Bunge earnings surge behind strong global demand

by Eric Schroeder
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WHITE PLAINS, N.Y. — Global food demand led to a sharp jump in earnings at Bunge Ltd., as net income in the first quarter ended March 31 surged to $289 million, equal to $2.10 per share on the common stock, up from $14 million, or 5c per share, in the same period a year ago. News of the earnings spike sent Bunge shares up nearly 7% in premarket trading, before falling back 7% in early trading on Thursday.

Net sales were $12,469 million, up 70% from $7,343 million.

"It is a unique time in the global agribusiness and food industry," said Alberto Weisser, chairman and chief executive officer. "High commodity and fertilizer prices reflect the fact that global demand for key commodities and products is very strong."

Agribusiness operating profit was $464 million in the first quarter, up sharply from the same period a year ago when the company posted a profit of $110 million. Net sales in Agribusiness were $8,863 million, up 65%.

Bunge said results in Agribusiness benefited from higher oilseed crushing margins in all regions, as well as stronger distribution results.

"Our risk management strategies worked well during a volatile period, and our global asset network provided us with the means to successfully manage through the farmer strikes in Argentina," Bunge said.

Operating income of the Fertilizer division was $250 million, up 213% from $80 million in the first quarter last year. Net sales were $1,191 million, up 96%.

"The increase in volumes was driven by product sales for soybean plantings, which historically are purchased in the second half of the year," Bunge said. "Soybean farmers accelerated purchases because of favorable agricultural commodity prices and concerns about increasing crop input costs."

Milling products operating profit was $36 million on sales of $486 million in the first quarter, versus $33 million and $257 million, respectively, the year before.

Bunge said the narrow profit gain reflected increased competition and higher operating costs in wheat milling.

Operating profit for Edible oil products climbed 52% to $117 million on a 72% gain in sales to $1,929 million.

Looking ahead, Bunge increased its full-year net income guidance for 2008 by $150 million to $980 million to $1.02 billion.

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