Bunge's 3Q15 Sales Were Down, but Margins Were Up

On October 29, 2015, Bunge Limited (BG) reported its third quarter results for fiscal 2015. Bunge, through its subsidiaries, operates as an agribusiness and food company worldwide. It has its headquarters in White Plains, New York. Bunge Limited trades on the NYSE (New York Stock Exchange) under the ticker “BG.” The company’s shares fell by 6.4% on the day of the earnings release in spite of the increase in earnings this quarter. The stock closed at $74.09 on October 29.

Bunge’s shares have been falling following the company’s ongoing disappointing performance in the last few quarters. The company’s stock is down almost 13% this year. The stock closed at $72.96 on October 30. It reported a year-to-date return of -19.8%.

The company’s peers in the industry include Syngenta (SYT), Ingredion (INGR), and B&G Foods (BGS). These companies also trade on the NYSE. They closed at $67.29, $95.06, and $36.29 on October 30, respectively. The Vanguard FTSE Europe ETF (VGK) invests 0.36% of its portfolio in SYT. The Market Vectors Agribusiness ETF (MOO) invests 3.0% of its portfolio in BG. MOO reported a year-to-date return of -7.71% as of October 30.

Bunge reported the following 3Q15 results in comparison to 3Q14:

• The total adjusted segment EBIT (earnings before income and tax) of $367 million rose by $51 million this quarter.
• The combined agri-foods trailing-four-quarter ROIC (returns on invested capital) of 10.3% was 3.3 points over the WACC (weighted average cost of capital).
• The year-to-date total adjusted segment EBIT of $892 million rose by $83 million this quarter.
• A higher tax rate impacted the EPS (earnings per share).

Soren Schroder is Bunge’s chief executive officer. He stated, “Agribusiness delivered a good third quarter. The segment capitalized on favorable soy processing margins and increased farmer selling in Brazil and generated solid risk management income. Food & Ingredients showed sequential improvement from the second quarter driven by our North American operations, but the tough economic environment in Brazil and rapid devaluation of the real continued to present challenges. Bunge’s returns are strong, with a four-quarter trailing ROIC in our core Agribusiness and Food operations of 10.3%, well above our 7% cost of capital. We continue to make progress in our performance improvement programs, which have generated ~$75 million of benefits year-to-date, and pursue a balanced approach to capital allocation.”

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Browse this series on Market Realist:

• Part 2 - Bunge Reported Strong Margins in a Challenging Environment
• Part 3 - Bunge’s Agribusiness Segment Contributed 71% to Net Sales in 3Q15
• Part 4 - Bunge Missed Consensus Earnings Estimates by 21%