In this file:
· Bunge profit tops estimates on South American results
· Bunge fourth quarter sees support from grains, agribusiness
· Bunge Ltd (BG) Q4 2019 Earnings Call Transcript
Bunge profit tops estimates on South American results
By Karl Plume, Reuters
via GFM Network News/Canadian Cattlemen - February 12, 2020
Chicago | Reuters — Agricultural commodities trader Bunge reported a stronger-than-expected quarterly profit on Wednesday as rising crop prices boosted farmer sales in South America and swelled margins in its large agribusiness segment, sending shares up more than three per cent in pre-market trading.
But uncertainty about global trade and demand for Bunge’s food and feed products clouded the outlook for this year, with 2020 earnings per share seen about flat.
The company cautioned that agribusiness results could slip this year as margins shift depending on crop sizes, farmer sales and the implementation of an interim U.S.-China trade deal.
Bunge and its agribusiness peers Archer Daniels Midland, Cargill and Louis Dreyfus have been hit hard by a years-long crop supply glut followed by a tit-fot-tat tariff war between the U.S. and China that disrupted global trade flows.
The companies, known as the ABCDs of global grain trading, have also seen livestock feed demand dented by a deadly hog disease in China known as African swine fever (ASF). The full impact of China’s coronavirus outbreak on Bunge’s business also remains unknown.
“We’re still faced with uncertainty in 2020. We expect markets to remain volatile as long as U.S. and China trade tensions and ASF continue to create uncertainty,” CEO Gregory Heckman said on a call with analysts.
“It’s too early to tell what, if any, impact the coronavirus situation will have on our markets or how developments in Argentina may affect the industry this year,” he said, referring to changes in Argentine agricultural export tax policy.
Bunge’s agribusiness segment, its largest in terms of revenues and volumes, gained in the fourth quarter on strong vegetable oil demand and good South American oilseed crushing margins...
Bunge fourth quarter sees support from grains, agribusiness
By Aerin Einstein-Curtis, Feed Navigator
Agribusiness and grain results are boosting fourth quarter returns for Bunge Limited based, in part, on origination and improved farmer selling in South America.
The Missouri-headquartered company released details of its fourth-quarter and full-year results on Wednesday [February 12]. Its fiscal quarter ended December 31.
Overall, the company reported total segment earnings before interest and taxes (EBIT) of $44m for the quarter, said John Neppl, chief financial officer with Bunge. The company saw $70m for the final quarter of 2018.
However, the adjusted total segment EBIT was $283m, up from $107m the previous year, he said during an earnings conference call. Adjusted segment results for the full year rose to $1.12bn.
The company saw $239m in net changes, with about $102m related to various portfolio initiatives and $76m linked to the “partial impairment of goodwill” from the acquisition of Loders Croklaan, he said. Its net les for the final quarter of 2019 were $10.78bn, a drop from the $11.54bn the previous year. Net sales for the year declined from $45.74bn to $41.14bn.
Gross profit for the quarter increased from $422m in 2018 to $571m, Bunge said. However, gross profit for the year declined from returns set the previous year.
Bunge’s global competitiveness program – started in 2017 – is intended to provide a $250m reduction in selling, general and administrative expense (SG&A) costs by the end of 2020, Neppl said. The cost savings target has been reached through a “split of indirect spending and employee costs.”
Recapping and looking forward ...
External influences ...
Segment results ...
Bunge Ltd (BG) Q4 2019 Earnings Call Transcript
BG earnings call for the period ending December 31, 2019.
Motley Fool Transcribers
Feb 12, 2020
Bunge Ltd (NYSE:BG)
Q4 2019 Earnings Call
Feb 12, 2020, 8:00 a.m. ET
Questions and Answers
Good morning and welcome to the Bunge Ltd. Fourth Quarter 2019 Earnings Release and Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded.
I would now like to turn the conference over to Ruth Ann Wisener, Vice President of Investor Relations. Please go ahead.
Ruth Ann Wisener -- Vice President of Investor Relations
Thank you, operator and thank you for joining us this morning for our fourth quarter earnings call. Before we get started, I wanted to let you know that we have slides to accompany our discussion. These can be found in the Investors section of our website at bunge.com, under Investor Presentations. Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well.
I'd like to direct you to slide 2 and remind you that today's presentation includes forward-looking statements that reflect Bunge's current view with respect to future events, financial performance and industry condition. These forward-looking statements are subject to various risks and uncertainties, Bunge has provided additional information in its reports on file with the SEC, concerning factors that could cause actual results to differ materially from those contained in this presentation, and we encourage you to review these factors.
On the call this morning are Greg Heckman, Bunge's Chief Executive Officer; and John Neppl, Chief Financial Officer.
I'll now turn the call over to Greg.
Gregory A. Heckman -- Chief Executive Officer
Thank you, Ruth Ann and good morning everyone. We're happy to be joining the call from our new headquarters in St. Louis this morning. So let's get started. On slide 3, you can see the agenda for today's call, I'll start with some thoughts on our 2019 accomplishments, through the lens of our key priorities, and then I'll provide an overview of the fourth quarter before handing it over to John, who will go into more depth on our performance. I'll conclude with our outlook for 2020 and then we'll open up the line for your questions.
With that, let's turn to slide 4. In 2019, the team did an excellent job executing in the face of great complexity in many moving parts, both internally and externally. We effectively managed the things under our control and made substantial progress against our key priorities. We drove improved operational performance. We took actions to optimize the portfolio and we increased our financial discipline and rigor, especially around capital allocation.
On operational performance, our total oilseed crush volume and capacity utilization rates were the highest in the past five years. Our soy and sun seed crushing operations achieved the lowest industrial unit costs in that same timeframe. These improvements helped us weather the difficult markets in 2019, and allowed us to capture more margin, when we had the opportunity. We moved from a regional structure to a global operating model, simplifying how we operate and aligning incentives to the whole, rather than the parts. With that, we reduced the number of bonus pool dramatically, incentivized teams to work together, toward the common goals of Bunge. We've received positive internal feedback about our headquarters move, with clear evidence of improved efficiency, collaboration, and shared insights as a result. We will be fully moved into St. Louis by the end of Q2.
Our new operating model, allows us to focus on what's most important, our business relationships on both ends of the value chain, with farmers and customers, while facing fewer internal distractions. In short, we're working as one team, better able to focus on driving results and operating the business with better visibility and more accountability.
Moving to slide 5; while we made substantial improvements to our portfolio, we continue to execute against other identified opportunities, with the goal to be substantially finished by the end of the second quarter. We completed our Sugar & Bioenergy 50-50 joint venture with BP, and announced an agreement to also sell our margin in managed assets in Brazil. Recently SIRE, a U.S. ethanol producer repurchased our stake in that business. We also completed several smaller transactions, selling several idle grain facilities in Eastern Europe, and two idled wheat milling sites in Brazil, while also optimizing our South American grain footprint, to improve capacity utilization by closing seven other grain facilities.
Turning to slide 6; we've increased our financial discipline and rigor, continuing our work to identify and capture cost savings opportunities. 2019, we achieved approximately $50 million in savings from our previously established global competitiveness program, and are driving additional savings opportunities from our more recent efforts. Combined with the operational and portfolio actions we took in 2019, Bunge is getting more streamlined, with line of sight to additional improvement opportunities. We also changed our approach to risk management, with a focus on taking risk appropriate for the earnings power of Bunge, and the environment we're operating within. This approach allows us to better capture the earnings power available and the physical and financial flows provided by our global asset base. This is especially true, when market conditions change, as they did during the fourth quarter.
We're committed to pursuing a disciplined capital allocation strategy, capital deployment decisions will be the result of a deliberate process, anchored by high quality analysis and stress testing on the front-end, as well as performing post project reviews.
Moving to the next slide; because we're managing risks better while running our assets harder, when margins in certain markets improved in Q4, we delivered better earnings than we had earlier anticipated.
Looking ahead to 2020, we feel good about our transformation and our ability to adapt to what we expect to remain challenging and volatile environment. We have a lot of momentum coming out of Q4, that will help us move ahead. And taking into account the current margin environment and lack of visibility into the back half of the year, we expect 2020 EPS to be broadly in line with what we earned in 2019, when excluding notable items, our gain on Beyond Meat, and the depreciation benefit of the Sugar & Bioenergy segment.
With that, I'll hand it over to John, to walk us through our financial results and 2020 outlook in greater detail.
John W. Neppl -- Chief Financial Officer ...