Agribusiness, Fertilizer profits surge at Bunge

by Josh Sosland
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WHITE PLAINS, N.Y. — In New York Stock Exchange trading July 26, shares of Bunge Ltd. jumped as much as $9.55, or 11%, after the company released second-quarter financial results.

Net income of Bunge in the quarter ended June 30 was $168 million, equal to $1.30 per share on the common stock, up 460% from $30 million, or 25c per share, in the second quarter last year. Net sales were $9,915 million, up 65% from $6,001 million.

The improved results were driven by two Bunge divisions — Agribusiness and Fertilizer.

Agribusiness operating profit was $107 million in the second quarter, a dramatic improvement from the same period last year when a $30 million operating loss was sustained. Net sales in Agribusiness were $7,543 million, up 68%.

"Results benefited from improved oilseed processing margins and strong international marketing results," Bunge said. "Our risk management strategies worked well, and we recovered a portion of the mark-to-market losses incurred in the first quarter on our agricultural commodity inventories and forward purchase contracts."

Operating income of the Fertilizer division was $142 million, up 788% from $16 million in the second quarter last year. Net sales were $795 million, up 109%.

"Higher volumes and margins led to a strong performance when compared to the same period last year," Bunge said. "The increase in volumes was almost entirely driven by product sales for soybean plantings, which historically are purchased in the second half of the year. Soybean farmers accelerated purchases because of favorable agricultural commodity prices and concerns about increasing crop input costs. Margins benefited form higher international prices for imported fertilizers and raw materials."

Bunge projected "solid marketing conditions" in Agribusiness and Fertilizer in the remainder of 2007.

Edible Oil Products suffered a $4 million operating loss on sales of $1,267 million in the second quarter, versus an operating profit of $13 million and sales of $882 million a year earlier.

Operating results were hurt by "weaker performance in Europe," attributed to higher input costs and difficulty passing the costs along to customers.

Milling products operating profit was $12 million on sales of $310 million in the second quarter, versus $19 million and $239 million, respectively, the year before.

Profits were pressured by higher raw material and operating in wheat flour milling.

In the six months ended June 30, Bunge net income was $182 million, equal to $1.35, up 107% from $88 million, or 73c, in the first half of last year. Sales were $18,104 million, up 56%.

In later trading July 26, Bunge shares fell from highs as the overall stock market fell sharply.

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