Bunge reports improved results for sugar, bioenergy segment

By Erin Voegele | February 17, 2014

Bunge Ltd. has released its 2013 financial results, reporting a loss of $34 million for its sugar and bioenergy segment. In 2012, the company reported a $118 million loss for the segment. On a quarterly basis, Bunge reported a loss of $35 million in the fourth quarter of last year, an improvement over the $49 million loss reported for the same three months of 2012.

The company reported net sales of $61.347 billion for 2013, up from $60.991 billion in 2012. Total adjusted segment EBIT was $1.291 billion last year, up from $1.109 billion the prior year. The agribusiness segment reported an adjusted EBIT of $1.008 billion, down slightly from $1.038 billion the prior year. The food an ingredients segment achieved an adjusted EBIT of $280 million, up from $166 million in 2012, which the fertilizer segment reported $37 million, up from $23 million.

“Our sugar and ethanol trading and merchandising operations performed well in the quarter and full year; however, our Brazilian sugarcane milling operations continued to be impacted by depressed global sugar prices, low sucrose cane content (ATR) and capped ethanol prices in Brazil. In the quarter we took several restructuring and impairment charges, which is part of our ongoing effort to improve the cost structure of our industrial business,” said Soren Schroder, CEO of Bunge. “We made good progress during the year to reduce costs in our milling operations, and the efforts will continue. We are actively engaged in our strategic review to optimize the value of this business and have retained financial advisors to assist in the process.”

During a call to discuss the results, Schroder pointed out that while Bunge reported a loss for its sugar and bioenergy segment, the company was able to increase segment performance by $84 million despite significantly lower sugar prices. He also noted that the company is focused on delivering additional improvements in its sugar milling operations.

According to Bunge, improved fourth quarter results for sugar and bioenergy segment were driven by higher margins and volumes in the company’s trading and merchandising operations, as well as improved performance in its U.S. biofuels business, which benefited from a robust ethanol production environment.

Results for Bunge’s Brazilian sugarcane milling operations were down from the previous year, and generated a quarterly loss. Higher cane million volume and ethanol prices were more than offset by lower ATR and sugar prices. Bunge also indicated that the segment’s fourth quarter resulted included $10 million in restructuring and impairment charges that related to improving the cost structure of its milling operations in Brazil.

Moving forward, Drew Burke, chief financial officer of Bunge, said results in the sugar and bioenergy segment are expected to be about breakeven. He cited global sugar prices and uncertainty over further gasoline price increases in Brazil as two factors contributing to that forecast. “We will manage this business to be cash flow positive, limiting capital investment to agricultural and industrial maintenance and efficiency projects only,” he continued.