Bunge Reports First Quarter 2013 Results

WHITE PLAINS, N.Y., April 25, 2013 /PRNewswire/ -- Bunge Limited (NYSE: BG)

• Total segment EBIT of $260 million, up 30% vs. last year on an adjusted basis
• Agribusiness managed challenging markets well, but results lower than last year
• Sugar & bioenergy and food & ingredients off to a good start

Financial Highlights

Overview

Alberto Weisser, Bunge's Chairman and Chief Executive Officer stated, "We had a solid first quarter.  Our agribusiness team performed well, managing risk in a volatile market environment characterized by tight global supplies and challenging Brazilian logistics.  We are pleased to see sugar & bioenergy get off to a good start to the year, and that food & ingredients continued its strong performance from the second half of last year.

"Looking ahead, agribusiness markets are transitioning from ones of tightness to more comfortable supplies.  Customer inventory pipelines are lean and in need of restocking, so demand should remain strong.   Farmers in South America responded with record production and farmers in the Northern Hemisphere are expected to respond similarly.  The logistics congestion in Brazil is improving, but delays will continue to persist until the U.S. harvest later this year.   We see positive signs in sugar & bioenergy as the weather in the Center-South of Brazil has been ideal for cane development and early readings of ATR, the sugar content in the cane, are on track to return to more normal levels.  We expect food & ingredients results to continue to improve throughout the year."

First Quarter Results

Agribusiness
Improved oilseed processing results in the quarter were more than offset by lower results in grain merchandising.  Our merchandising business benefited from strong global demand for Brazilian corn and soybean exports; however, lower grain origination in Argentina and the Northern Hemisphere due to tight supplies adversely impacted results.  Soybean processing was higher in all geographies with the largest contribution coming from the U.S., which benefited from strong export demand due to tight supplies and delays in South American harvests.  Results in softseed processing in Canada and Europe were lower due to margin pressure from weather-related supply shortages and slow farmer selling.

Sugar & Bioenergy
The first quarter is the inter-harvest in Brazil when sugarcane mills in the Center-South region typically do not operate until the end of the quarter, and are selling sugar and ethanol inventories from the previous sugarcane harvest.  Results were higher in the quarter due to improved performance in all parts of the segment.  Sugarcane milling benefited from the combination of lower inventory costs and higher average ethanol prices.  Due to heavy rains during the month, the start-up of some of our mills was postponed.  This weather delay will have a positive impact on the development of the sugarcane, but a portion of the start-up costs associated with the mills will shift to the second quarter.  Trading & merchandising benefited from higher volumes and margins on export programs and good risk management.  U.S. biofuels benefited from higher results in our ethanol joint venture due to improved margins.

Edible Oil Products
Higher results in the quarter were primarily due to improved performance in Brazil, which experienced a challenging prior-year period, and in India, which more than offset lower results in North America and Europe.

Milling Products
Higher results in the quarter were primarily due to improved performance in our Brazilian wheat milling business, which experienced a challenging prior-year period, and contributions from our 2012 acquisition in Mexico, which more than offset lower results in corn milling. 

Fertilizer
Results in our ongoing fertilizer operations were higher in both Argentina and in our Morocco joint venture.

Cash Flow
Cash generated by operations in the first quarter 2013 was approximately $103 million compared to cash used of $302 million in the same period last year.  The year-over-year variance primarily reflects the combination of higher earnings and lower inventories. 

Income Taxes
The effective tax rate for the quarter ended March 31, 2013, excluding our discontinued fertilizer business and $31 million of discrete tax items for the period, was approximately 18%.

Outlook

Drew Burke, Chief Financial Officer, stated, "We remain confident about 2013, though results will be more back-end weighted than previously expected.  Demand for agricultural commodities has been strong, which should continue to draw exports out of South America, and assuming large crops in the Northern Hemisphere, prices should moderate, spurring additional consumption and restocking of inventory.  However, slow commercialization of crops by farmers in South America is shifting volume to future periods.  Similarly, our oilseed processing and merchandising operations in North America and Europe are being impacted by the combination of tight supplies and farmers holding on to their crops until they have more visibility into the progress of their new crops.  

"In sugar & bioenergy, with the favorable weather and development of our sugarcane plantations during the inter-crop period, we are confident that we will have sufficient cane to operate at capacity this season.  Additionally, ATR is showing early signs of returning to more normal levels, which combined with our expected higher crush should significantly reduce our unit production costs.  Additionally, changes in Brazilian energy policy that will be in effect this year should improve the economics of producing ethanol, offsetting weaker sugar prices.  Due to the seasonality of the Brazilian sugarcane harvest, we expect results in this segment to be weighted toward the second half of the year.

"In food & ingredients, following the strong start to the year, we expect the solid performance to continue and results to progressively improve throughout the year.  We should extract greater value from our recent acquisitions and improve our operating efficiencies with the start-up of operations at our new multi-oil refining facility in India and our new refining and packaging facility in Decatur, Alabama. 

"Lastly, the pending sale of the Brazilian fertilizer business remains on-track to close this year."

Conference Call and Webcast Details

Bunge Limited's management will host a conference call at 10:00 a.m. EDT on April 25, 2013 to discuss the company's results.

Additionally, a slide presentation to accompany the discussion of results will be posted on www.bunge.com.

To listen to the call, please dial (800) 446-1671.  If you are located outside the United States or Canada, dial (847) 413-3362.  Please dial in five to 10 minutes before the scheduled start time.  When prompted, enter confirmation code 34543275.  The call will also be webcast live at www.bunge.com.

To access the webcast, go to the "Webcasts and Events" page of the "Investors" section of the company's website.  Select "Q1 2013 Bunge Limited Conference Call" and follow the prompts.  Please go to the website at least 15 minutes prior to the call to register and download any necessary audio software.

For those who cannot listen to the live broadcast, a replay will be available later in the day on April 25, 2013, continuing through May 25, 2013.  To listen to it, please dial (888) 843-7419 or, if located outside the United States or Canada, dial (630) 652-3042.  When prompted, enter confirmation code 34543275.  A replay will also be available on the "Audio Archives" page of the "Investors" section of the company's website.

About Bunge Limited

Bunge Limited (www.bunge.com, NYSE: BG) is a leading global agribusiness and food company operating in over 40 countries with approximately 35,000 employees.  Bunge buys, sells, stores and transports oilseeds and grains to serve customers worldwide; processes oilseeds to make protein meal for animal feed and edible oil products for commercial customers and consumers; produces sugar and ethanol from sugarcane; mills wheat, corn and rice to make ingredients used by food companies; and sells fertilizer in South America.  Founded in 1818, the company is headquartered in White Plains, New York.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains both historical and forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but rather reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including "may," "will," "should," "could," "expect," "anticipate," "believe," "plan," "intend," "estimate," "continue" and similar expressions. These forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. The following important factors, among others, could affect our business and financial performance: industry conditions, including fluctuations in supply, demand and prices for agricultural commodities and other raw materials and products used in our business; fluctuations in energy and freight costs and competitive developments in our industries; the effects of weather conditions and the outbreak of crop and animal disease on our business; global and regional agricultural, economic, financial and commodities market, political, social and health conditions; the outcome of pending regulatory and legal proceedings; our ability to complete, integrate and benefit from acquisitions, dispositions, joint ventures and strategic alliances; our ability to achieve the efficiencies, savings and other benefits anticipated from our cost reduction, margin improvement and other business optimization initiatives; changes in government policies, laws and regulations affecting our business, including agricultural and trade policies, tax regulations and biofuels legislation; and other factors affecting our business generally. The forward-looking statements included in this release are made only as of the date of this release, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

„Additional Financial Information

The following table provides a summary of certain gains and charges that may be of interest to investors. The table includes a description of these items and their effect on total segment EBIT, net income attributable to Bunge and earnings per share for the quarter ended March 31, 2013 and 2012.

Reconciliation of Non-GAAP Measures

This earnings release contains certain "non-GAAP financial measures" as defined in Regulation G of the Securities Exchange Act of 1934.  Bunge has reconciled these non-GAAP financial measures to the most directly comparable U.S. GAAP measures below.  These measures may not be comparable to similarly titled measures used by other companies.

Total segment EBIT
Total segment EBIT is consolidated net income attributable to Bunge excluding interest income, interest expense and income tax attributable to each segment.

Total segment EBIT is a non-GAAP financial measure and is not intended to replace net income attributable to Bunge, the most directly comparable GAAP financial measure. Total segment EBIT is an operating performance measure used by Bunge's management to evaluate its segments' operating activities.  Bunge's management believes total segment EBIT is a useful measure of its segments' operating profitability, since the measure allows for an evaluation of the performance of its segments without regard to its financing methods or capital structure.  In addition, EBIT is a financial measure that is widely used by analysts and investors in Bunge's industries.  Total segment EBIT is not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to net income or any other measure of consolidated operating results under U.S. GAAP.

Below is a reconciliation of total segment EBIT to net income attributable to Bunge:

Earnings per common share-diluted (excluding certain gains & charges)
Below is a reconciliation to earnings per common share-diluted (excluding certain gains and charges and discontinued operations) to earnings per common share-diluted. Earnings per common share-diluted (excluding certain gains and charges and discontinued operations) is a non-GAAP financial measure and is not a measure of earnings per common share–diluted, the most directly comparable GAAP financial measure. It should not be considered as an alternative to earnings per share-diluted or any other measure of consolidated operating results under U.S. GAAP.

Notes

SOURCE Bunge Limited

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