Grain trader Bunge Ltd reported a lower quarterly profit on Thursday as weaker results in its sugar, fertiliser, and food and ingredients units overshadowed gains in the core agribusiness division. Bunge, a major player in South America, pointed to low sugar prices and “extremely low consumer confidence” in Brazil and weak fertiliser margins in Argentina as hurting its performance.
Agribusiness, the company’s largest unit, benefited from favourable margins on soybean processing in the United States, South America and Europe and from increased grain deals in Brazil.
The core businesses of Bunge and its rivals Archer Daniels Midland and Cargill Inc are buying, selling, transporting, storing and processing grains and oilseeds. Margins are typically thin, but volumes are massive when crop supplies are ample and prices are low, as they currently are following large global harvests.
Net income available to shareholders in the third quarter ended on September 30 fell to $229 million, or $1.56 per share, from $284 million, or $1.90 per share, a year earlier.Bunge’s grain trading and distribution results benefited from the recovery of about $50 million lost on open positions in the second quarter, according to the company.
Excluding discontinued operations and other charges, adjusted net income was $1.24 per share, down from $1.31 a year ago. Analysts expected earnings of $1.56 per share, according to Thomson Reuters I/B/E/S. Revenue dropped to $10.79 billion from $13.68 billion, below analysts’ estimates for $12.64 billion.
Bunge said it cut its forecast for capital expenditures in 2015 to $750 million from $875 million, due to the timing of spending on certain long-term projects in its agribusiness and food and ingredients units. The difference of about $125 million will carry over into 2016 and 2017, according to the company.
Bunge’s stock price is down about 13 percent this year, while ADM shares are down about 10 percent.