Milling & Baking News - November 5, 2019 - 14

Financial Results

Bunge battling through difficult
environment in ag business
WHITE PLAINS, N.Y. - While significant accounting charges related
to the company's portfolio restructuring and headquarters relocation
dragged down financials, core business of Bunge Ltd. exceeded the
company's expectations for the third
quarter, said Gregory A. Heckman,
chief executive officer of the White
Plains-based company.
"I don't know that we could see
a much more difficult environment
than we've seen," Mr. Heckman noted during an Oct. 30 conference call
with analysts. "You can stack A.S.F.
(African swine fever), the on-again/
off-again trade war, the late harvest
in the U.S. and then the Argentinian elections. And I couldn't really
be more pleased with the amount of

declined during the quarter, especially
near the end of the period, and our
grain business was impacted by ongoing trade issues and a delayed U.S.
harvest," Mr. Heckman said. "Nevertheless, our team did a great job in
mitigating those challenges, and our
results were positively impacted by
our risk management actions. Results
in Edible Oils were strong, reflecting favorable industry dynamics and
good execution.
"... a lot of the noise in our results
this quarter was connected to the strategic actions we are taking. In July, we
announced our agreement with BP to
contribute our Brazilian Sugar & Bioenergy business to a new 50-50 joint
venture. As a result of this, we've reclassified that business as held for sale

'I don't know that we could see a much more difficult
environment than we've seen. You can stack A.S.F. (African
swine fever), the on-again/off-again trade war, the
late harvest in the U.S. and then the Argentinian
elections. And I couldn't really be more pleased with
the amount of change we're driving through the
organization and that the team continues to execute
very, very well.'
- Gregory A. Heckman, Bunge Ltd.

change we're driving through the organization and that the team continues to execute very, very well."
Bunge sustained a loss of $1,496 million in the third quarter ended Sept.
30, which compared with income of
$357 million in the third quarter a year
ago, equal to $2.44 per share on the
common stock.
Sales were $10,323 million, down
10% from $11,412 million.
Charges in the third quarter of fiscal
2019 included $1,603 million related to
assets classified as held for sale in the
Sugar & Bioenergy business (no charges in 2018); $107 million in impairment
charges (no charges in 2018); $11 million in expired indemnification asset
in Agribusiness (no charge in 2018);
$8 million for severance, benefits and
other costs ($7 million in 2017); and $1
million in sugar restructuring charges
($2 million in 2018). Overall, special
charges totaled $1.7 billion in the third
quarter of 2019, versus charges of $18
million in the third quarter of 2018.
"In Agribusiness, crush margins
14 / November 5, 2019

Milling & Baking News

and taken the expected $1.6 billion
charge we discussed on our last call.
"We remain very excited about the
transaction and our new partnership
with BP. It checks the boxes across
all of our strategic criteria, reducing
our exposure to Brazilian Sugar &
Bioenergy, allowing us to strengthen
our balance sheet and, importantly,
enabling us to increase our focus on
our core businesses. We're on track to
close the transaction before yearend,
as planned.
"Also in the third quarter, we took
a big step forward in our work to
streamline our global business structure with the announcement that
we're moving our global headquarters
to St. Louis where our North American headquarters is already located.
This move will allow us to better align
with our commercial teams and drive
additional efficiencies with cost reductions as an additional output."
Bunge's largest division, Agribusiness, had EBIT in the third quarter
of 2019 of $44 million, down sharply

from $464 million in 2018. Agribusiness volumes were 36,554,000 tonnes,
down 3% from 37,690,000 tonnes in
the third quarter a year ago. Sales were
$7,008 million, down 11% from $7,905
million in the third quarter of 2018.
John W. Neppl, chief financial officer, said during the call that Agribusiness results were adversely affected by
approximately $70 million of mark-tomarket reversals on soy crush contracts.
"Softseed processing results in the
quarter were higher than last year,
led by Canada and China, as were results in trading and distribution and
biodiesel," Mr. Neppl said. "In grains,
results were lower in both North and
South America, primarily due to soft
export demand, farmer retention related to the U.S.-China trade dispute and
the delayed harvest in the U.S. Results
in ocean freight and trading and distribution were lower than last year."
Providing more color on the challenges in Agribusiness, Mr. Heckman
said the on-again/off-again trade war
has "kind of been the worst of both
worlds," as the market struggles to
adjust as if the trade war is over, when
in reality it continues on.
"So it's been about as confusing
an environment as we could see," he
said. "And I think that, as we look toward '20, it would be hard to imagine
probably a more challenging or confusing environment than (what) we've
seen the last 30 days."
EBIT of the Bunge Edible Oil Products division was $52 million, up 73%
from $30 million in the third quarter
of 2018. Sales were $2,319 million, up
narrowly from $2,298 million.
Mr. Neppl said Edible Oil results
were driven largely by better results in
North America and Brazil, benefiting
from better supply/demand balance of
soy oil as well as improved execution.
EBIT of the Milling Products division totaled $7 million in the third
quarter of 2019, down 76% from $30
million a year ago. Net sales increased
to $437 million from $427 million.
Weaker Milling results reflected
lower margins in the United States
and lower volumes and margins in
Mexico, Mr. Neppl said.
Mr. Neppl said capital expenditure
spending totaled $378 million in the
first nine months of fiscal 2019, which
compared with $318 million in the
first nine months of fiscal 2018. For
the full year, capital expenditures are
expected to total $520 million to $540
million, he said, with approximately
$115 million of that total related to the
sugarcane milling business. MBN
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Milling & Baking News - November 5, 2019

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