UPDATE 3-Bunge profit misses views; company cuts outlook

Thu Apr 29, 2010 12:55pm EDT

* EPS 45 cts vs Street view 75 cts-Thomson Reuters I/B/E/S

* Cuts full-year outlook to $5.30-$5.80 per share

* Fertilizer loss tied to low margins, slow sales

* Agribusiness profit rises on higher oilseed margins

* Shares down 4.4 percent (Adds quote, updates stock activity)

By Karl Plume

CHICAGO, April 29 (Reuters) - Bunge Ltd (BG.N) posted a lower-than-expected quarterly profit on Thursday, citing tight soybean supplies and weak fertilizer margins in South America, and the agricultural processor cut its 2010 outlook.

Shares fell more than 4 percent to their lowest point in 10 months on the downgraded outlook.

"We may see some pressure on margins from increased oilseed processing capacity in North America," Chief Financial Officer Jacqualyn Fouse said.

"Retail fertilizer should improve in the second half of the year as the pace of farmer purchases picks up closer to planting (in South America)," she said, "but will be below our expectations."

Bunge cut its full-year earnings-per-share forecast to a range of $5.30 to $5.80. Its prior target was $5.75 to $6.25.

For the first quarter, Bunge reported a net profit of $63 million, or 31 cents per share, compared with a year-earlier net loss of $195 million, or $1.76 a share.

Excluding impairment and acquisition charges, Thomson Reuters I/B/E/S said Bunge earned 45 cents per share, below the 75 cents analysts were expecting.

AGRIBUSINESS PROFIT UP

Bunge's agribusiness segment posted a net profit of $122 million, up from $28 million a year earlier, on strong oilseed processing margins and robust soybean demand from China.

However, the results were tempered by tight soybean supplies in Brazil, which restricted grain origination.

Agribusiness results included $14 million in impairment and restructuring charges stemming from the closure of an older, less efficient U.S. oilseed processing plant, Bunge said.

Sugar and bioenergy, a new segment added following Bunge's acquisition of five sugar mills from Brazilian miller Moema, posted net earnings of $5 million for the quarter.

White Plains, New York-based Bunge finalized its purchase of the Moema assets in the quarter, making it Brazil's third-largest sugar and ethanol producer, with 20 million tonnes of sugarcane milling capacity.

Bunge's fertilizer segment narrowed its net loss to $40 million from $262 million a year earlier as average inventory costs finally fell below market prices.

Low prices and a high cost inventory led to a more than $600 million loss in the segment for 2009.

In the latest quarter, lower margins and slower-than-anticipated retail sales weighed on fertilizer results.

Bunge expects to close the sale of its Brazilian fertilizer nutrients assets to mining giant Vale in the second quarter, resulting in about $3.5 billion in after-tax proceeds.

Some of the proceeds would pay down debt. The remainder would "expand and strengthen" existing businesses and go toward exploring "opportunities in other areas that complement our businesses," Bunge CEO Alberto Weisser said. He did not say what that meant.

"While (first quarter) results are better both sequentially and year-over-year, we expect the stock to remain in the penalty box until the company articulates its use of proceeds from the fertilizer sale," Morgan Stanley analyst Vincent Andrews said in a note to clients.

In other segments, edible oils net profit slipped 18 percent to $18 million, while milling products net income fell 32 percent to $13 million.

Bunge's shares were down $2.52 at $54.76 on the New York Stock Exchange. (Reporting by Karl Plume, editing by Gerald E. McCormick, Lisa Von Ahn and Robert MacMillan)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.