CHICAGO Agribusiness company Bunge Ltd (BG.N) said quarterly earnings were cut in half due to tight crop supplies and it would adjust its investment approach to improve returns.
Bunge, one of the world's largest agricultural trading houses, is anxiously awaiting the next U.S. soy and corn harvests this autumn to increase the volume of crops available for it to buy, sell, transport and process.
Last year, U.S. harvests were devastated by a historic drought, while grain crops in Argentina and the Black Sea region also suffered due to poor weather.
Export demand for crops should be strong in the second half of the year because prices have dropped on expectations for large harvests, Drew Burke, Bunge's chief financial officer, said, adding that buyers have been waiting to make purchases.
"Our oilseed processing and merchandising operations in North America and Europe will continue to be impacted by low capacity utilizations due to tight supplies until new crops are harvested," he said.
Bunge is among the four large players known as the "ABCD" companies that dominate the flow of agricultural goods around the world. The others are Archer Daniels Midland Co (ADM.N), Cargill Inc CARGIL.UL and Louis Dreyfus Corp LOUDR.UL.
The company reported net earnings of $110 million for the second quarter that ended June 30, versus $265 million for the same quarter a year ago.
Revenue for the quarter was $15.5 billion, below analysts' expectations of $15.8 billion, according to Thomson Reuters I/B/E/S. A year ago, revenue was $14.5 billion.
Rival ADM, which is set to report quarterly earnings on August 6, said in May that it, too, would struggle with a lack of volume until the autumn U.S. harvests.
Bunge shares are up about 2 percent year to date. ADM shares have risen almost 32 percent.
Soren Schroder, who took over as Bunge's chief executive on June 1, said results "must improve." The company is reducing 2013 capital expenditures by $200 million to $1 billion and "commencing a review of 2014 plans," he said.
"Projects that more immediately improve efficiencies and competitiveness - and that generate faster payback - will be priorities for Bunge," he said.
Strong margins and volumes in Brazil, which harvested a record-large soy crop this year, helped blunt the impact of tight supplies elsewhere in the world. Bunge executed record volumes in Brazil amid logistical delays at ports, according to the company.
"While Brazil was strong as expected, all other regions were flat to down," JP Morgan analyst Ann Duignan said.
Investors are likely to focus on the potential for third- quarter earnings, she said, calling the outlook "upbeat."
(Reporting by Tom Polansek; Editing by Maureen Bavdek)