Bunge posts surprising loss, says CEO to retire

CHICAGO Thu Feb 7, 2013 10:25am EST

CHICAGO (Reuters) - Bunge Ltd (BG.N) Chief Executive Alberto Weisser will retire as head of one of the world's largest agricultural merchants amid a wave of consolidation that is reshaping the industry.

Weisser is slated to step down June 1 after 14 years as CEO during which he transformed the company through a public listing, Bunge said on Thursday. Soren Schroder, CEO of Bunge North America, will replace him.

The announcement came after Bunge swung to a surprising quarterly loss, hurt by goodwill and impairment charges.

However, the agricultural processor and trading house had been working on a succession plan for a couple of years, a company spokeswoman said, adding that Weisser's departure is "the culmination of a deliberate, thoughtful process."

Bunge shares fell 6.1 percent.

The company is among the four large players, known as the ABCD, that dominate the flow of agricultural commodities around the world. The others are Archer Daniels Midland Co (ADM.N), Cargill CARG.UL and Louis Dreyfus.

The industry has seen it biggest consolidation wave in more than a decade as grain traders have scrambled to expand their global footprints to meet increasing demand from Asian consumers, notably China.

Last year, Japanese trading house Marubeni (8002.T) struck a $5.6 billion deal for U.S. grain trader Gavilon, and Glencore (GLEN.L) agreed to pay $6 billion for Canada's leading grain handler Viterra.

Australia's GrainCorp (GNC.AX) in December rejected a $2.9 billion takeover bid from Bunge rival ADM as too low.

While declining to comment specifically on GrainCorp, Weisser said in October that he was interested in expanding in Australia, adding that consolidation would likely continue in the grain industry.

Schroder, the incoming CEO, has led Bunge's North America operations since 2012 and formerly worked for 15 years at rival Cargill and Continental Grain.

Schroder has helped build Bunge's "global agribusiness marketing and trading operation" and developed its agribusiness franchise in Europe and the Middle East, the company said.

WEAK QUARTER

Strong global demand for oilseeds recently has helped agricultural traders and processors rebound from a tough environment early last year and in 2011, when grain prices often swung on economic concerns instead of supply and demand fundamentals.

However, Bunge reported a net loss of $610 million, or $4.17 per share, in the quarter ended December 31, compared with a profit of $245 million, or $1.65 per share, a year earlier.

Adjusted earnings were 57 cents per share, below analysts' estimates of $2.36 per share.

The agricultural processor said the fourth quarter included after-tax charges of $683 million, with a goodwill impairment charge of $327 million in its sugar and bioenergy business and provisions of $298 million related to the pending sale of its fertilizer business.

Revenue rose 9 percent to $17.04 billion.

"The fourth quarter was weaker than expected," Weisser said, calling the goodwill impairment charge "disappointing."

ADM on Tuesday reported a six-fold increase in earnings after U.S. soybean operations ran at record capacity during the quarter ended December 31.

Cargill said last month that "more fundamentally driven markets" helped it quadruple earnings in the quarter ended November 30, with results buoyed by gains in global commodities trading and oilseed processing.

BRAZILIAN FACE

Weisser, who studied business administration at the University of Sao Paulo, put a Brazilian face on Bunge.

The company's strong presence in South America could give it an advantage over U.S.-focused rival ADM this year because farmers in Brazil and Argentina are expected to harvest large crops of soybeans and sugar cane.

U.S. farmers are worried dryness will reduce corn and soy production for another year.

"With 36 percent of oilseeds processing capacity and 60 percent of port capacity located in South America, (Bunge) in our view is uniquely positioned to benefit from continued growing demand for protein in Asia," JP Morgan analyst Ann Duignan wrote in a research note.

The large South American harvests, coupled with strong demand, "will stress local grain transport and handling infrastructure more than usual, particularly in Brazil," Weisser said, adding that Bunge's global network will help it deliver farm products to customers.

The U.S. Department of Agriculture is slated to issue a monthly update on global supplies and demand on Friday.

(Additional reporting by Siddharth Cavale in Bangalore; Editing by Supriya Kurane and Jim Marshall)

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