CHICAGO Oct 25 Soren Schroder is shaking up
Bunge Ltd five months after taking the helm of the
195-year-old agricultural trading house.
After vowing in February that he would make no major
strategy changes when he became chief executive, the company's
first new leader in 14 years has said that financial results
must improve and chopped capital expenditure plans.
On Thursday, Schroder told a quarterly earnings call that
the status quo was unacceptable for Bunge's loss-making
Brazilian sugar milling business and that he will explore
options, including a sale, for the business.
Schroder, 52, also has ramped up discussions about share
repurchases to the delight of investors who have watched as
Bunge shares have failed to keep pace with those of rival Archer
Daniels Midland Co. Bunge shares are up 13 percent so
far this year, compared to gains of nearly 46 percent for ADM.
Analysts say the changes are promising signs for Bunge, one
of the world's top oilseed processors and a major agricultural
force in South America. Global grain companies need aggressive
management amid intense competition to feed fast-developing
countries like China, they said.
Bunge has launched a "strategic shift toward a focus on
returns and returning capital to shareholders," BMO Capital
Markets analyst Ken Zaslow said on Friday.
"There are initial signs that new CEO Soren Schroder appears
both more inclined and more capable of returning cash to
shareholders," Zaslow said.
Schroder, who studied economics at Connecticut College,
took over from Alberto Weisser, 58, as CEO on June 1. Weisser
transformed Bunge into one of the world's largest agricultural
trading houses from a regional operator over 14 years as CEO and
will serve as executive chairman through the end of the year.
Schroder's annual base salary is $1 million, compared to
$1.2 million for Weisser. Like Weisser, he is eligible for
A former employee of rival Cargill, Schroder joined Bunge in
2000 and led the company's North America operations for three
years before becoming CEO.
Schroder, in an interview after Bunge reported third-quarter
earnings on Thursday, said the company was making a team effort
to improve results.
Bunge reported revenue during the quarter slipped to $14.7
billion from $16.5 billion a year earlier, and came in below
analysts' average forecast of $16.9 billion, according to
Thomson Reuters I/B/E/S.
"The team is looking at the business very seriously, is
committed to driving returns," Schroder told Reuters. "We're
being very frank about what's working and what's not."
Schroder cut capital expenditure plans for 2014 to $900
million after reducing plans for 2013 by 16 percent to $1
billion. He said the company would postpone projects, such as
expanding oilseed processing in China, with the goal of "buying
time to grow into our own capacity."
North America and Brazil remain two areas of focus for
growth because acquisitions would be "natural add-ons" to
Bunge's food and ingredients business in the regions, Schroder
said. In North America, Bunge is open to adding rice, wheat and
corn mills, he said.
Bunge on Wednesday said it struck a deal to buy Grupo Altex
wheat mills in Mexico for an undisclosed amount.
MAKING HIS MARK
Bunge Chief Financial Officer Drew Burke told analysts on
Thursday that share repurchasing was "very much on our agenda,"
although no specific new program has been announced.
Bunge initiated a $700 million program to buy back shares in
2010. The company expanded the program to $950 million in 2012
and extended its duration indefinitely. It has used about $450
million of the $950 million so far.
"There's been a lot of talk about return of capital and
probably more than the last several years combined," said Ari
Gendason, managing principal for Arlon Group, a New York-based
firm that invests in agricultural commodities and owns Bunge
Schroder "has the benefit of knowing the culture and the
people and the operations but also saying I'm going to put my
own mark on this as CEO," Gendason said.