Business Description
Bunge Global SA is a leading global agribusiness and food company with integrated operations that span from farmer to consumer . The company operates through four main segments: Agribusiness, Refined and Specialty Oils, Milling, and Sugar and Bioenergy . Bunge Global SA is involved in purchasing, storing, transporting, processing, and selling agricultural commodities like oilseeds and grains, as well as producing and selling edible oil products . The company's operations are geographically diverse, with significant activities in North and South America, Europe, and Asia-Pacific .
- Agribusiness - Involves purchasing, storing, transporting, processing, and selling agricultural commodities like oilseeds and grains.
- Refined and Specialty Oils - Produces and sells edible oil products.
- Milling - Processes wheat and corn into milled products.
- Sugar and Bioenergy - Comprises Bunge's 50% interest in BP Bunge Bioenergia.
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Q2 2024 Summary
What went well
- Bunge is making significant progress towards closing the strategic acquisition of Viterra, expecting to conclude the transaction in the next several months, which will enhance the company's capabilities and create a more complete company post-closing.
- The divestment of the non-core sugar and bioenergy joint venture with BP will release resources and allow Bunge to focus on its core businesses, strengthening its long-term strategy.
- Anticipated increase in farmer selling due to larger crops and favorable conditions could provide upside opportunities, positively impacting Bunge's operations.
What went wrong
- Regulatory hurdles and potential delays in the Viterra acquisition could impact Bunge's growth plans. The company is still engaging with major jurisdictions like the EU, Canada, and China for approvals, and some conversations are confidential, suggesting uncertainties in the closing timeline.
- Merchandising earnings are operating below baseline due to challenging market conditions. Factors such as smaller crops, slow farmer selling, and pressure on logistics have hurt margins, impacting Bunge's profitability in this segment.
- Low visibility and uncertainty in Q3 and Q4 earnings due to low liquidity and lack of coverage. Bunge mentioned there's "no liquidity yet and very low visibility" for Q4, which could affect future financial performance.
Q&A Summary
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Viterra Acquisition Progress
Q: What's the status of regulatory approvals for Viterra deal?
A: Bunge is making progress with the Viterra acquisition, having received clearances from the majority of jurisdictions. They are currently engaging with the EU, Canada, China, and a few others, expecting to conclude the process in the next several months. Discussions are confidential, but any required divestitures are not expected to have meaningful financial impact. -
Viterra Financial Performance
Q: How has Viterra's recent performance met expectations?
A: Viterra continues to perform well, and Bunge remains confident in the transaction. While they cannot share specifics due to operating separately until close, Bunge is impressed with Viterra's capabilities and believes the transaction will enhance future growth. -
Conservative Guidance Explanation
Q: Why does guidance seem conservative despite strong crush margins?
A: Bunge raised full-year guidance to approximately $9.25 per share, reflecting overperformance in the first half. Although Q3 margins are visible and some have been locked in, Q4 margin curves are very inverted with little visibility. The company remains cautious due to spot behavior of farmers and consumers, which justifies the conservative guidance. -
Share Repurchase Plans
Q: Will share buybacks continue before Viterra closes?
A: Bunge is unlikely to repurchase shares prior to the Viterra transaction closing due to leverage commitments and targets. They remain committed to the repurchase program and expect to execute it post-close, potentially utilizing proceeds from the sugar business sale. -
Non-Core Business Divestiture
Q: How did the sugar business sale come about, and are you satisfied?
A: Bunge had planned to exit the sugar business and, when timing and values aligned, proceeded with the sale. They are pleased with the transaction price and anticipate closing it by year-end, which will unlock capital and resources. -
Merchandising Earnings Outlook
Q: Has the outlook for Merchandising earnings changed?
A: Bunge acknowledges that Merchandising earnings have been below the normalized range of $75 to $100 million per quarter due to challenging market conditions with slow farmer selling and reduced margins. However, they view this as a market transition phase and expect opportunities to improve as markets rebalance. -
Capital Expenditure Plans
Q: What are your CapEx plans for 2025?
A: Bunge expects 2025 capital expenditures to be around $1.9 to $2 billion, up from the high end of the $1.4 billion range in 2024, as major projects reach full swing. They anticipate a significant drop, potentially up to 50%, in CapEx by 2026 as these projects near completion. -
Farmer Selling Trends
Q: Where are we in farmer selling slowdown?
A: The transition to lower prices has led to slower farmer selling, but Bunge expects improvement as new crops are produced and farmers adjust to market conditions. Factors like weather and currency will influence future selling, but the company believes the situation is unfolding as expected. -
Managing Challenging Margins
Q: What internal levers can you pull in tough margin environments?
A: Bunge leverages its global platform to operate flexibly, running assets hardest where margins are favorable. The company's improved execution and discipline allow it to manage risks appropriately and capitalize on opportunities despite challenging conditions. -
Refined Products Performance
Q: What's driving outperformance in Refined Products?
A: Bunge's Refined Oils segment exceeded expectations due to factors like stronger energy demand in the U.S. and tight cocoa butter supply benefiting tropical oils. The team effectively capitalized on these opportunities, resulting in better-than-expected performance. -
Coverage for Q3 and Q4
Q: How covered are you for Q3 and Q4?
A: Bunge is largely covered for Q3, particularly in canola and soy, with some exposure in sun due to crop effects. This coverage supports confidence in the near-term outlook, although visibility for Q4 remains low due to inverted margin curves. -
Argentina Performance
Q: What happened in Argentina in Q2, and what's the outlook?
A: Despite some opportunities from sporadic farmer selling, margins in Argentina were not as robust as some expected. Slow selling and government policies affected performance. For the second half, the outlook depends on farmer behavior and policy developments. -
Financing Viterra Acquisition
Q: How are you approaching financing for the Viterra deal?
A: Bunge has syndicated debt commitments in place to finance the Viterra acquisition. They are set in terms of initial financing allocation and have planned for any adjustments post-close. The company is prepared for the transaction without needing pre-financing. -
Decoupling Internal Improvements
Q: Can you decouple internal improvements from market environment?
A: Bunge believes its operational enhancements over the past years have made it a stronger company, less dependent on market conditions. They continue to focus on continuous improvement, asset optimization, and executing well even in challenging environments. -
Farmer Selling Impact on Merchandising
Q: How does farmer selling affect Merchandising?
A: Slow farmer selling has pressured Merchandising margins as producers hold onto inventory in a lower price environment. However, Bunge expects that as farmers adjust to new price levels and crops develop, marketing activity will increase, improving Merchandising prospects.
Key Metrics
Revenue by Segment - in Millions of USD | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
---|---|---|---|---|---|---|
Agribusiness | - | - | 42,764 | 9,740 | 9,657 | 9,292 |
- Processing Products | - | - | 31,298 | - | - | - |
- Merchandising Products | - | - | 11,466 | - | - | - |
Refined and Specialty Oils | - | - | 14,603 | 3,240 | 3,121 | 3,158 |
Milling | - | - | 1,896 | 381 | 401 | 407 |
Sugar and Bioenergy | - | - | 235 | 43 | 49 | 38 |
Corporate & Other | - | - | 42 | 13 | 13 | 13 |
Total Revenue | - | - | 59,540 | 13,417 | 13,241 | 12,908 |
Revenue by Geography - in Millions of USD | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
Europe | - | - | 24,333 | - | - | - |
United States | - | - | 15,819 | - | - | - |
Asia-Pacific | - | - | 10,098 | - | - | - |
Brazil | - | - | 4,771 | - | - | - |
Argentina | - | - | 1,386 | - | - | - |
Canada | - | - | 2,606 | - | - | - |
Rest of World | - | - | 527 | - | - | - |
Total Revenue | - | - | 59,540 | - | - | - |
KPIs - Metric / Quarter | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
**Volumes (Agribusiness) [Thousand Metric Tons]** | 20,522 | 20,522 | - | 20,192 | 20,579 | 19,892 |
**Volumes (Refined & Specialty Oils) [Thousand Metric Tons]** | - | 2,272 | - | 2,195 | 2,300 | 2,334 |
**Volumes (Milling) [Thousand Metric Tons]** | - | 836 | - | 874 | 971 | 961 |
**Highest Daily Aggregated Position [$ Million]** | 459 | 459 | - | 166 | 530 | 762 |
**Lowest Daily Aggregated Position [$ Million]** | 502 | 502 | - | 319 | 407 | (407) |
**Agricultural Commodities Forwards (Long) [Metric Tons]** | 25,588,125 | 25,588,125 | - | 37,576,176 | 21,704,818 | 22,752,408 |
**Agricultural Commodities Forwards (Short) [Metric Tons]** | (34,163,143) | (34,163,143) | - | (31,425,698) | (29,689,276) | (31,474,803) |
**Natural Gas Futures [MMBtus]** | - | 12,715,588 | - | 12,560,498 | 13,477,273 | 10,231,918 |
**Electricity Futures [Mwh]** | - | (281,511) | - | (240,214) | (63,853) | 67,321 |
**Energy - CO2 Futures [Metric Tons]** | - | 675,000 | - | 300,000 | 56,000 | 245,000 |
Executive Team
Questions to Ask Management
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Given the limited visibility and liquidity in Q3 and Q4, especially with customers and farmers being slow to buy or sell, how are you addressing the challenges in forecasting and securing margins for these crucial quarters, and what strategies are in place to mitigate the risks associated with this uncertainty?
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You mentioned that divesting your interest in the sugar & bioenergy joint venture in Brazil allows you to focus on core businesses; can you elaborate on why this business is no longer aligned with your long-term strategy and how this divestment will impact your overall portfolio and future earnings?
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With the ongoing integration planning for the Viterra transaction adding strain to both teams during a challenging external environment, how confident are you in realizing the anticipated benefits of the merger, and what measures are being taken to ensure a smooth integration despite regulatory hurdles?
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Despite overperforming in the first half and improved gross margins leading you to raise the full-year adjusted EPS guidance to approximately $9.25, why does the guidance appear conservative given the current crush margin environment, and what factors are causing caution about the second half, particularly Q4?
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The refined products segment continues to exceed expectations due to both fuel and edible oil demand and benefits from tighter cocoa butter supply; how sustainable is this outperformance, and what steps are you taking to capitalize on these market conditions while mitigating potential risks?
Past Guidance
Q2 2024 Earnings Call
- Issued Period: Q2 2024
- Guided Period: FY 2024
- Guidance:
- Adjusted EPS: Approximately $9.25 .
- Adjusted Annual Effective Tax Rate: 22% to 25% .
- Net Interest Expense: $280 million to $310 million .
- Capital Expenditures: $1.2 billion to $1.4 billion .
- Depreciation and Amortization: Approximately $450 million .
- Agribusiness: Results in line with previous outlook, higher processing offset by lower merchandising, both down from last year .
- Refined and Specialty Oils: Up from previous outlook, down from last year .
- Milling: Similar to previous outlook, up from last year .
- Corporate and Other: Similar to previous outlook .
- Non-Core (Sugar & Bioenergy Joint Venture): Down slightly from previous outlook, significantly down from last year .
Q1 2024 Earnings Call
- Issued Period: Q1 2024
- Guided Period: FY 2024
- Guidance:
- Adjusted EPS: Approximately $9 .
- Adjusted Annual Effective Tax Rate: 22% to 25% .
- Net Interest Expense: $280 million to $310 million, down from previous $300 million to $330 million .
- Capital Expenditures: $1.2 billion to $1.4 billion .
- Depreciation and Amortization: Approximately $450 million .
- Agribusiness: Similar to previous outlook, down from last year .
- Refined and Specialty Oils: Similar to previous outlook, down from last year .
- Milling: Similar to previous outlook, up from last year .
- Corporate and Other: Similar to previous outlook, up from last year .
- Noncore Sugar & Bioenergy Joint Venture: In line with previous outlook, significantly down from last year .
Q4 2023 Earnings Call
- Issued Period: Q4 2023
- Guided Period: FY 2024
- Guidance:
- Adjusted EPS: Approximately $9 .
- Adjusted Annual Effective Tax Rate: 21% to 25% .
- Net Interest Expense: $300 million to $330 million .
- Capital Expenditures: $1.2 billion to $1.4 billion .
- Depreciation and Amortization: Approximately $450 million .
- Agribusiness: Down from last year's record, lower processing margins .
- Refined and Specialty Oils: Down from last year .
- Milling: Up from last year .
- Corporate and Other: Up from last year .
- Noncore (Sugar and Bioenergy Joint Venture): Down considerably from last year .
Q3 2024 Earnings Call
- Issued Period: Q3 2024
- Guided Period: N/A
- Guidance: The documents do not contain information about Bunge's guidance from the Q3 2024 earnings call. The available information is from the Q2 2024 earnings call, so no guidance details are available for Q3 2024.
Competitors
Competitors mentioned in the company's latest 10K filing.
- Archer Daniels Midland Co. (ADM) - Major competitor in Agribusiness and Refined and Specialty Oils segments .
- Cargill Incorporated (Cargill) - Major competitor in Agribusiness, Refined and Specialty Oils, and North American corn milling .
- Louis Dreyfus Group (Louis Dreyfus) - Major competitor in Agribusiness .
- Glencore - Competitor in Agribusiness .
- Wilmar International Limited (Wilmar) - Competitor in Agribusiness and Refined and Specialty Oils segments .
- COFCO International (COFCO) - Competitor in Agribusiness .
- AAK AB - Competitor in Refined and Specialty Oils segment .
- Fuji Oil Co. Ltd. - Competitor in Refined and Specialty Oils segment .
- M. Dias Branco - Major competitor in Brazil's wheat milling .
- J. Macedo - Major competitor in Brazil's wheat milling .
- Moinho Anaconda - Major competitor in Brazil's wheat milling .
- Grande Moinho Cearense - Major competitor in Brazil's wheat milling .
- Didion Inc. - Competitor in North American corn milling .
- SEMO Milling, LLC - Competitor in North American corn milling .
- Life Line Foods, LLC - Competitor in North American corn milling .
- Gruma S.A.B. de C.V. - Competitor in North American corn milling .
- Cosan Limited/Raizen - Major competitor in Brazilian sugar and ethanol production .
- São Martinho S.A. - Major competitor in Brazilian sugar and ethanol production .
- Biosev (a subsidiary of Louis Dreyfus) - Major competitor in Brazilian sugar and ethanol production .
- British Sugar PLC - Major international competitor in sugar production .
- Südzucker AG - Major international competitor in sugar production .
- Tereos S.A. - Major international competitor in sugar production .
- Sucden S.A. - Major international competitor in sugar production .
- ED&F Man Limited - Major international competitor in sugar production .
Latest news
Recent developments and announcements about BG.
Financial Actions
Debt Issuance
Bunge Global SA has recently amended its existing trade receivables securitization program. This amendment, known as the Twenty-Seventh Amendment to the Receivables Transfer Agreement, was executed on December 3, 2024. The amendment extends the termination date of the agreement by an additional 364 days, now set to end on December 16, 2025. This extension is part of Bunge's strategy to manage its financial obligations and liquidity more effectively. The securitization program involves Bunge selling its trade receivables to a special purpose vehicle, which in turn issues securities backed by these receivables to investors. This arrangement helps Bunge to improve its cash flow and reduce balance sheet liabilities. The amendment does not change other terms and conditions of the securitization program, which includes customary representations, warranties, and covenants .