A record soybean crop in top producer Brazil prompted one of the world’s largest agricultural commodities traders to boost its outlook for the year.
(Bloomberg) — A record soybean crop in top producer Brazil prompted one of the world’s largest agricultural commodities traders to boost its outlook for the year.
Bunge Ltd. raised its 2023 earnings guidance to at least $11.75 per share, up from a previous forecast of as much as $11, the company said in an earnings statement on Wednesday. Chief Financial Officer John Neppl also told analysts there could be even more upside. Shares rose as much as 6% in the New York, the most since the end of May.
The move comes after the St. Louis-based company beat second-quarter earnings projections by more than $1 a share. The company is also in the process of buying Glencore Plc.-backed Viterra for $8.2 billion, a move that will create a crop giant capable of competing with larger rivals Cargill Inc. and Archer-Daniels-Midland Co.
“Our performance proves that we can execute on big strategic moves like our business combination agreement Viterra, while continuing to keep our eye on the ball operationally,” Chief Executive Officer Greg Heckman said.
Bunge posted second-quarter earnings of $3.72 per share on an adjusted basis, beating even the highest analyst forecast. A bumper crop in Brazil also boosted the earnings of rival Archer-Daniels-Midland Co., which also posted second-quarter earnings that beat analyst expectations.
The agribusiness segment, which includes its oilseed, grain trading and processing operations, saw profits before some items rise almost 75% from a year earlier. Income from the company’s vegetable oil business slid 3.3%.
Heckman spent most of his tenure as CEO — which started in 2019 — turning Bunge’s business around. He shrank the company, sold under-performing assets and transformed the trader into the king of cooking oils. Bunge operates the world’s largest network of crushing facilities, processing everything from soybeans to canola and sunflower seeds to make frying oil and animal feed.
The company is now benefiting from higher demand for oils from the renewable diesel industry, with a bigger soybean crop in Brazil leaving more supplies to be processed in the US and sold to renewable diesel producers.
–With assistance from Tarso Veloso.
(Updates with share move in second paragraph.)
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