UPDATE 3-Bunge beats Street, shares fall on sugar outlook

Thu Feb 10, 2011 1:11pm EST

* Adjusted Q4 EPS $1.99 beats Street view of $1.59

* Q4 revenue $12.73 bln, up from $10.44 bln year ago

* Good grain merchandising results partly offset by sugar

* Shares fall 2 pct on weaker sugar segment outlook (Rewrites; adds quotes; updates share price)

By Karl Plume

CHICAGO, Feb 10 (Reuters) - Agricultural processor Bunge Ltd (BG.N) reported better-than-expected quarterly results on Thursday, but its shares fell 2 percent after it signaled its sugar business in Brazil might be slow to recover from a 2009 drought.

White Plains, New York-based Bunge, said it would no longer issue earnings guidance because volatility in the commodity markets have made forecasting increasingly difficult.

Still, it expects its business to remain strong on rising global food demand and supply imbalances that boost its grain shipping business.

Bunge, Brazil's third-largest sugar producer, said sugarcane volumes available to its mills will increase in 2011 from the prior year's drought-hit supply, but the projected milling volume was below its earlier estimate.

"Earlier in the year they said they might process about 19 million metric tonnes of sugarcane and now they're saying about 17 million," said Jeff Stafford, an equity analyst with Morningstar.

"In addition to the lower volume, now they're going to have lower margins because the fixed costs are going to be spread out over a smaller base," he said.

The sugar segment outlook overshadowed Bunge's better-than-expected fourth-quarter earnings on a strong grain in merchandising profits, which gave shares at boost early in the day.

Bunge's grain marketing, storage and transportation operations benefited from rising global demand for food amid thinning stocks and the company said it was able to withstand highly volatile commodities markets with favorable futures hedge positions.

Bunge reported net profit of $292 million, or $1.95 per share, available to common shareholders. On that basis, it lost $28 million, or 21 cents per share, a year earlier.

Excluding one-time items, earnings were $1.99 per share, handily beating the average analyst estimate of $1.59 per share, according to Thomson Reuters I/B/E/S.

Revenue rose to $12.73 billion from $10.44 billion, topping the average analyst estimate of $12.10 billion.

PROFIT UP ON AGRIBUSINESS

Bunge's agribusiness segment, its largest, posted a $377 million profit in the fourth quarter, up sharply from $65 million a year earlier when drought-thinned South American oilseed supplies weighed on results.

Reduced sugarcane processing in Brazil and challenges with the start-up of two mills during the quarter resulted in a $56 million net loss for Bunge's sugar and bioenergy segment. The segment lost $5 million a year earlier.

Earnings in edible oil products narrowed to $45 million, from $114 million a year ago. Milling products segment results slipped to $14 million on a one-time impairment charge, down from $18 million a year earlier.

Improved margins offset lower volumes in Bunge's fertilizer segment, which earned $1 million in the quarter. A year ago, poor demand and weak margins resulted in a $174 million loss in fertilizer.

Bunge's shares were down 2 percent at $68.39 on the New York Stock Exchange at midday. (Reporting by Karl Plume; editing by Lisa Von Ahn, Dave Zimmerman and Andre Grenon)

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