Bunge Global - Q3 2024
October 30, 2024
Transcript
Greg Heckman (CEO)
Good day and welcome to the Bunge Global SA third quarter 2024 earnings release and conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Ruth Ann Wisener. Please go ahead.
Ruth Ann Wisener (Head of Investor Relations)
Thank you, Operator, and thank you for joining us this morning for our third quarter earnings call. Before we get started, I want to let you know that we have slides to accompany our discussion. These can be found at the Investor Center on our website at bunge.com under Events and Presentations. Reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measures are posted on our website as well. I'd like to direct you to slide 2 and remind you that today's presentation includes forward-looking statements that reflect Bunge's current view with respect to future events, financial performance, and industry conditions. These forward-looking statements are subject to various risks and uncertainties.
Bunge has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation, and we encourage you to review these factors. On the call this morning are Greg Heckman, Bunge's Chief Executive Officer, and John Neppl, Chief Financial Officer. I'll now turn the call over to Greg.
Greg Heckman (CEO)
Thank you, Ruth Ann, and good morning, everyone. Our team delivered a strong third quarter thanks to their ability to react quickly to shifting market dynamics to capture opportunities as they emerged. Our focused approach to leveraging our global platform enabled us to serve our customers at both ends of the value chain: farmers and end consumers. We're making great progress on integration planning for our announced combination with Viterra. The teams are working well together, affirming our confidence that we will be a more complete one combined company. Their commitment will ensure that we can effectively serve our customers from day one. We also continue to engage with the relevant authorities as we work toward gaining the few remaining regulatory approvals. Since our last call, we received conditional clearance from the European Commission, and we're well into the process of meeting the conditions.
Conversations in the other jurisdictions are constructive. We do not see any issues that would materially impact the economics of the deal. We expect to close the transaction later this year, early 2025. In addition to progressing on the Viterra transaction, we also completed other strategic priorities, including closing the sale of our interest in our non-core sugar and bioenergy joint venture in Brazil to our partner BP. According to our results, we delivered another quarter of solid Adjusted EBIT. We exceeded our expectations for the quarter. Great execution by the team led to stronger results in our core segments. Similar to the second quarter, we saw shifting margin environments across the globe with improved margins in some regions, offsetting more muted conditions in others.
Since we reported the second quarter, we purchased $200 million of Bunge shares, making progress against the repurchase plan we outlined following the announcement of the Viterra transaction. Looking ahead, many of the same market dynamics remain in place, which we expect to continue for the rest of the year. Based on what we see in the markets and the forward curves today, we now expect full-year adjusted EPS to be at least $9.25. And with that, I'll turn it over to John for a deeper look at our financials and outlook. John?
John Neppl (CFO)
Thanks, Greg, and good morning, everyone. Let's turn to the earnings highlights on slide 5. Reported third quarter earnings per share is $1.56 compared to 2.47 in the third quarter of 2023. Reported results include an unfavorable mark-to-market timing difference of $0.16 per share and a negative impact of $0.57 per share, primarily related to transaction and integration costs associated with our announced business combination with Viterra. Adjusted EPS was $2.29 in the third quarter versus $2.99 in the prior year. Adjusted core segment earnings before interest and taxes, or EBIT, was $561 million in the quarter versus $735 million last year. In agribusiness, processing results of $291 million in the quarter were down from last year. Higher results in South America and European soy crush were more than offset by lower results in North America, European soft seeds, and Asia.
In merchandising, higher results were driven by improved performance in our financial services, ocean freight, and global oils businesses, more than offsetting lower results in global grains. Refined specialty oils performed well but down from a strong prior year as higher results in Asia were more than offset by lower results in North and South America. Results in Europe were in line with last year. In milling, slightly higher results in North America were more than offset by lower results in South America as high raw material costs pressured margins. Corporate and other improved from last year. The increase in corporate expenses was primarily driven by lower performance-based compensation. Other results were largely related to Bunge Ventures and our captive insurance program. In our non-core sugar and bioenergy joint venture, higher sugar and ethanol volumes were more than offset by higher operating costs and lower ethanol prices.
Lower results also reflected foreign exchange translation losses on U.S. dollar-denominated debt in the quarter compared to translation gains in the prior year. The first 9 months of the year, reported income tax expense was $236 million compared to 495 million in the prior year. The increase was primarily due to lower pre-tax income. Net interest expense of $94 million in the quarter was in line with last year. Let's turn to slide 6, where you can see our adjusted EPS and EBIT trends over the past 4 years along with the trailing 12 months. Strong performance over the period reflects a combination of favorable market environment and excellent execution by our team. The recent trend reflects more balanced and less volatile markets translating into lower earnings. Slide seven details our capital allocation. Year to date, we generated approximately $1.3 billion in adjusted funds from operations.
After allocating $295 million to sustaining CapEx, which includes maintenance, environmental health, and safety, we have $988 million of discretionary cash flow available. Of this amount, we paid $287 million in dividends, invested $592 million in growth and productivity-related CapEx, about two-thirds of which relates to our large multi-year greenfield investments, and repurchased $600 million in Bunge shares. This resulted in the use of $491 million of previously retained cash flow. Based on our current progress on our greenfield projects, we now expect that we will end the year toward the higher end of CapEx range of $1.2-1.4 billion, or slightly above. Moving to slide 8, at quarter-end, readily marketable inventories, or RMI, exceeded our net debt by approximately $2.8 billion. Our adjusted leverage ratio, which reflects our adjusted net debt to adjusted EBITDA, was 0.5 times at the end of the quarter.
Slide nine highlights our liquidity position. At quarter-end, we had committed credit facilities of approximately $8.7 billion, all of which was unused at the end of the quarter, providing ample liquidity to manage our ongoing capital needs. In addition, we had a cash balance of $2.8 billion, accumulated in large part as a result of $2 billion of cash proceeds from the U.S. public debt offering that we closed in September. These amounts, in addition to $6 billion of term loan commitments that we had secured last year, will be used to fund the Viterra transaction. Please turn to slide 10. In trailing 12 months, adjusted ROIC was 13.8%, well above our RMI-adjusted weighted average cost of capital of 7.7%. ROIC was 11.3%. While returns have declined from recent highs, they remain well above our weighted average cost of capital of 7%. Moving to slide 11.
In trailing 12 months, we produced discretionary cash flow of approximately $1.4 billion and a cash flow yield of 12.3% compared to our cost of equity of 8.2%. Please turn to slide 12 in our 2024 outlook. As Greg mentioned in his remarks, taking into account year-to-date results, the current margin environment forward curves, and the loss of income due to the sale of our ownership in the sugar JV, we now expect full-year 2024 adjusted EPS to be at least $9.25. In agribusiness, full-year results are forecasted to be up from our previous outlook, reflecting the better-than-expected third quarter, but down compared to last year. In refined and specialty oils, full-year results are expected to be up from our previous outlook, but down compared to last year's record performance.
In milling, full-year results are expected to be down from our previous outlook, reflecting the lower-than-expected third quarter, but up from last year. In corporate and other, full-year results are expected to be similar to our previous outlook. In non-core, full-year results are expected to be down considerably from our previous outlook due to the lower-than-expected third quarter and the loss of income from the sale of our ownership in the sugar JV, which closed on October 1st. Additionally, the company currently expects to fall ahead for 2024. Adjusted annual effective tax rate in the range of 22%-24, net interest expense in the range of $285-305 million, capital expenditures in the upper end of the range of $1.2-1.4 billion, and depreciation and amortization of approximately $450 million. With that, I'll turn things back over to Greg for some closing comments.
Greg Heckman (CEO)
Thanks, John. So before turning to Q&A, I wanted to offer a few closing thoughts. Looking ahead, what impresses me most is our team's commitment to day-to-day execution along with continuous improvement. We've done a lot of hard work to strengthen our business and operations so that we can continue to provide quality products and services to our customers at both ends of the value chain. We're always looking for additional opportunities to get better. We've spent significant capital improving the facilities and operations across our outstanding global footprint, and our team is making sure those investments pay off in improved efficiency and reliability. For instance, our U.S. plants had their best soy crush performance for a crop year ever, and we continue to run at high utilization rates. We also reached year-to-date record volumes in global rapeseed crushing and refining.
In the quarter, we broke ground on the expansion of our palm and specialty oils facility in Avondale, Louisiana, that we purchased last year. This facility, which has multi-oil capabilities, builds on our ability to provide specialty oils to our food customers in North America and is already exceeding our initial performance expectations. We're excited to further grow operations in this location that has significantly improved our reach across North America. In today's often complicated global environment, strengthening all areas of our business is more important than ever. Our combination with Viterra will further accelerate our diversification across assets, geographies, and crops, providing us with more optionality to help address the world's food security needs. While we always look for opportunities to improve, we are well-positioned to deliver on our critical mission of connecting farmers to consumers to deliver essential food, feed, and fuel to the world.
With that, we'll turn to Q&A.
Operator (participant)
Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. The first question comes from Andrew Strelzik with BMO. Please go ahead.
Andrew Strelzik (Analyst)
Hey, good morning. Thanks for taking the questions. I guess I wanted to start on crush margins. There's been a lot of concern in the market throughout this year on what would happen with crush margins, but the curve has only strengthened, at least for the U.S., for the rest of this year and also 2025. So I guess the question is, how are you thinking about crush margins from here in terms of durability and the ability to capture that margin strength? I don't know if there are offsets in other regions, excuse me. And then the press release says that you passed through the 3Q processing strengths to the guidance, but I didn't know if you made any changes to your assumptions for the fourth quarter.
Greg Heckman (CEO)
Yeah, let me start, and John can fill in. I'd say that the headline has been demand is good. So we've got livestock economics have been good, really everywhere except China, where chicken's been good, but pork is bigger than the laggard. And so very supportive on meal demand. And then soy oil is competitive globally. And some of the support there, of course, is palm, but just overall good demand. And so we've seen Europe good demand, and part of that's lower soybean meal shipments out of South America. Brazil, you've seen a little bit of slower spot farmer selling and working through some of the logistical commitments down there. Argentina's been margin challenged, but the margin's been good enough to cover fixed costs. So we've seen Argentina crushing, even with farmers continuing to retain their ownership, kind of waiting for the next round of policy incentives.
And then the U.S. continued to improve on strong soybean meal demand. And part of that has been less flows out of Argentina, but it's been our own big soy crop. And then I touched on China, which the margin has been very volatile there, really driven by softer and weak demand. So that's what we've seen carry in. And I don't think, as usual, we don't see a lot of visibility beyond the first half. But right now, demand feels pretty good for meal and oil.
John Neppl (CFO)
Yeah. And Andrew, maybe just to touch on the outlook for Q4 and whether we've had any changes. I think really the only couple of things I'd mentioned there, one is when we looked at, if you look at the overperformance in our core business in Q3, we think we probably pulled a little bit of earnings out of Q4, just given the market and customers and uncertainty around EUDR. We think maybe we pulled maybe $0.15 out of Q4 into Q3. And then the other one, of course, was with the sale of sugar. We took about $0.15 of earnings out of our Q4 forecast.
Andrew Strelzik (Analyst)
Got it. Okay. Okay. That's helpful. And then I guess if I zoom out, and I know you're not giving 2025 guidance at this point, and obviously a lot of work to do around acquisitions and buybacks going forward as well. But if I just look at the base business at current levels, I guess crush appears to be above the baseline. You've seen the refined continues to hold in better. So I guess just from a high level, how would you frame the setup for into 2025, I guess, relative to maybe a normal type of year for Bunge? Thanks.
Greg Heckman (CEO)
And I was kind of specifically speaking to soy. I probably should mention softs is probably the one area that what we've seen the last few years on the soft seed side, we've got a lot of weather impacting the Black Sea and European sun and rape production.
So that's not only soy margins, but you've got a farmer who's going to be very short there with a smaller crop. Now, in Canada, we also are seeing canola margins continue to be good, but they're off from the higher margins we enjoyed in the past. And some of that's due to a smaller crop. So our soft seed crushing is a smaller business, but that's definitely softer than what we've seen the last few years. So that would be part of the offset to the positive environment we're seeing in soy.
John Neppl (CFO)
Yeah. I think, Andrew, in terms of the baseline, how we think about that in 2025, I would say refining and specialty oils has been pretty resilient. I think probably logically we'll perform a little better than baseline in 2025. Crush, we'll see. We're off to a good start. Crush margins are pretty resilient in the first half of the year. We'll see how that progresses. Probably some opportunity there. Merchandising has continued to be performing a little below baseline. That one, we'll see what kind of volatility we get in the markets and opportunity. Of course, we're taking sugar now out of our baseline. With what we expect to do on share buybacks relative to sugar, that should be net neutral to slightly positive.
Andrew Strelzik (Analyst)
Great. Thank you very much.
Operator (participant)
The next question comes from Salvatore Tiano with Bank of America. Please go ahead.
Salvatore Tiano (Analyst)
Yes. Thank you very much. I want to ask a little bit about your customers on the fuel side. And specifically, firstly, there was an article earlier this week on Bloomberg about how you and some other big crushers are actually slowing down soybean purchases and crushing volumes because you're going to see less purchases from your fuel customers. At the same time, so if you have any comments on that and your strategy there, what you're seeing in terms of demand in Q4 and perhaps in Q1 as the tax credit landscape changes, and also what other feedback you have, I guess. On the other hand, one of the major customers on the fuel side has mentioned that they're using higher CI score feedstocks right now before they make a more major switch in Q1 to lower CI score feedstocks. So what are you seeing there?
What are your thoughts on this and the risk it poses for next year?
Greg Heckman (CEO)
Sure. Yeah. Let me divide that into a couple of pieces. Let me talk first about the Bloomberg article. We did see that, and that is not accurate. We continue to have our purchases from farmers be very strong. In fact, if you compare this marketing year, it's higher than the last several years. So that just wasn't accurate. As far as the fuel demand and the customers, yeah, we do have some uncertainty here in the U.S. And I might start at a high level and finish with the U.S., but while we had a lot of lack of clarity around U.S. policy, globally, things feel better, right? You got Brazil talking. They put in the law on the Fuel of the Future. So we're seeing them move from B14 here in 2024 to B15 in 2025 and moving towards B20 in 2030. So they'll go up 1% annually.
You've got Indonesia that just went from B35 and committed to go to B40. And then in Europe, there's some support put in place now for SAF and maritime fuels. And some of those have UCO caps, which will then lead to veg oils as well. So I think it feels better overall. Now, back to the U.S., with our policy uncertainty and the switch from a blender's credit to a producer's credit and uncertain RVO, what we've got out there, we got billions of dollars of assets that are proven technology in the ground on traditional biodiesel, renewable diesel, and even some SAF that's running at really low capacity utilization because we haven't got all the policy and the incentives right yet. And we remain positive that that'll get worked out, right?
Because one of the things that the policymakers said they wanted to see is to make sure that we could have the supply there. And I think what the market has shown, it's done its work, and we've shown that we do have the supply. Capacity has been added. The market works, and we've been able to provide for that industry. So we remain positive that that will get worked out over the next year, and that'll be positive for demand from the fuel sector, from the renewable feedstocks here in the U.S.
Salvatore Tiano (Analyst)
Perfect. And if I may just follow up, I guess technically with the new credit landscape, if someone can only use lower CI feedstocks, they would fully go away from soybean oil. But the main issue is obviously logistical and supply challenges. So do you have any views on the supply and the supply restrictions and limitations for tallow and used cooking oil and how much essentially of the feedstock mix this could be next year or the next few years?
Greg Heckman (CEO)
I think I would start again with, if you look over the last few years, the market works, and so we've seen the low CI feedstocks as well as the vegetable oils, and as policy shifts, it finds its place to the right demand on the globe, so there is more demand coming than any one feedstock can address.
John Neppl (CFO)
Salvator, this is John. When you look at 45Z, of course, we were hoping that would get finalized this year. It may spill into Q1. A big part of that now is push from agricultural groups in the U.S., particularly farmers, to even the playing field and maybe provide either preference for U.S.-based supply or restrict the import of UCO and tallow and other feedstocks. That could have a pretty big impact on the farm economy, depending on the decision that's made. And obviously, we just want the U.S. farmer to have an even playing field. And we think that's important to get that right in the upcoming finalization of 45Z. But that will certainly drive how much foreign feedstocks come into the U.S. And it could be similar last year.
I don't know that it's hard to predict whether it'd be more than last year, but certainly, if the change has come that I think the farming groups are hoping for and I think we think is fair, it'll certainly provide some tailwind for the products that we supply the industry.
Salvatore Tiano (Analyst)
Thank you very much.
Operator (participant)
Next question comes from Tom Palmer with Citi. Please go ahead.
Thomas Palmer (Analyst)
Good morning, and thanks for the question. I wanted to just ask on Viterra, and thanks for the update on expected timing. Just on the business's recent results, does it affect at all how you look at the longer-term earnings power for the business, or should we look at kind of the details you laid out last summer as still largely holding? Thank you.
Greg Heckman (CEO)
I'd say absolutely not. We still have the confidence in this combination. It's a great fit. They are not in the same places we are. As we've had a chance to work on some of the integration planning, seeing that great team that they've got and seeing how these teams are working together, and they are as excited, I think, as all of us are to get this deal closed so we can all work together because there's just so much that we can't do at this point in the process. So we're excited about what it means for the long term. This is going to give us a lot of alternatives and ways to grow and to continue to serve our customers in a very differentiated way, and that's customers at both ends of the value chain.
John Neppl (CFO)
Tom, I'd maybe just add, while we're a little disappointed that things have taken this long to close, it has given us time to continue. We haven't stopped and just sat and waited. We've been continuing to fine-tune our planning, doing some things now that we would have maybe done after close, around readiness, around transition, around organizational design and integration, of course, synergy capture. We're focused on the things we can control around this transaction, and we're very excited about that. And as we mentioned before, we weren't totally surprised with Viterra's first half performance given kind of the broader market. But to Greg's point, this is about a long-term opportunity, and we feel very good together about the things we can control. And ultimately, the market environment will be what it is as we move forward.
But in the long run, we think this is a hit.
Thomas Palmer (Analyst)
Okay. Thank you for that. And then just one topic that had come up in previous quarters, and you did touch on it earlier, was just the lack of farmer selling in South America, I think, and how that's maybe there's offset that maybe hurts margin in South America, but does seem to be helping soy crush margins as we look at Europe and North America. Just any thoughts on the pace of farmer selling? Is there a point where that should really pick up as we move towards maybe this new harvest in the first half of 2025? Thanks.
Greg Heckman (CEO)
Yeah. We think that you probably are right. It'll be in the first half of 2025. One is that South American farmer gets a better idea in Argentina of how policy will shake out. Even if something's communicated here in 2024, there's not much of the year left to probably make much of a difference here. So I think first half 2025 will be key on that, and then in Brazil, where we've got some good rains and planting is really accelerating down there, I think we feel like we'll see another big crop there in South America. And I think that'll give some confidence to the producer, and then here in the U.S., of course, we're harvesting a real big bean crop right now. And so as we get to the end of that, we'll see how the producer they never like lower prices than prior year.
But ultimately, you've got to make some decisions and manage some risk. And we'll see that, I think, start to move here in the first half of next year.
Salvatore Tiano (Analyst)
Thank you.
Operator (participant)
The next question comes from Manav Gupta with UBS. Please go ahead.
Manav Gupta (Analyst)
Good morning. My question is on your growth CapEx. You're obviously spending on your growth projects. Help us understand what's the progress over there. When are the key startup dates for these growth projects? When do you expect them to come online and start making a material contribution to the EBITDA?
John Neppl (CFO)
Yeah. So we have 4 key large projects underway today. And I think that 2025 will really be the biggest year in terms of spending CapEx on those as those projects move toward finalization. I think realistically, on those projects, we're looking at late 2024 or, I'm sorry, late 2025 commissioning to early 2026. So not probably a lot of impact on 2025 results, just given the fact that you got to work through commissioning and bugs as you get these plants up and going. But so I think really we'll start to look for first half of 2026 for these to start contributing and expect all of them to be kind of running by second half. And so second half of 2026 is really how I'd see the addition to earnings from those projects from a run rate perspective.
Of course, once we complete those projects toward the end of 2025, early 2026, we'll start to see a more normalized CapEx level back half of 2026 and beyond.
Manav Gupta (Analyst)
Perfect. My follow-up here is a little bit you've also mentioned this, that although the deal has been delayed a little, it's given you more time to plan. So help us understand now when Viterra does close, do we expect some of those synergies to be realized earlier than expected? How has the timeline of moving the deal allowed you to plan better as you close on it?
John Neppl (CFO)
Yeah. It's really been around, I'll say, the organizational design and getting things ready and right for day one with no disruption. Unfortunately, despite the extended time frame, we still cannot get together commercially. And so we have not been able to accelerate any of the commercial planning and the commercial roles. But what we the commercial our role in the market together, that unfortunately, we have to wait till close. But we have been able to spend more time with the teams, make sure we're getting the right people in the right roles going forward. And I think we feel like a lot of the uncertainty sometimes that can happen right after close, we're addressing that stuff now so that people have focus and confidence the day we close a transaction and lower our risk of any kind of disruption in the day-to-day.
But again, unfortunately, we have not been able to accelerate the commercial planning side, which is really where we think the long-term opportunity is.
Manav Gupta (Analyst)
Thank you so much.
Greg Heckman (CEO)
Okay.
Operator (participant)
The next question comes from Heather Jones with Heather Jones Research. Please go ahead.
Heather Jones (Analyst)
Good morning. Thanks for the question.
Salvatore Tiano (Analyst)
Morning, Heather.
Heather Jones (Analyst)
Good morning. I had a question on bean oil and meal, but starting with bean oil. So given the biofuel policy uncertainty we've got in the U.S., demand for bean oil could be very depressed in late Q4 and Q1. And I was just curious if you think the export demand could be strong enough to offset that given soybean oil's attractive price relative to palm and rape. And also, do you see any potential logistical constraints to the U.S. handling that magnitude of exports?
Greg Heckman (CEO)
Yeah. I think you've got that right that soy oil is competitive globally right now, right, against palm and some of the soft oils, and we've now seen the U.S. be competitive again. I do think we can handle those logistics because the U.S. was always holding the residual stocks prior to some of the biofuels demand the last few years. We held the residual stocks for the world, and we did export as it was needed, so as the market's calling for that, I think we're in good position to do that, and that's one of the things that we feel good about on the oil demand side globally.
Heather Jones (Analyst)
Okay. Thank you. And then on meal. So that demand has been much stronger than expected this year. And it seems to be because of big step up in feed ration inclusion because animal numbers globally just aren't up that much. So when we look to 2025, I was wondering if you think there's room for additional sizable increases in ration inclusion, assuming that pricing is relatively attractive.
Greg Heckman (CEO)
Yeah. Soybean meal demand has been very good. And you've got less mid-proteins around. You've got a wheat crop that's not as competitive for feeding on the wheat side. And you've got the other if you look historically, when meal gets cheaper, people like to feed it. They like feeding meal. And when the numbers work and the animal profitability is up, which is the situation we're in right now, we see the inclusion rates go up. And I think that's the demand that we have seen this year in the U.S. and globally. So we kind of expect that to continue there into 2025. We can't see much past the first half, but that's what we see right now.
John Neppl (CFO)
Yeah. And Heather, I would just add that I think one of our strengths on the commercial side is our ability to market meal globally. And we actually market today more meal than we produce ourselves. So we've got a team that's very steeped in the experience of marketing meal globally. And as things change and as market demand ebbs and flows, I think our team is usually right on top of that.
Heather Jones (Analyst)
And if I could sneak in a clarifying question. So you guys probably have as good a visibility as anyone into feed profiles globally. I mean, could we see a situation in 2025 where we have an increase in inclusion rates as much as we did this year? I mean, I don't know if we're near a cap, or could we see another sizable step up?
Greg Heckman (CEO)
I think you've got to continue to watch how it sets up versus the competing. And what we do know right now is less wheat feeding, less mid-proteins. You've got some smaller seed crops. You don't make as much meal in the soft crush, but you've got Europe and Black Sea with some smaller seed crops, so some less meal there. So yeah, it's all part of the factors that are setting up the current situation we've got, which has been constructive. And we've all seen it in the numbers.
Heather Jones (Analyst)
Okay. Thank you so much.
Operator (participant)
The next question comes from Steven Haynes with Morgan Stanley. Please go ahead.
Steven Haynes (Analyst)
Hey, good morning. I maybe just want to ask a kind of follow-up question on the refined side of things. I think there was a comment before to an earlier question about being resilient and better than baseline in 2025. I think you're still kind of quite a bit above baseline where we are right now. So can you kind of help frame, I guess, what a bit better looks like and how we should be thinking about it next year?
John Neppl (CFO)
Yeah. I'll start, and Greg can jump in if you like. I think we certainly are seeing as expected. And what we contemplated in our long-term baseline was that refining premiums would moderate and that demand would go back more toward crude veg oil, especially for the energy side. I think what we've seen is a very strong and somewhat of a resilient market on the food side that's been very good. We had about a $400 million baseline for that business. And as you pointed out, we've been performing above that. And I think just given our increased capability in our portfolio and what we've seen on the food side, plus probably a little bit more resilient demand on energy, I think we feel like we're set. It's hard today to predict what that above baseline number is going to be.
I think we have to get a better handle on where things are headed from a policy standpoint. These things around 45Z and RVO and things like that could have an impact, certainly on even the refining versus crude piece of it. But ultimately, we feel pretty good about that business being on probably more solid footing than it's ever been in total when you look at the specialty side and the refined piece. Obviously, the refining, again, the energy piece of that, we did expect to moderate, but we've been very pleased with the food demand.
Steven Haynes (Analyst)
Got it. Thank you for the color. And then just on the meal side of things, there's been a bunch of capacity that's kind of come on in the U.S. this year. Our understanding is that it's not kind of fully running yet. It takes some time to kind of hit that run rate. Is the market kind of feeling the impact of this yet, or how should we think about it as even more supply is expected to come on in 2025? And there's some projects slated for 2026, yourself included. So yeah, how should we be thinking about the market's ability to, I guess, absorb the excess meal going forward?
Greg Heckman (CEO)
Yeah. The thing about meal, it's a very global market. I think John mentioned we market more than we produce. We continue to make investments. We've made investments in our PNW asset to be able to handle meal here in the U.S. and get it to export, so I think the investments will continue to be made to connect the supply to the demand globally. And as you said, those plants, they're not like flipping a light switch. They do come on, and so they kind of get dovetailed into the demand, and price does its work around the inclusion rates, so we think the market will do its work.
John Neppl (CFO)
Yeah. And maybe I just add one thing, Steven. Greg mentioned the PNW, where we're adding some capacity for export of meal. We're doing the same in the Gulf. So we have our big project, of course, our expansion with Chevron in the Gulf at Destrehan. Our adjacent export terminal, we're expanding the capacity of that to handle more meal to be exported from the U.S. So we've anticipated this for 2 or 3 years. And these projects are well underway and moving along. And we'll be well-positioned, as well-positioned as anybody, to get the stuff out in the market where it needs to go internationally.
Steven Haynes (Analyst)
Great. Thank you. Appreciate it.
Operator (participant)
The next question comes from Ben with Barclays. Please go ahead.
Hey, good morning. Greg, John, thanks for taking my question.
John Neppl (CFO)
Morning.
Just a few things for clarification. I think you said there's a $0.15 impact on the loss that you need to book for the bioenergy disposal. Was that something that you expected to happen in 3Q, and now it's just moved into 4Q for that implicit downgrade of that $0.15? That would be question number one. Then just question number 2, related to the timing of Viterra and the pending approvals, can you remind us which are the big jurisdictions that are still pending right now?
Yeah. I'll start with sugar, and Greg can talk about Viterra timing. So we had a forecast in for the full year for sugar because we really didn't know when it was going to actually close. The Q3 was simply underperformance. So we didn't have a good Q3 in sugar, as we highlighted. And then Q4, we lost about $0.15 of earnings that was in our prior forecast because of selling and closing on an acquisition. But we left that in there until we actually had certainty around close. So that's just reflective of the lost earnings for Q4. And then, of course, as I mentioned, you can see the results for Q3 that we were well below kind of where we expected.
Okay. Got it.
Overall second half, probably down $0.35, I would say, between Q3 and Q4 from what we had originally expected.
Just sugar.
Just sugar.
Okay.
Greg Heckman (CEO)
With the core business stepping up and covering that in the second half, so it's a better quality of earnings. We like the way it happened.
Well said. And then on the pending approval.
And then, on the regulatory.
Yeah.
Yeah. On the regulatory, since the last time we were all together, of course, we got the EU conditional approval where we've got to do some asset sales and pull out of Hungary. So we're working through that process currently and making good progress. In Canada, you may have seen there's a new transport minister there. We're engaged with them and making great progress, addressing all the questions and closing out the issues. We expect that to be in the relative near term. And then the other, of course, is in China. And we continue to work with the Chinese authorities. We have very productive discussions and are able to respond to all their questions. So again, we feel that should be hopefully here in the near term. And lastly, look forward to getting the regulatory approvals done.
As we said, in no scenario, we don't see anything that would be material to the economics of the transaction, and we just cannot wait to put these 2 great companies together and get these teams to work. Everybody is excited and feels like we've got our hands tied behind our back here and can't wait to get to the next stage.
Okay, and then Argentina, I mean, obviously, that's a post-close approval process, but there was some news just recently about an Argentine soy exporter that you were planning to take over, and that got kind of blocked out of bankruptcy. Has that any consequences on how you think about the post-close approval process in Argentina?
No. No, not at all. We, of course, we've been in Argentina a long time. We work closely with the authorities there. It's an important operation for us. So the appeal is just part of the process, the legal process down there. We weren't really surprised by it. It's kind of a technical issue, and we'll continue to work through the process, but no, we've always thought about those processes working in parallel.
Okay. Thank you.
Operator (participant)
This concludes the question and answer session. I would like to turn the conference back over to Greg Heckman for any closing remarks. Please go ahead.
Greg Heckman (CEO)
Thank you, so thanks again for joining us today, and we appreciate your interest in Bunge. I want to just close by thanking the team one more time for their dedication. Our performance is a testament to the quality of our people and the culture that we've built here at Bunge, and it's allowed us to execute on our day-to-day business, to maintain a relentless drive for continuous improvement, and to make great progress on the integration planning. I'm really as excited as ever about the future of Bunge and what we're going to be able to accomplish together with Viterra, so we look forward to speaking with you again soon, and have a great day.
Operator (participant)
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.