Bunge: Reports Strong Second Quarter Results

White Plains / NY. (bl) Bunge Limited posted second quarter 2011 results. Highlights: strong operating performance of 373 million USD total segment Ebit; agribusiness and food + ingredients continued to perform well; sugar + bioenergy and fertilizer performed as expected; 2010 total segment Ebit includes 2’440 million USD gain on sale of fertilizer nutrients assets.

Overview

Alberto Weisser, Bunge´s Chairman and Chief Executive Officer: «We posted good second quarter results. Agribusiness and food + ingredients did well in the quarter and we anticipate a solid performance in these segments in the second half of the year. We also anticipate increased contributions from sugar + bioenergy and fertilizer, as these two businesses enter their high-volume seasons.

«The agribusiness and food markets are characterized by steady overall growth, as well as natural volatility due to weather and other factors. 2011 has not been an exception. Global trade in grains and oilseeds is robust and with the Black Sea region recently reopened for exports, we expect to see additional shifts in trade flows as the world adjusts to a new supply and demand relationship among regions.

«With our global asset network and excellent risk management capabilities, we are well positioned to capture this growth and respond to these changes. The recent addition of our first deep water port terminal on the Black Sea, which scaled up operations in Ukraine during the second quarter, makes our network even stronger».

Second Quarter Results

Agribusiness: Results in the second quarter improved in most parts of the agribusiness chain when compared to last year. Large harvests in South America benefited our grain business and oilseed processing operations in Brazil and Argentina. Performance in Europe and the U.S. improved compared to a challenging prior year period. Risk management strategies worked well. Volume, while slightly higher in the quarter, continued to be impacted by lower merchandising and processing volumes in Europe due to the smaller crop production in the Black Sea region last year. Results in the quarter included a 37 million USD gain related to the sale of our interest in a European oilseed processing facility joint venture.

Sugar + Bioenergy: Improved results in the quarter compared to last year came from sugarcane milling, which benefited from higher sugar and ethanol prices and increased sales volume, as all mills were operating during the quarter. Merchandising experienced lower volumes and margins. The second quarter is typically the weakest period for this segment, as it marks the beginning of the sugarcane harvest in the Center-South of Brazil when the sugar content of the sugarcane is at its lowest level. Consequently, mills produce less sugar and ethanol per unit of sugarcane milled than they will in the second half of the year when the yield increases.

Edible Oil Products: Strong results in North America and Brazil primarily due to improved margins were partially offset by lower results in Europe, which experienced aggressive competition in certain markets. Second quarter 2010 results included 23 million USD of charges in our Brazilian business.

Milling Products: Higher results in the quarter were due to stronger margins in wheat and corn milling. Second quarter 2010 results included eight million USD of charges in wheat milling.

Fertilizer: Volume trend in 2011 is improving and we are making progress toward our market share targets. Margins were strong, benefiting from good farm economics and improved risk management. Results in the quarter were adversely impacted by approximately 17 million USD of net charges primarily related to inventory adjustments and bad debt in our Brazilian business. Last year included the gain on the sale and approximately two months of results, from our Brazilian fertilizer nutrients assets that were sold in May 2010.

Financial Costs: Interest expense decreased in the quarter due to lower average interest rates on debt.

Income Taxes: The effective tax rate for the six months ended June 30, 2011 was eleven percent compared to 23 percent for the same period last year, which reflected the impact of the gain on the sale of our fertilizer nutrients assets in the period.

Outlook

Drew Burke, Chief Financial Officer: «We expect a good second half with results weighted to the fourth quarter. The agribusiness markets will be characterized by the Northern Hemisphere harvests and continued strong global trade in response to the relatively tight supply situation. We expect our agribusiness results to continue to be driven by our grain business. Oilseed processing margins in the U.S. should improve from current low levels when harvest commences and plants run at higher utilization. However, margins are likely to remain under some pressure due to excess processing capacity and the long tail of the South American harvest that will continue to attract export demand. In Europe, the smaller rapeseed crop due to poor weather may pressure margins; however, the sunseed harvest is expected to be large, providing an offset, as should imports from the Americas. Oilseed processing in China, which has been weak, is showing improvement and should continue to progress throughout the year as the market works through the excess supply.

«In sugar + bioenergy, we expect to mill approximately 15,5 million metric tons of sugarcane, which is about a million metric tons below our previous estimate. This reduction reflects the impact of adverse weather on the development of the sugarcane. However, tight global sugar supplies, strong demand for ethanol in Brazil and ongoing concern about Brazil´s sugarcane crop should be supportive of prices. As a result, our expectations for the year have not changed.

«Food + ingredients should continue to perform well and the tough competitive environment we have seen in some edible oil markets this year is showing signs of improvement. In fertilizer, farm economics are strong, South America is entering its high volume period and our expectations for the business are on track. The Brazilian industry is expecting annual volume growth of approximately seven percent, which implies that there is about 60 percent of the total volume remaining to be sold between July and December. Lastly, we are reducing our full year effective tax rate expectation to approximately ten percent».

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