Bunge profit falls, but ag results stay strong

by Eric Schroeder
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WHITE PLAINS, N.Y. — Net income at Bunge Ltd. in the year ended Dec. 31, 2011, totaled $942 million, equal to $6.07 per share on the common stock, down 60% from $2,354 million, or $15.06 per share, in fiscal 2010. Last year’s results included a $2.4 billion gain on the sale of the company’s fertilizer nutrient business.

Net sales during fiscal 2011 were $58,743 million, up 29% from $45,707 million in fiscal 2010.

“In 2011, Bunge produced strong results in many parts of our business, but faced significant headwinds in others,” said Alberto Weisser, chairman and chief executive officer. “On a combined basis, our agribusiness, edible oils and milling segments generated record full-year results of over $1.1 billion. However, reduced sugarcane production yields in Brazil due to back-to-back years of poor weather had a material impact on volumes in our sugar and bioenergy segment.”

For Agribusiness, fiscal 2011 EBIT rose to $934 million from $840 million, while sales rose 29% to $38,909 million from $30,138 million. During the fourth quarter ended Dec. 31, EBIT fell 46% to $203 million from $377 million, while sales increased 34% to $11,109 million.

“Higher oilseed processing results in Asia, Europe and South America were offset by weaker results in the U.S.,” Bunge said of fourth-quarter results in the Agribusiness segment. “Grain merchandising results were lower, compared to an extraordinarily strong period last year. Increased volume in the quarter was primarily driven by higher grain merchandising out of the Black Sea region, the addition of new grain facilities in the U.S., increased oilseed processing in Brazil and two new oilseed processing facilities in Asia that started up earlier in the year.”

The Edible Oil Products segment had fiscal 2011 EBIT of $137 million, up 71% from $80 million, and sales of $8,839 million, up 30% from $6,783 million. For the fourth quarter, EBIT was flat at $45 million, while sales increased 16% to $2,286 million from $1,968 million.

For Milling Products, fiscal 2011 EBIT was $104 million, up from $67 million in fiscal 2010. Net sales for the year rose 25% to $2,006 million from $1,605 million. For the fourth quarter, EBIT was $25 million, up from $14 million in the previous year’s fourth quarter, and sales were $490 million, up from $409 million. Bunge said its fourth-quarter 2010 results included a $9 million impairment charge related to a long-term supply contract that accompanied an acquisition of a wheat mill.

Bunge sustained a loss of $20 million in its Sugar & Bioenergy segment during fiscal 2011, which compared with a loss of $13 million in fiscal 2010. Net sales, meanwhile, rose 31% to $5,842 million from $4,455 million. For the fourth quarter, EBIT was $3 million, which compared with a loss of $56 million in the same period a year ago. Fourth-quarter sales totaled $1,630 million, up from $1,314 million.

In the Fertilizer segment, Bunge sustained a loss of $1 million, which compared with EBIT of $2,344 million in fiscal 2010. Sales rose 15% to $3,147 million from $2,726 million. For the fourth quarter, the segment suffered a loss of $3 million, which compared with EBIT of $1 million a year ago. Net sales totaled $930 million, up from $731 million.

Looking ahead, Mr. Weisser said 2012 will present some challenges, especially early in the year. But the company remains confident and expects to generate good results.

“We see positive signs in the industry and have confidence in our business,” he said. “The U.S.D.A. forecasts global protein meal and vegetable oil demand to both grow at 4% this year. Production and trade of agricultural commodities are expected to increase. We reached our sugarcane planting target in 2011, which should enable us to produce significantly more sugar and ethanol and run our mills closer to capacity. And our global asset network, strong market positions and excellent team should enable us to benefit from opportunities as they arise during the year.”

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