uploads///Bunges Actual Earnings per Share versus Consensus Estimates

Bunge’s Earnings Missed Consensus Estimates in 2Q15


Oct. 26 2015, Updated 4:06 p.m. ET

Reported earnings per share fell by 64% in 2Q15

Bunge Limited (BG) reported earnings of $86 million and $0.51 per share in 2Q15. The results fell badly as per analyst’s estimates of $1.43. This year, analysts are forecasting an earnings rise of 36.9% over last year. Analysts expect earnings growth next year of ~17.8% over this year’s forecast earnings. The analyst’s estimate for the upcoming 3Q15 is $1.56. We’ll have to wait and find out if Bunge will miss or beat the estimate this quarter.

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Forward guidance

According to Bunge’s management, in the company’s Grains segment, the “Brazilian safrinha” corn harvest is underway and with the recent devaluation of the Brazilian real, farmer selling has picked up for both corn and soybeans. Farmers in the United States and the Black Sea region have planted large crops. Based on current growing conditions, this should provide ample supplies to drive high asset utilization. While global grain supply and demand should be in relative balance, the reduced production in certain Northern Hemisphere regions could provide pockets of supply opportunities.

In the Food & Ingredients segment, the company expects improvement. In Europe, margins are supposed to improve as new oilseed crops change the raw material costs. In the United States, they will continue to leverage the benefits from their performance improvement programs. Also, the company is taking additional cost saving measures in Brazil to address current market conditions. While Bunge expects its Brazilian food business to continue to face near-term challenges, improvement is probable as they move through the year.

In the Sugar and Bioenergy segment, the company expects the sugarcane crop to develop well with the favorable weather. Based on current high domestic demand for ethanol in Brazil, Bunge is confident of finishing the year profitable with positive free cash flow.

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Bunge’s peers General Mills (GIS) and Flowers Foods (FLO) reported an EPS (earnings per share) of $0.69 and $0.24 in their last quarter. The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests ~2.8% of its portfolio in General Mills, while the Vanguard Consumer Staples ETF (VDC) invests ~1.9% of its portfolio in the GIS stock.

Management overview of 2Q15

Soren Schroder, Bunge’s chief executive officer, stated, “Conditions in the second quarter were more challenging than expected. In Agribusiness, we experienced weak soft-seed margins, slow farmer selling outside of Brazil and a difficult trading & distribution environment. In Food & Ingredients, margins and volumes came under dramatic pressure in our Brazilian businesses, especially Edible Oils, as consumers adjusted to an environment of increasing unemployment, inflation, and currency devaluation.”


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