Bunge Ltd., White Plains, N.Y., on Feb. 21 reported a fourth-quarter loss of $63 million ($0.51 per diluted share) from continuing operations, net of tax, on net sales of $11.5 billion, down from the year-ago loss of $60 million ($0.48 per share) and $11.6 billion, respectively. The company said its Agribusiness segment took a hit due to the reduction in value of its Brazilian soybeans as factors related to China trade, and demand caused Brazilian soybean prices to converge with U.S. and Brazilian new crop prices.
Full-year income from continuing operations was $257 million ($1.57 per share) on sales of $45.7 billion, compared to 2017’s $126 million ($0.89 per share) and $45.8 billion, respectively.
“Although 2018 was a substantially better year than 2017, we are not satisfied with these results, and we know that Bunge has the global assets and people to perform better in the future,” said Kathleen Hyle, Bunge non-executive board chair. “In the past several months, the company has taken a number of significant and positive steps to reposition itself for sustainable growth, including announcing a leadership transition and enhancing its leadership team, refreshing our board, and establishing a Strategic Review Committee of the board.
“The Committee initiated and is continuing a thorough, outside-in review of all of Bunge’s businesses,” she added. “At the same time, we are committed to addressing underperforming assets as part of our effort to enhance shareholder value, and we are strengthening our risk management capabilities, as they are foundational to everything we do. The board and the leadership team are moving with speed and accountability to drive results.”
Acting CEO Greg Heckman told analysts the company is expected to exit some businesses or form partnerships in areas where it wasn’t a leader or “the best owner.” He said Bunge wants to keep businesses where it is in the top three and that meet the company’s growth targets and return on investment. “We’re cutting that analysis several different ways from the top, down, regionally, along value chains, by individual asset within the value chain.”
Sugar is the only business Bunge has been on record as looking to divest. In the past, both Glencorp and ADM have shown interest in Bunge.
Bunge announced that it would no longer provide EBIT guidance for individual businesses, but instead would give directional guidance. It said its Agribusiness unit, based on the current soy crush margin environment, would be expected to have lower results in 2019 than 2018. Sugar & Bioenergy was seen as break-even, while Fertilizer, based on current market conditions, would be lower than 2018. In Food & Ingredients, Edible Oils would benefit from a full year of ownership of Loders Croklaan, while favorable Milling results in the U.S. and Brazil might be offset by challenging conditions in Mexico.
Bunge’s fourth-quarter Fertilizer EBIT was $27 million on net sales of $160 million, up from the year-ago loss of $1 million and $152 million, respectively. Adjusted EBIT was $27 million versus $15 million. Volumes were down at 454,000 mt from 499,000 mt.
Bunge said higher results for the quarter were primarily driven by higher prices as well as lower costs related to prior restructuring actions in its Argentine operations. These positives more than offset lower volumes. In addition, it said results for the quarter included the remaining $6 million recovery of foreign exchange losses from the second quarter.
Full-year Fertilizer EBIT was $39 million on net sales of $460 million, up from 2017’s $3 million and $406 million, respectively. Adjusted EBIT was $42 million, up from 2017’s $19 million. Volumes were level at 1.328 million mt versus 1.329 million mt.