The New York-based grain trading company announced the results of its second quarter Wednesday, July 31. The period covered ended June 30.
Overall, the second-quarter were results consistent with company anticipations, said Greg Heckman, CEO, Bunge Limited.
Soy crush saw higher volumes, while improved grain results for South America helped offset challenges from weather experienced in North America.
The company reported net income for the quarter of $214m, up from a loss of $12m for the same quarter last year. However, gross profit for the quarter dropped from $542m in 2018 to $512m this year.
The results included $135m “net unrealized gain” for Bunge Venture’s portion of the plant-based protein company Beyond Meat, Inc., said John Neppl, the new Bunge CFO.
Total segment earnings before interest and tax (EBIT) were $354m, an improvement on the $71m last year, he said. Total segment adjusted EBIT rose from $117m in the second quarter of 2018 to $370m.
The company is continuing work on its global operation model, said Heckman on an earnings conference call.
“We're seeing an engaged and energized team, improved speed of execution, and risk management that better supports our commercial decision making,” he added.
Going forward, the anticipation is for full-year consolidated results similar to last year, he said. However, lower soy crush margins are anticipated along with an improvement in soft seed crush and for the company’s grains and food and ingredients businesses.
Several areas of market uncertainty remain especially due to the ongoing trade war between the US and China, he added.
“African swine fever continues to impact Chinese demand for soy meal combined with the unresolved US-China trade, this has altered both typical trade flows and producer marketing patterns,” Heckman said. “We continue to monitor these factors, and we'll leverage our global footprint as needed to ensure uninterrupted supply for our customers while managing margins and physical flows to optimize our own results.”
Segment highlights
The agribusiness segment saw a total adjust EBIT of $189m for the quarter, up from $118m for the same period last year, said Neppl.
Within the business segment, oilseeds brought in $164m, the company reported.
“In oilseeds, structural soy crush margins were lower, as farmers retained soybeans in anticipation of higher prices and meal availability increased as Argentine supply returned to the market,” said Neppl. “Second quarter results benefited from approximately $70m timing benefit as soy crush margins decreased in many markets toward the end of the quarter, creating mark-to-market profit in hedge contracts.”
The gains are expected to be offset by a drop in “realized margins,” later in the fiscal year, he said. Results for trading and distribution dropped from last year.
Bunge’s grains business saw an EBIT of $25m for the quarter, an improvement on the $22m loss experienced in the same quarter last year, he said. Ports and origination supported results for the quarter.