Bunge Ltd., White Plains, N.Y., announced June 8 that its board of directors has approved a program for the repurchase of up to $700 million of Bunge’s common shares through Dec. 31, 2011. “We remain focused on growing our business through a combination of organic growth and acquisitions. However, following the recent closing of the sale of our Brazilian fertilizer nutrients assets, our strengthened financial profile also provides an excellent opportunity for us to return capital to shareholders,” said Alberto Weisser, Bunge chairman and CEO.
Bunge has also indicated that a considerable chunk of the proceeds from the sale of Brazil assets to Vale S.A. will go to pay off debt, which in turn has improved its stance with credit rating agencies.
Bunge told analysts June 4 at the Sanford Bernstein Strategic Decisions Conference that it is aggressively reducing costs at its remaining fertilizer retail business in Brazil. Weisser said the company is changing the way it does business. He said the company used to have five or six months of inventories going into season, but now that will be limited to three.
Weisser said now when it negotiates prices with suppliers such as Vale S.A., OCP, and Mosaic Co., it will be for 45 days out, not six months. Without its mines, he said the company no longer cares whether prices are high or low. Instead, he said the company would be focusing on margins. “So in fact, we probably prefer now lower prices because this will benefit our customers, which are the farmers, and we would make more money by selling more in volume.”
He said it makes sense to stay in the retail business due to the synergies it has with the agribusiness unit since that unit buys grain from farmers, while retail sells them fertilizer. Logistic synergies, he added, are also important.