Bunge: Demand for soymeal 'soft' but Q4 2016 positive end to tough year

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Agribusiness had a challenging year in terms of global macroeconomics but finished strong, says Bunge as it released its Q4 2016 results. 

Net income attributable to Bunge was $271m in the fourth quarter, compared to $203 for the same period in 2015.

The company had a strong finish to the year, with results about as anticipated, said Soren Schroder, Bunge CEO on a call with reporters. “We’re optimistic about 2017,” he added.

Full year results were not so favorable - Bunge saw earnings of $745m in 2016 against income of $791m in 2015.

“Looking back at 2016, I feel good about our accomplishments in a very challenging market environment,” said Schroder.

Soymeal demand 'soft'

In earnings before interest and taxes (EBIT) results, the agribusiness division saw a YOY drop moving from $1.054bn to $782m in 2016, Bunge reported.

Volume sales also dropped from about 33.93m metric tons to 32.82m metric tons.

“Agribusiness had a reasonable performance, even though adjusted EBIT decreased by $31m to $237m in the fourth quarter 2016 compared to $268m in the prior comparable quarter,” said Thomas Boehlert, Bunge CFO. “The $31m decrease resulted from a $51m decrease in oilseeds, partially offset by $20m increase in grains.”

Global crush volumes were similar to the last quarter of 2015, but margins were not, as demand for soymeal has remained soft, he said. “The $20m increase in grains was primarily the result of significantly higher volumes and margins in North America resulting from record crops,” he added.

Results for the agribusiness sector are expected to be more in keeping with past years for 2017, he said. Limited advanced sales of the 2017 crop from Brazil and increased feeding of wheat dampened results for 2016.

However, the first quarter is seeing a slow start with average crush margins in North America and soft ones from South America, said Boehlert. Farmer selling continues to be slow, but that is expected to change as harvest continues.

The company is looking at recent acquisitions including Walter Rau Neusser, Ana Gida and Grupo Minsa as part of its effort to improve its crush and oil business and milling, said Schroder. Those efforts also tie into a move to support or grow Bunge’s global footprint.

“In Brazil, we replaced our Rio de Janeiro mill with a lower cost, more efficient facility and we are well advanced in operating our export terminal in New Orleans,” he said. “We completed a multi-seed crush plant in the Ukraine in the same location as our port facility, and we have our first rapeseed plant coming on stream in China, as we speak.”

The company also is expanding its soy crush capacity in Northern Europe and working on joint ventures in countries including Brazil, Canada and Vietnam, he said.

Oilseed sector EBIT results had drops for both the quarter and the full year, the quarter fell from $185m to $134m, while the year moved from $596m in 2015 to $407m in 2016, said Bunge.

Adjusted EBIT results for grains saw an improvement in the fourth quarter of 2016 compared to 2015, moving from $83m to $103m for 2016, but for the year the results were down to $375m from $458m in 2015, it added.

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