By Karl Plume
(Reuters) -Bunge Ltd raised its full-year earnings outlook on Wednesday after improved processing margins helped the agri-trader post a second-quarter profit above Wall Street estimates, sending shares up sharply.
Bunge forecast full-year adjusted profit to be at least $11.75 per share on an improving margin outlook, up from guidance of $11 a share previously and above the average analyst estimate of $11.60 per share, according to Refinitiv data.
Bunge shares were up 6% at midmorning at $114.96, a 14-month high.
The earnings beat comes as Bunge is working to close a merger deal with crop handler Viterra that would create a global agribusiness powerhouse worth about $34 billion with annual earnings projected around $4 billion.
Global grains merchants have capitalized on robust demand for food, animal feed and biofuel. They further profited from higher crop prices due to a string of supply chain disruptions, from the COVID-19 pandemic to an historic Argentine drought to a war in major grains exporter Ukraine.
But profits for Bunge and grain trading rivals such as Archer-Daniels-Midland, Cargill and Louis Dreyfus, have moderated from record levels last year due to rising operating costs and tighter oilseed processing margins, which have now started to rebound.
ADM reported a drop in second-quarter profit last month but raised its full-year guidance, citing improving market conditions in the second half of the year.
Bunge said second-quarter adjusted earnings in Agribusiness, its largest segment in terms of sales and volumes, jumped 75% as a record-large Brazilian soybean crop boosted its processing operations.
The surge in processing profit more than offset mixed results from Bunge’s Refined & Specialty Oils unit and lower profit from its Milling segment.
Bunge’s adjusted profit was $3.72 per share for the three months ended June 30, compared with analysts’ estimate of $2.69 per share.
(Additional reporting by Saikeerthi in Bengaluru; Editing by Shilpi Majumdar, Nick Zieminski, Louise Heavens and Marguerita Choy)
