Bunge: profit drops by more than half in Q2/2009

White Plains / NY. (bl) Bunge Limited saw its profit drop by more than half in the second quarter as strong results in its agribusiness unit were partially offset by a loss in its fertilizer segment, which was hurt by falling prices. The company earned 313 million USD in the three months that ended June 30, down 58 percent from 751 million USD in the same quarter a year ago.

Bunge posted sales of nearly eleven billion USD in the second quarter, down 23 percent from 14,4 billion USD a year earlier. The company recently announced the creation of a joint venture to build and operate a 200 million USD export grain terminal in Washington state and plans to buy Raisio, a European margarine producer.

Financial Highlights

(in millions, except per share data and percentages)

Q2 ended H1 ended
06/30/09 06/30/08 % Change 06/30/09 06/30/08 % Change
Volumes (metric tons) 38’505 36’318 06% 70’756 67’281 05%
Net sales $10’994 $14’365 (23)% $20’192 $26’834 (25)%
Total segment EBIT (1,2) $419 $1’078 (61)% $216 $1’520 (86)%
– Agribusiness $448 $614 (27)% $466 $865 (46)%
– Fertilizer $(53) $393 (113)% $(315) $526 (160)%
– Edible Oil Products $10 $15 (33)% $32 $65 (51)%
– Milling Products $14 $56 (75)% $33 $64 (48)%
Net income attributable to Bunge (2) $313 $751 (58)% $118 $1’040 (89)%
Earnings per common share diluted (2,3) $2,28 $5,45 (58)% $0,64 $7,56 (92)%

(1): Total segment earnings before interest and tax (EBIT) is a non-GAAP financial measure. The information required by Regulation G under the Securities Exchange Act of 1934, including a reconciliation to net income attributable to Bunge, is included in the tables attached to this press release.
(2): Bunge´s results included certain gains and charges that may be of interest to investors. See the Additional Financial Information section included in the tables attached to this press release for more information.
(3): See Note 2 to the consolidated statements of income attached to this press release for information on the calculation of diluted earnings per share.

Overview

Alberto Weisser, Bunge´s Chairman and Chief Executive Officer: «Bunge´s skilled team leveraged our integrated global asset network to generate better than expected agribusiness returns. We served our customers well and managed risks effectively in a volatile environment. This strong performance offset weak fertilizer results.

We remain optimistic for a solid second half of the year. Lower soybean production in South America has limited oilseed processing utilization in Argentina. While challenging locally, this should continue to support crush margins on a global level. A large North American harvest, which according to early indicators is likely, should provide us with ample volumes for our agribusiness operations in that region.

To rebuild global stocks, crop prices will need to stay at levels that encourage good planting and fertilizer use by South American farmers in the coming months. We continue to work through some remaining high-cost raw material inventory in our fertilizer segment, but good demand and improved international phosphate pricing should benefit our fertilizer margins.

During the second quarter we continued to follow our strategy of investing in our core businesses. We recently announced the creation of a joint venture to build and operate a state-of-the-art export grain terminal in the U.S. port of Longview in Washington state. This investment will improve the balanced, global asset network that is a key driver of value for our company. We also announced an agreement to acquire Raisio, a European margarine producer. The transaction encompasses margarine plants in Finland and Poland as well as several brands. This will expand our food and ingredients business and enhance our efficiency».

Outlook

Jacqualyn Fouse, Chief Financial Officer: «We expect a strong second half of the year, with results weighted more heavily to the fourth quarter when the Northern Hemisphere harvest is well underway and our fertilizer economics have stabilized. We are maintaining our 2009 full-year earnings guidance of 4,90 USD to 5,40 USD per share. This guidance assumes an effective tax rate range of 22 to 26 percent. This fully diluted per share guidance is based on an estimated weighted average of 138 million shares outstanding, which includes assumed dilution relating to our convertible preference shares».

Further details: see «Bunge Reports Second Quarter Results» (press release).
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