The US-listed agribusiness Bunge has reported third quarter operating profits of $218m, a decline of 18% compared with the same period last year. The slide in profits was due to weak results from the group’s fertiliser, sugar, food & ingredients divisions which more than offset the improved performance from Bunge’s core agribusiness division.
Bunge, which is one of the four global grain traders collectively known as the ABCDs (Archer Daniels, Bunge, Cargill, and Louis Dreyfus), also saw its revenues under pressure during the quarter, with sales back by more than a fifth to $10.8bn.
With major operations in South America, particularly Brazil, Bunge’s results have been significantly hampered by the weakening of the Brazilian economy in the past year and the continued deterioration of the Brazilian currency, the real.
Soren Schroder, chief executive of Bunge, said the tough economic environment in Brazil and rapid devaluation of the real continued to present challenges for the remainder of the year but the group’s integrated oilseed and grain value chains should produce results that exceeded the previous year.
By Division
Bunge’s core business is the origination, sale, transport, storage and processing of grains and oilseeds in major growing regions such as the US, Brazil, Argentina and Europe. Bunge’s agribusiness division benefitted from strong domestic and export demand for soyabean allowing the group to process, transport and sell greater tonnes.
In cereals, the devaluation of the Brazilian real led to a significant pick up in Brazilian farmers selling grains which increased volumes for Bunge – a key metric of profitability for the ABCD grain traders. When the vast network of grain elevators, mills, rail cars and barges are left idle, these companies begin to lose money.
Bunge’s fertiliser recorded a loss over the quarter due to lower sales volumes and margins in Argentina after farmers planted less maize and wheat while in Brazil, fertiliser imports also declined as well as the negative impact of currency when reporting Brazilian sales.
In the group’s sugar & biofuel division, lower sugar prices negatively affected performance. Despite higher volumes of sugarcane, prices and margins were much lower than previous years. Bunge said its biofuel business were in line with last year as demand for ethanol in Brazil remains strong.
Bunge said the results from its food & ingredients division were negatively impacted by lower margins in US dollars and volumes due to the rapid contraction of consumer demand, particularly from the food service channel.
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Bunge – a critical link in the food chain
The US-listed agribusiness Bunge has reported third quarter operating profits of $218m, a decline of 18% compared with the same period last year. The slide in profits was due to weak results from the group’s fertiliser, sugar, food & ingredients divisions which more than offset the improved performance from Bunge’s core agribusiness division.
Bunge, which is one of the four global grain traders collectively known as the ABCDs (Archer Daniels, Bunge, Cargill, and Louis Dreyfus), also saw its revenues under pressure during the quarter, with sales back by more than a fifth to $10.8bn.
With major operations in South America, particularly Brazil, Bunge’s results have been significantly hampered by the weakening of the Brazilian economy in the past year and the continued deterioration of the Brazilian currency, the real.
Soren Schroder, chief executive of Bunge, said the tough economic environment in Brazil and rapid devaluation of the real continued to present challenges for the remainder of the year but the group’s integrated oilseed and grain value chains should produce results that exceeded the previous year.
By Division
Bunge’s core business is the origination, sale, transport, storage and processing of grains and oilseeds in major growing regions such as the US, Brazil, Argentina and Europe. Bunge’s agribusiness division benefitted from strong domestic and export demand for soyabean allowing the group to process, transport and sell greater tonnes.
In cereals, the devaluation of the Brazilian real led to a significant pick up in Brazilian farmers selling grains which increased volumes for Bunge – a key metric of profitability for the ABCD grain traders. When the vast network of grain elevators, mills, rail cars and barges are left idle, these companies begin to lose money.
Bunge’s fertiliser recorded a loss over the quarter due to lower sales volumes and margins in Argentina after farmers planted less maize and wheat while in Brazil, fertiliser imports also declined as well as the negative impact of currency when reporting Brazilian sales.
In the group’s sugar & biofuel division, lower sugar prices negatively affected performance. Despite higher volumes of sugarcane, prices and margins were much lower than previous years. Bunge said its biofuel business were in line with last year as demand for ethanol in Brazil remains strong.
Bunge said the results from its food & ingredients division were negatively impacted by lower margins in US dollars and volumes due to the rapid contraction of consumer demand, particularly from the food service channel.
Read more
Bunge – a critical link in the food chain
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