Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bunge Global SA (BG, Financial) delivered solid adjusted EBIT, reflecting an improved margin environment in some regions during the second half of the quarter.
- The regulatory approval process for the Viterra transaction is progressing well, with the bulk of approvals already obtained.
- Bunge Global SA (BG) expects full-year adjusted EPS of approximately $9.25, indicating confidence in their financial outlook.
- The company generated $895 million of adjusted funds from operations in the first half of the year, showcasing strong cash flow.
- Bunge Global SA (BG) is making significant progress on strategic initiatives, including the sale of its interest in the Sugar and Bioenergy joint venture in Brazil to BP.
Negative Points
- Reported second-quarter earnings per share were significantly lower at $0.48 compared to $4.9 in the same quarter of 2023.
- Adjusted EPS for the quarter was $1.73, down from $3.72 in the prior year, indicating a decline in profitability.
- Agribusiness processing results were down from last year, with higher results in Europe offset by lower results in North and South America and Asia.
- Merchandising results were lower, primarily driven by global grains, with volumes more than offset by lower margins.
- The company's non-core sugar and bioenergy joint venture results were negatively impacted by lower Brazil ethanol prices, which more than offset higher sugar prices.
Q & A Highlights
Q: Can you explain the drivers behind the updated guidance of $9.25 EPS for 2024?
A: Greg Heckman, CEO: We overperformed in the first half, and improved crush margins late in Q2 gave us visibility into Q3. However, Q4 margin curves are very inverted with little visibility, leading us to maintain a conservative guidance of approximately $9.25 EPS.
Q: What is the status of the regulatory approvals for the Viterra transaction?
A: Greg Heckman, CEO: We have received the majority of the required clearances and are currently engaging with the EU, Canada, China, and a few other jurisdictions. We expect to conclude the process in the next several months.
Q: Can you provide more color on the merchandising side of Agribusiness, particularly in Brazil and Argentina?
A: Greg Heckman, CEO: In Argentina, crop recovery has been slow due to lower prices and government policies. In Brazil, a smaller crop and opportunistic farmer selling have pressured margins. North America has also seen slower farmer selling due to balanced S&D and improving livestock margins.
Q: What contributed to the stronger-than-expected performance in Refined and Specialty Oils?
A: Greg Heckman, CEO: We benefited from tight cocoa butter supply in our tropical oils and stronger-than-expected energy demand in the US. Lower prices have also driven demand for soybean oil in both food and energy sectors.
Q: Are you planning any share repurchases before the Viterra transaction closes?
A: John Neppl, CFO: We are unlikely to commit to share repurchases before the Viterra close due to leverage commitments and targets. However, we remain committed to the program and expect to execute post-close, potentially increasing it with proceeds from the sale of our sugar business.
Q: How do you see farmer selling evolving in the second half of the year?
A: Greg Heckman, CEO: Farmers have built inventories and are waiting to see how weather and S&D develop. We expect more marketing as the North American crop develops and as South American farmers react to North American price developments and currency movements.
Q: What are your capital expenditure plans for 2025 compared to 2024?
A: John Neppl, CFO: We expect 2025 CapEx to be up from this year, closer to $2 billion, due to major projects in full swing. However, we anticipate a significant drop-off in 2026, potentially up to 50%, excluding any new opportunities.
Q: How did the recent financials reported by Viterra align with your expectations?
A: Greg Heckman, CEO: Viterra continues to perform well despite the challenging environment. We remain impressed by their team and capabilities and feel very good about the transaction.
Q: Can you provide details on the divestment of your non-core sugar business?
A: Greg Heckman, CEO: We declared our intention to exit the sugar business early on and supported its improvement. The timing and values aligned, leading to the transaction. We look forward to closing it and reallocating resources to our core businesses.
Q: What financing plans do you have in place for the Viterra transaction?
A: John Neppl, CFO: We have syndicated the debt and secured commitments to finance the transaction. There will be some fine-tuning post-close, but the initial allocation is set.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
