February 5, 2009 / 12:07 PM / 11 years ago

UPDATE 4-Bunge up 15 pct on improved 2009 outlook

* Shares up 15.5 pct on improved second-half 2009 outlook

* Sees better soymeal demand, S. America fertilizer sales

* Maintains 2009 profit forecast

* Q4 loss $1.89 per share vs Street loss view of $1.55

* Q4 net sales down 12 pct (Recasts with share price, context, analyst quote)

By Karl Plume

CHICAGO, Feb 5 (Reuters) - Shares of oilseed processor and fertilizer producer Bunge Ltd (BG.N) soared more than 15 percent on Thursday after it forecast a recovery in the second half of 2009 that would result in slightly higher sales of animal feed and vegetable oil.

The stock soared despite Bunge losing $210 million in the fourth quarter, its first loss since the White Plains, New York-based company went public in 2001.

Bunge’s cautiously optimistic outlook was the first from a major player in the agricultural sector, which has been hit hard by the global recession as demand for raw materials such as grains and oilseeds slowed.

Competitors Archer Daniels Midland Co (ADM.N) on Tuesday said that 2009 would be a challenging year and some sectors such as ethanol may not recover until 2010. ADM’s share tumbled on the grim outlook.

Fertilizer producer Mosaic Co (MOS.N), which is owned in part by Cargill Inc [CARG.UL], said it expects results to be weak at least through the third quarter and has started to lay off employees.

Bunge’s optimism stems from the fact that corn and soybean stocks, relative to how much is consumed each year, are low while demand for food and the means to produce it will continue to rise as the world’s population grows.

“We feel good that we will produce a solid year, though the results will be heavily weighted toward the second half of the year. We think we’ve seen the trough in our industry and we expect things to improve as we move through the year,” Chief Financial Officer Jacqualyn Fouse said.

Bunge said demand for soymeal was expected to rise 1.5 percent this year after falling globally by seven percent in 2008, while vegetable oil demand was seen up 4 percent in 2009. A stronger U.S. dollar should benefit its foreign operations, it added.

Also, good farm economics and a continued credit market thaw should help drive fertilizer demand in South America, where it is the largest producer and supplier.


Shares of Bunge rose to $49.19, up 15.5 percent, to $6.60 on the New York Stock Exchange late Thursday afternoon. The stock neared a five-year low of $27.60 in October after hitting a record high of $135 in January 2008.

Thursday’s rally lifted Bunge shares to the highest level in nearly a month despite a bigger-than-expected fourth-quarter loss blamed on poor fertilizer sales and foreign exchange losses totaling $543 million.

“A lot of it is short covering,” said Christina McGlone, analyst with Deutsche Bank, adding that Bunge’s earnings warning in January had already been factored into its stock price.

Investors were also likely reassured by Bunge’s improved forecast for late-2009.

“The stock was attractive from a valuation perspective,” McGlone said. “People are putting stock into the fact that it probably won’t get worse.”

Bunge reported a fourth-quarter net loss of $210 million, or $1.89 per share, compared with a profit of $245 million, or $1.82 per share, a year earlier.

Analysts on average were expecting a loss of $1.55 per share, before special items, according to Reuters Estimates.

It reported full-year 2008 earnings of $7.73 per share and maintained its 2009 earnings forecast of $6.90 to $7.60 per share.

Fourth-quarter net sales fell 12 percent to $10.94 billion, missing analysts’ estimates of $13.52 billion, and sales volume rose 6 percent to 36 million tonnes.

Bunge reported losses in three of its four operating segments, with milling products the lone profitable sector at $18 million versus a loss of $12 million a year ago.

Bunge’s fertilizer business recorded a loss of $289 million compared with a gain of $52 million a year ago. Bunge lost $86 million in its agribusiness sector and $47 million in edible oil products. (Reporting by Karl Plume; editing by Richard Chang) (karl.plume@thomsonreuters.com; +1 312 408 8720; Reuters Messaging: karl.plume.reuters.com@reuters.net) (For help: Click “Contact Us” in your desk top, click here [HELP] or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546)

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