Bunge Reports Fourth Quarter and Full Year 2012 Results

WHITE PLAINS, N.Y., Feb. 7, 2013 /PRNewswire/ -- Bunge Limited (NYSE: BG)

  • Fourth quarter included non-cash, after-tax charges of $683 million, primarily includes goodwill impairment of $327 million in sugar & bioenergy segment,  provisions of $298 million in discontinued operations related to pending sale of fertilizer business and $49 million related to sale of long-term recoverable taxes
  • Record full-year results in agribusiness of over $1 billion, up 20% vs. last year on an adjusted basis
  • Fourth quarter operating cash flow of approximately $2.4 billion
  • Expect strong performance in 2013

Financial Highlights


 

           Quarter Ended            

Year Ended

US$ in millions, except per share data

12/31/12

12/31/11

12/31/12

12/31/11

Net sales

$17,040

$15,692

$60,991

$56,097

Total segment EBIT (a)

$(414)

$295

$628

$1,189

Certain gains & charges (b)

$(563)

-

$(481)

$43

Total segment EBIT, adjusted (a)

$149

$295

$1,109

$1,146

Agribusiness

$134

$199

$1,038

$868

Sugar & Bioenergy

$(49)

$3

$(118)

$(20)

Food & Ingredients

$49

$70

$166

$235

Fertilizer

$15

$23

$23

$63

Net income (loss) per common share from
  continuing operations-diluted

$(1.99)

$1.80

$2.51

$6.23

Net income (loss) per common share from
  continuing operations-diluted, adjusted
(a)

$0.57

$1.80

$4.62

$5.96


 

 

 

 

 

 

 

(a)  Total segment earnings before interest and tax ("EBIT") and net income (loss) per common share from continuing operations-diluted (excl. certain gains and charges and discontinued operations) are non-GAAP financial measures. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables attached to this press release and the accompanying slide presentation posted on Bunge's website, respectively.

(b)  Includes certain gains and charges included in segment EBIT for the quarter and year-end December 31, 2012 of ($76) million and $9 million for agribusiness, ($480) million and ($519) million for sugar & bioenergy and ($7) million and $29 million for food & ingredients respectively.  Includes certain gains and charges included in segment EBIT for the year-ended December 31, 2011 of $37 million for agribusiness and $6 million for food & ingredients.


Overview

Alberto Weisser, Bunge's Chairman and Chief Executive Officer stated, "The fourth quarter was weaker than expected, but looking at the full year, agribusiness achieved record EBIT of over $1 billion in a challenging, volatile period.  On an adjusted basis, this exceeded last year's record year by 20%.  After a slow beginning to the year, food & ingredients recovered and delivered a solid second half.  And in fertilizer we took the important strategic step of agreeing to sell our Brazilian business for $750 million.  This divestiture will create a more streamlined complement to our agribusiness operations with lower price risk.  Sugar & bioenergy, however, continued to be challenged by negative margins in our Brazilian ethanol operations and the lingering impact of weather on sugarcane yields and ATR.  While the non-cash impairment charge to goodwill that we were required to take under U.S. GAAP accounting rules is disappointing, it does not change our positive view of the business and our optimism about its future growth opportunities.

"Looking to 2013, the agribusiness environment is robust.  The world needs to rebuild grain and oilseed stocks to meet growing consumption.  Crops in South America are developing well and are expected to reach record levels.  In combination with expected strong export demand, this will stress local grain transport and handling infrastructure more than usual, particularly in Brazil.  In these environments, the value of our services and network of elevators, processing plants and port terminals increases as we are able to provide market access for farmers and deliver the right products to customers when and where they are needed.  In sugar & bioenergy, we reached our sugarcane planting target of nearly 70 thousand hectares in 2012, which combined with our planting programs in previous years, should allow us to operate our mills at capacity in 2013.  We expect our food & ingredients segment to build upon its recent momentum and extract even greater value from the business."    

Fourth Quarter Results

Results in the quarter included after-tax non-cash charges of $683 million that reduced net income attributable to Bunge from continuing operations by $385 million and discontinued operations by $298 million.  

  • In connection with our annual goodwill impairment testing, we recorded an after-tax goodwill impairment charge of $327 million in our sugar & bioenergy segment resulting primarily from the current difficult industry market conditions.  The impairment is a non-cash charge and does not affect the Company's current or future operations.

     
  • As a result of our entry into an agreement in December 2012 to sell our Brazilian fertilizer business, the results of this business, net of tax, have been classified as discontinued operations. In addition, the assets and liabilities of the business that are included in the sale have been classified as held for sale.  Due to this pending sale, we recorded a deferred tax valuation allowance of $266 million.  We have also recorded an after-tax provision of $32 million related to long-term Brazilian farmer receivables, as we believe the sale of the business will negatively impact our ability to collect those outstanding amounts from farmers.  At closing, we expect to record a gain on the sale transaction.

     
  • During the quarter, we sold at a discount certain long-term recoverable tax assets in Brazil for $31 million in cash, which resulted in an after-tax loss of $49 million.  On a pre-tax basis this charge negatively impacted EBIT in agribusiness by $66 million and edible oil products by $7 million.  In addition, we entered into an agreement to sell certain legal claims in Brazil.  This transaction closed in January 2013 and is expected to result in an after-tax gain of approximately $40 million, which we will recognize in the first quarter 2013.  

Agribusiness
On an adjusted basis, higher oilseed processing results in North and South America were offset by lower results in Asia and European softseed processing.  Grain trading & merchandising benefited from corn export programs out of South America and Eastern Europe and slightly higher results out of North America; however, results were short of expectations primarily due to weak U.S. grain export volumes and risk management strategies that were not as profitable as expected in the quarter.

Sugar & Bioenergy
Bunge's eight mills crushed 1.5 million metric tons more sugarcane in the quarter than in the prior year. Despite lower ATR levels, our unit production costs decreased, reflecting our efficiency improvement activities, and sales volumes increased. However, this was offset by lower ethanol and sugar prices, which were on average down approximately 20%. Risk management strategies were less effective in the quarter, which impacted results in our trading & merchandising business.  Performance in our U.S. ethanol joint ventures was also lower than last year.

Edible Oil Products
Adjusting for charges, results in the quarter were primarily driven by higher packaged oil margins in Brazil and Europe and our 2012 acquisition in India.  Results in the quarter included a $16 million valuation adjustment for certain value added taxes in Brazil.

Milling Products
Higher results in wheat milling, which benefited from improved margins and contributions from our 2012 acquisition in Mexico, were more than offset by lower results in corn milling and rice milling, which experienced lower margins.  Results in the quarter included a $6 million valuation adjustment for certain value added taxes in Brazil.

Fertilizer
Results in our ongoing fertilizer operations were lower in both Argentina and in our Morocco joint venture.

Cash Flow
Cash generated in the fourth quarter 2012 was approximately $2.4 billion compared to cash generated of $1.3 billion in the same period last year.  For the full year, cash used by operations was $455 million compared to cash generated of $2.6 billion in 2011.  The year-over-year variance primarily reflects higher commodity prices. 

Income Taxes
The effective tax rate, excluding our discontinued fertilizer business and the sugar & bioenergy impairment for the year ended December 31, 2012 was approximately 19% compared to 6% last year.  The higher tax rate primarily reflects earnings mix.

Outlook

Drew Burke, Chief Financial Officer, stated, "We expect a much improved year in 2013.  In agribusiness, the combination of tight global supplies and large crops in South America should make this region the principal supplier of soybean, soy products and grain exports until Northern Hemisphere harvests begin later in the year.  At that time we expect a similar situation to develop in the Northern Hemisphere.  Considering our global network of assets, expertise in managing risk and export capabilities this market environment fits us well.

"For the first time, in sugar & bioenergy we expect to have sufficient sugarcane to be able to operate our mills at our 21 million tons of capacity. This higher level of crush, as well as an expected improvement in ATR, should significantly reduce our unit production costs.  We expect results in this segment to be significantly higher and weighted toward the second half of the year due to the seasonality of the Brazilian sugarcane harvest.

"In food & ingredients, we expect the solid performance in the second half of 2012 to continue.  We should benefit from the full-year results of our acquired wheat mill in Mexico and the start-up of operations at our new multi-oil refining facility in India and our new refining and packaging facility in Decatur, Alabama, both of which should improve our operating efficiencies. 

"Additionally, we expect the following for 2013:  depreciation, depletion and amortization of approximately $575 million; capital expenditures of approximately $1.2 billion, approximately 25% of which will be invested in maintenance, safety and environmental projects; and a full-year tax rate of 17% to 20%."

Conference Call and Webcast Details

Bunge Limited's management will host a conference call at 10:00 a.m. EST on February 7, 2013 to discuss the company's results.

Additionally, a slide presentation to accompany the discussion of results will be posted on www.bunge.com.

Earnings announcements for the first, second and third quarters of fiscal year 2013 are tentatively scheduled for April 25, July 25 and October 24, respectively.   

To listen to the call, please dial (877) 261-8992.  If you are located outside the United States or Canada, dial (847) 619-6548.  Please dial in five to 10 minutes before the scheduled start time.  When prompted, enter confirmation code 34095635.  The call will also be webcast live at www.bunge.com.

To access the webcast, go to the "Webcasts and Events" page of the "Investors" section of the company's website.  Select "Q4 2012 Bunge Limited Conference Call" and follow the prompts.  Please go to the website at least 15 minutes prior to the call to register and download any necessary audio software.

For those who cannot listen to the live broadcast, a replay will be available later in the day on February 7, 2013, continuing through March 8, 2013.  To listen to it, please dial (888) 843-7419 or, if located outside the United States or Canada, dial (630) 652-3042.  When prompted, enter confirmation code 34095635.  A replay will also be available on the "Audio Archives" page of the "Investors" section of the company's website.

About Bunge Limited

Bunge Limited (www.bunge.com, NYSE: BG) is a leading global agribusiness and food company operating in over 40 countries with approximately 35,000 employees.  Bunge buys, sells, stores and transports oilseeds and grains to serve customers worldwide; processes oilseeds to make protein meal for animal feed and edible oil products for commercial customers and consumers; produces sugar and ethanol from sugarcane; mills wheat, corn and rice to make ingredients used by food companies; and sells fertilizer in South America.  Founded in 1818, the company is headquartered in White Plains, New York.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains both historical and forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but rather reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including "may," "will," "should," "could," "expect," "anticipate," "believe," "plan," "intend," "estimate," "continue" and similar expressions. These forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. The following important factors, among others, could affect our business and financial performance: industry conditions, including fluctuations in supply, demand and prices for agricultural commodities and other raw materials and products used in our business; fluctuations in energy and freight costs and competitive developments in our industries; the effects of weather conditions and the outbreak of crop and animal disease on our business; global and regional agricultural, economic, financial and commodities market, political, social and health conditions; the outcome of pending regulatory and legal proceedings; our ability to complete, integrate and benefit from acquisitions, dispositions, joint ventures and strategic alliances; our ability to achieve the efficiencies, savings and other benefits anticipated from our cost reduction, margin improvement and other business optimization initiatives; changes in government policies, laws and regulations affecting our business, including agricultural and trade policies, tax regulations and biofuels legislation; and other factors affecting our business generally. The forward-looking statements included in this release are made only as of the date of this release, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

 

Additional Financial Information

The following table provides a summary of certain gains and charges that may be of interest to investors.  The table includes a description of these items and their effect on total segment EBIT, net income attributable to Bunge and earnings per share for the quarter and year ended December 31, 2012 and 2011.


 


 

 

Total Segment

EBIT

Net Income

Attributable to

Bunge

Earnings

Per Share

Diluted


 

(In millions, except per share data)

Quarter Ended December 31:

2012 

2011

2012

2011

2012

2011

Continuing operations:


 

 

 

 

 

 

 

 

 

 

 

 

Agribusiness:


 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on sale of recoverable tax credits (2)

$

(66)

$

-

$

(44)

$

-

$

(0.30)

$

-


 

Impairment of equity method investment


 

 

 

 

 

 

 

 

 

 

 

 

 

   and related party loan (3)


 

 (10)


 

-


 

(9)


 

-


 

(0.06)


 

-

Sugar & Bioenergy:


 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill impairment (5)


 

 (514)


 

-


 

(339)


 

-


 

(2.32)


 

-


 

Noncontrolling interest share of goodwill impairment


 

18


 

-


 

12


 

-


 

0.08


 

-


 

Gain on sale of investment (6)


 

 16 


 

-


 

11


 

-


 

0.07


 

-

Edible oil products:


 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on sale of recoverable tax credits (8)


 

 (7)


 

-


 

(5)


 

-


 

(0.03)


 

-

Discontinued operations - Fertilizer (10):


 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of long-term receivables from farmers (12)


 

 (49)


 

-


 

(32)


 

-


 

(0.22)


 

-


 

Income tax valuation allowance (13)


 

 - 


 

-


 

(266)


 

-


 

(1.82)


 

-

Total

$

(612)

$

-

$

(672)

$

-

$

(4.60)

$

-


 

 

 

Total Segment

EBIT

Net Income

Attributable to

Bunge

Earnings

Per Share

Diluted


 

(In millions, except per share data)

Year Ended December 31:

2012 

2011

2012

2011

2012

2011

Continuing operations:


 

 

 

 

 

 

 

 

 

 

 

 

Agribusiness:


 

 

 

 

 

 

 

 

 

 

 

 

 

Gains on sales of investments in affiliates (1)

$

85

$

37

$

54

$

37

$

0.37

$

0.24


 

Loss on sale of recoverable tax credits (2)


 

 (66)


 

-


 

(44)


 

-


 

(0.30)


 

-


 

Impairment of equity method investment


 

 

 

 

 

 

 

 

 

 

 

 

 

   and related party loan (3)


 

 (10)


 

-


 

(9)


 

-


 

(0.06)


 

-

Sugar & Bioenergy:


 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of equity method investments


 

 

 

 

 

 

 

 

 

 

 

 

 

   and related party loan (4)


 

(39)


 

-


 

(25)


 

-


 

(0.17)


 

-


 

Goodwill impairment (5)


 

 (514)


 

-


 

(339)


 

-


 

(2.31)


 

-


 

Noncontrolling interest share of goodwill impairment


 

18


 

-


 

12


 

-


 

0.08


 

-


 

Gain on sale of investment (6)


 

 16 


 

-


 

11


 

-


 

0.07


 

-

Edible oil products:


 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of property, plant and equipment (7)


 

 - 


 

6


 

-


 

5


 

-


 

0.03


 

Loss on sale of recoverable tax credits (8)


 

 (7)


 

-


 

(5)


 

-


 

(0.03)


 

-

Milling products:


 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on acquisition of controlling interest (9)


 

 36 


 

-


 

36


 

-


 

0.24


 

-

Discontinued operations - Fertilizer (10):


 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense) - net (11)


 

 (27)


 

-


 

(18)


 

-


 

(0.12)


 

-


 

Impairment of long-term receivables from farmers (12)


 

 (49)


 

-


 

(32)


 

-


 

(0.22)


 

-


 

Income tax valuation allowance (13)


 

 - 


 

-


 

(266)


 

-


 

(1.81)


 

-

Total

$

(557)

$

43

$

(625)

$

42

$

(4.26)

$

0.27

 


 

Consolidated Earnings Data (Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended


 

 

Year Ended


 

December 31,


 

 

December 31,

(In millions)


 

2012 


 

2011


 

 

 

2012


 

2011

Net sales

$

17,040

$

15,692


 

 

$

60,991

$

56,097

Cost of goods sold


 

 (16,490)


 

(14,975)


 

 

 

(58,418)


 

(53,470)

Gross profit


 

 550 


 

717


 

 

 

2,573


 

2,627

Selling, general and administrative expenses


 

 (399)


 

(390)


 

 

 

(1,563)


 

(1,436)

Foreign exchange gain (loss)


 

 2 


 

(11)


 

 

 

88


 

(16)

Other income (expense)−net


 

 (74)


 

(2)


 

 

 

(92)


 

7

Goodwill impairment (5)


 

 (514)


 

-


 

 

 

(514)


 

-

Gain on sale of investments in affiliates


 

 - 


 

-


 

 

 

85


 

37

Gain on acquisition of controlling interest


 

 - 


 

-


 

 

 

36


 

-

EBIT attributable to noncontrolling interest


 

 21 


 

(19)


 

 

 

15


 

(30)

Total Segment EBIT (14)


 

 (414)


 

295


 

 

 

628


 

1,189

Interest income


 

 18 


 

29


 

 

 

76


 

102

Interest expense (15)


 

 (87)


 

(80)


 

 

 

(317)


 

(301)

Income tax (expense) benefit


 

 203 


 

19


 

 

 

6


 

(55)

Noncontrolling interest share of interest and tax


 

 - 


 

13


 

 

 

13


 

32

Income (loss) from continuing operations, net of tax


 

 (280)


 

276


 

 

 

406


 

967

Income (loss) from discontinued operations, net of tax (10)


 

 (319)


 

(22)


 

 

 

(342)


 

(25)

Net income (loss) attributable to Bunge


 

 (599)


 

254


 

 

 

64


 

942

Convertible preference share dividends and other obligations


 

 (11)


 

(9)


 

 

 

(36)


 

(34)

Net income (loss) available to Bunge common shareholders

$

(610)

$

245


 

 

$

28

$

908

Net income (loss) per common share diluted attributable
to Bunge common shareholders (16):


 

 

 

 

 

 

 

 

 

 

Continuing operations

$

(1.99)

$

1.80


 

 

$

2.51

$

6.23

Discontinued operations


 

 (2.18)


 

(0.15)


 

 

 

(2.32)


 

(0.16)

Net income (loss) per common share - diluted

$

(4.17)

$

1.65


 

 

$

0.19

$

6.07

Weighted–average common shares outstanding - diluted


 

146 


 

154


 

 

 

147


 

155