Bunge Limited (NYSE: BG) reported record third quarter volumes, gross profit, income from operations and net income for the quarter ending September 30, 2001.
Third quarter net income was $57 million, or $0.76 per share, representing a 235% increase over net income of $17 million, or $0.26 per share, in 2000.
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For the third quarter of 2001, compared to the same period last year:
— Volumes grew 31% to 21.7 million metric tons
— Gross profit increased 32% to $333 million
— Income from operations rose 56% to $207 million
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By GlobalDataThe Company’s overall performance reflected strong growth in the agribusiness division, which was driven by more favorable market conditions as well as by increased volumes in international marketing operations and South American grain origination. Market conditions in agribusiness improved due to strong global demand for soybean meal and oil and the positive impact of industry-wide rationalization of soybean processing capacity.
Commenting on the results, Alberto Weisser, Chairman and Chief Executive Officer, stated: “We are very pleased with the improved results, which reflected positive contributions across all three of our core divisions. During the quarter, the agribusiness division experienced a faster-than-anticipated improvement to more traditional levels of capacity utilization and profitability. The fertilizer division’s results were strong despite lower volumes. In Bunge’s food products division, wheat milling product volumes and margins continued to recover. The corn products business is improving now that the strike at the Danville, Illinois facility has been settled. Our high-growth soy ingredients business continues its outstanding performance. Global demand for our soy ingredient products has resulted in our plants operating at high capacity. Softness in the U.S. foodservice industry offset these positive trends in the food products division and adversely affected our bakery and edible oil product businesses in North America. Finally, the realignment of our capital structure and our position as one of Brazil’s leading exporters insulated Bunge from the weakness of the Brazilian real in the third quarter.”
In light of the tragic events that took place in New York, Washington D.C. and Pennsylvania on September 11th, Mr. Weisser further commented: “Our sympathies are with those who have been affected by these horrible events. Our thoughts and prayers are with families and colleagues of the victims, as well as with the rescue workers and other authorities who continue to work heroically in these extremely difficult circumstances.”
Financial Performance
Third Quarter Results
Income from operations in the agribusiness division increased 165% to $130 million. Soybean processing margins returned to historical norms in the Company’s three primary operating countries, Argentina, Brazil and the United States. Margin expansion was augmented by the 14% devaluation of the Brazilian real versus the U.S. dollar and benefits from the new Argentine export incentive program. Grain origination volume increased substantially due to large South American soybean and wheat harvests. Solid origination margins in South America were partially offset by the lower quality corn and soy crops experienced in the southern United States. International marketing volumes and income from operations continued to expand. During the third quarter, Bunge became the largest exporter of soybean products into China.
The Company’s fertilizer division generated income from operations of $64 million, 6% lower than the third quarter of 2000. As anticipated, volumes were 14% lower than the third quarter of the previous year due to the unusually strong consumption levels experienced in the third quarter of 2000, as farmers purchased ahead of normal seasonal patterns. However, the Company’s strategy of maintaining prices in lieu of protecting market share substantially offset the lower volumes.
Income from operations in the food products division was $20 million, 25% above the third quarter of 2000. Overall, volumes were slightly higher than last year’s third quarter. The soy ingredients business continued to build momentum through rapid growth and profitability, and profitability recovered in the corn products business as a result of better margins and the end of the strike at the Company’s Danville, Illinois facility. Wheat milling results were stronger due to better margins and higher volumes. While bakery profitability suffered from weakness in the U.S. foodservice market, the outlook has improved due to the signing in September of a major supply contract for frozen bakery products. Edible oil income from operations also suffered from weakness in the U.S. foodservice market.
Non-operating income (expense) – net increased primarily due to higher foreign exchange losses for the third quarter of 2001 as compared to the same period last year. The net income effects of these foreign exchange expenses were more than offset by expansion of operating income margins and reduced effective tax rates due to the devaluation of the Brazilian real and the realignment of Bunge’s capital structure. The Brazilian real declined 14% in value against the U.S. dollar for the third quarter of 2001, as compared to 2% for the same period last year. Partially offsetting the increase in non-operating income (expense) – net were declines in net interest expense and interest on readily marketable inventories, in large part due to lower average interest rates on short-term debt.
Nine-Month Results
Income from operations increased 89% to $379 million. The increase was generally attributable to higher agribusiness division volumes and gross profit due to increases in oilseed processing margins and volumes, growth in the international marketing operations and the April 2000 acquisition of Manah and Fosfertil in the fertilizer business. In our food products division, income from operations improved in corn products and soy ingredients, while income from operations in edible oil products declined due to the weakness in the U.S. foodservice market.
Non-operating income (expense) – net increased, primarily due to higher foreign exchange losses for the nine months ended September 30, 2001 as compared to the same period last year. The Brazilian real declined 27% in value against the U.S. dollar through the first nine months of 2001 versus 3% for the same period last year. Partially offsetting the increase was a decline in interest on readily marketable inventories, primarily due to lower average interest rates on short-term debt. The net income effect of the devaluation of the Brazilian real was partially offset by expansion of operating income margins due to the devaluation and the effects of Bunge’s capital structure realignment, which was substantially completed with the initial public offering in August 2001.
Outlook
Bill Wells, Chief Financial Officer, stated: “Our core businesses are operating at the more normalized levels of volumes and prices that we enjoyed during the third quarter of this year, and we expect that to continue. As a result we forecast fourth quarter net income to be within a range of $35-$40 million, and EPS to be $0.42-$0.48.”
About Bunge
Bunge Limited is an integrated, global agribusiness and food company operating in the farm-to-consumer food chain with primary operations in North and South America and worldwide distribution capabilities. Headquartered in White Plains, NY, Bunge has over 17,000 employees and operations in 17 countries. The Company is the largest processor of soybeans in the Americas and the largest producer and supplier of fertilizers to farmers in Latin America.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains both historical and forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but rather reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “estimate” and “continue” and similar expressions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. The following important factors, among others, could affect future results, causing them to differ materially from those expressed in our forward-looking statements: estimated demand for commodities and other products that we sell and use in our business; industry conditions, including the cyclicality of the agribusiness industry; economic conditions in Brazil and Argentina; and other economic, business, competitive and/or regulatory factors affecting our business generally. The forward-looking statements included in this release are made only as of the date of this release, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
Summary of Results
(In millions, except per share data and percentages)
Third Quarter Ended
———————— Percent
09/30/2001 09/30/2000 Change
———- ———- ——-
Volumes (in millions of
metric tons) 21.7 16.6 31%
Net sales $3,151 $2,711 16%
Gross profit 333 252 32%
Income from operations 207 133 56%
Non-operating income
(expense) – net (100) (72) 39%
Income tax expense (24) (12) 100%
Net income before
minority interest,
discontinued operations
and cumulative effect of
change in accounting
principle 83 49 69%
Net income 57 17 235%
Net income per share (1) $0.76 $0.26
Average shares
outstanding 75,221,060 64,380,000
EBITDA (2) 243 177 37%
Adjusted EBITDA (3) 233 163 43%
Nine Months Ended
———————— Percent
09/30/2001 09/30/2000 Change
———- ———- ——-
Volumes (in millions of
metric tons) 52.9 45.0 18%
Net sales $8,312 $7,000 19%
Gross profit 699 508 38%
Income from operations 379 201 89%
Non-operating income
(expense) – net (232) (149) 56%
Income tax expense (28) (9) 211%
Net income before
minority interest,
discontinued operations
and cumulative effect of
change in accounting
principle 119 43 177%
Net income 86 2 4200%
Net income per share (4) $1.26 $0.03
Average shares
outstanding 68,033,397 64,380,000
EBITDA (2) 493 308 60%
Adjusted EBITDA (3) 462 270 71%
(1) The third quarter ended 9/30/00 includes a loss on
discontinued operations of $.08 per share.
(2) Earnings before interest, taxes, depreciation, amortization
(“EBITDA”) equals income from operations plus depreciation,
depletion and amortization.
(3) EBITDA less interest expense on readily marketable inventories
financed by short-term debt.
(4) The nine months ended 9/30/01 includes a gain on discontinued
operations of $.04 per share and cumulative effect of change
in accounting principal gain of $.10 per share. The nine
months ended 9/30/00 includes a loss on discontinued
operations of $.14 per share.
Segment Results
(In millions, except percentages)
Third Quarter Ended
———————– Percent
09/30/2001 09/30/2000 Change
———- ———- ——-
Volumes (in millions of
metric tons)
Agribusiness 17.1 11.6 47%
Fertilizer 3.1 3.6 (14)%
Food Products 1.5 1.4 7%
Edible Oil Products 0.4 0.4 –
Wheat Milling and Bakery
Products 0.5 0.6 (17)%
Other 0.6 0.4 50%
Total 21.7 16.6 31%
Gross Profit
Agribusiness 182 94 94%
Fertilizer 90 95 (5)%
Food Products 61 63 (3)%
Edible Oil Products 30 40 (25)%
Wheat Milling and Bakery
Products 16 15 7%
Other 15 8 88%
Total 333 252 32%
Income from Operations(a)
Agribusiness 130 49 165%
Fertilizer 64 68 (6)%
Food Products 20 16 25%
Edible Oil Products 7 12 (42)%
Wheat Milling and Bakery
Products 1 3 (67)%
Other 12 1 1,100%
Unallocated (7) –
Total 207 133 56%
(a)Income from operations is before net interest expense, foreign
exchange results and income taxes.
Nine Months Ended
———————– Percent
09/30/2001 09/30/2000 Change
———- ———– ——-
Volumes (in millions of
metric tons)
Agribusiness 43.0 35.6 21%
Fertilizer 6.1 6.1 –
Food Products 3.8 3.3 15%
Edible Oil Products 1.2 1.2 –
Wheat Milling and Bakery Products 1.5 1.5 –
Other 1.1 0.6 83%
Total 52.9 45.0 18%
Gross Profit
Agribusiness 361 176 105%
Fertilizer 175 149 17%
Food Products 163 183 (11)%
Edible Oil Products 84 113 (26)%
Wheat Milling and Bakery Products 44 51 (14)%
Other 35 19 84%
Total 699 508 38%
Income from Operations(a)
Agribusiness 228 66 246%
Fertilizer 114 92 24%
Food Products 47 48 (2)%
Edible Oil Products 18 35 (49)%
Wheat Milling and Bakery Products 7 9 (22)%
Other 22 4 450%
Unallocated (10) (5)
Total 379 201 89%
(a) Income from operations is before net interest expense, foreign
exchange results and income taxes.
