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Supply Chain

Grains Trader Bunge Forecasts Upbeat Full-Year Earnings

By Reuters
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Grains Trader Bunge Forecasts Upbeat Full-Year Earnings

Bunge Ltd forecast full-year earnings above Wall Street estimates, after improved processing margins helped the agri-trader beat second-quarter profit estimates.

'Higher results in the quarter were primarily driven by softseed crush and strong Brazil soybean origination, which also contributed to higher crush results in Brazil and our destination crush operations in Europe and Asia,' the company said in a statement.

Bunge forecasts full-year adjusted profit to be at least $11.75 per share on an improving margin outlook, up from guidance of $11 a share previously and above the average analysts' estimate of $11.60 per share, according to Refinitiv data.

The earnings beat comes as Bunge is working to close a merger deal with crop handler Viterra that would create a global agribusiness powerhouse worth about $34 billion (€31 billion) with annual earnings projected around $4 billion (€3.6 billion).

Greg Heckman, chief executive officer of Bunge, commented, "We delivered strong results as we successfully navigated a highly dynamic quarter through agility and discipline, capturing opportunities while continuing to serve our customers at both ends of the value chain.

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"Our team remained flexible, leveraging our global footprint and connectivity to optimise margins and utilisation as market conditions evolved over the quarter."

Robust Demand

Global grains merchants have capitalised on robust demand for food, animal feed and biofuel. They further profited from higher crop prices due to a string of supply chain disruptions, from the COVID-19 pandemic to an historic Argentine drought to a war in major grains exporter Ukraine.

But profits for Bunge and grain trading rivals like Archer-Daniels-Midland, Cargill and Louis Dreyfus, have moderated from record levels last year due to rising operating costs and tighter oilseed processing margins, which have now started to rebound.

The agribusinesses make money by processing, trading and shipping crops around the world, often benefiting when crises such as droughts or war trigger shortages.

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ADM reported a drop in second-quarter profit last month but raised its full-year guidance, citing improving market conditions in the second half of the year.

Bunge's adjusted profit was $3.72 per share for the three months ended 30 June, compared with analysts' estimate of $2.69 per share.

Article by Reuters, additional reporting by ESM.

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