Bunge predicts lower-than-expected profit with fall in grain prices

Bloomberg—A Bunge (BG) reported a smaller-than-expected drop in first-quarter earnings, but the technology giant agribusiness said it had “limited visibility” as the sector faces falling grain prices and tighter profit margins in crushing.

Earnings per share — excluding some unrealized losses associated with the fair valuation of forward contracts and inventory — fell 6.7% from a year ago to $3.04, the St. Louis, Missouri-based company said. in a statement on Wednesday (24).

That compares with the $2.57 average of analyst estimates compiled by Bloomberg.

A Bunge recipe in the three-month period ending in March it shrank more than 12% from the previous year, to US$13.4 billion, below projections.

The company maintained the profit outlook for 2024 at US$9 per share, lower than what analysts projected.

“While we are off to a good start, we continue to have limited visibility into the second half of the year,” CEO Greg Heckman said in a statement.

Bunge shares fell 1.22% this Thursday (25) at around 11 am (Brasília time) after closing with a drop of 3.49% the day before. As of Wednesday, the stock had accumulated an accumulated gain of 27% compared to its lowest point in February.

Investors and crop processors, who in recent years have made huge profits from massive crop losses and disruptions caused by Russia’s invasion of Ukraine, are now being hit by lower prices amid a rise in global stocks and falling demand.

An increase in processing capacity soy us U.S it also pressures margins for meal and oil production, eroding profits for crushers.

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Still, Bunge saw profits in its oilseed processing business — which includes the origination and crushing of soybeans and canola — increase slightly from the previous year, driven by higher results in Europe and Asia.

This was more than offset by a drop in profits from marketing operations, which involve the negotiation and distribution of grains.

O Bloomberg Grain Indexwhich tracks soybean, corn and wheat futures, had the lowest average since 2020 in the first quarter.

The sector’s slowdown comes at a time when Bunge seeks to further expand and diversify its operations through the proposed acquisition of Viterra, backed by Glencore.

The company said Tuesday it expects the $8.2 billion deal to close mid-year, even as Canada’s antitrust regulator has raised concerns about how the combination will affect competition.

The company said about $400 million of its own shares were repurchased in the first quarter as part of a $2 billion plan.

See more at Bloomberg.com