Bunge poised for record 2002

Bunge, the world's largest oilseed processor, said yesterday that quarterly earnings rose sharply as a slump in the Brazilian currency helped boost the performance of its agribusiness and fertiliser divisions.

The company, which is the dominant producer of soyoil and soymeal in Brazil, also said it was poised to finish the year with record earnings and year-over-year increases in earnings per share for each quarter, with the recent acquisition of a French rival helping to extend its market reach in Europe.

The news helped push Bunge's shares more than 5 per cent higher.

"Even though we knew the quarter was going to be good because of the (company's) preannouncement, we didn't know it was going to be this good,"​ analyst John McMillin of Prudential Securities said. "I think it's going to start getting a little more difficult. Soybean margins have not been that great."​

Bunge chief financial officer Bill Wells said: "We certainly have been getting one-time benefits from the devaluation in South America, and that will probably not continue next year.​

"Nevertheless, our ongoing business is doing very well. We are seeing increases in profitability,"​ he told Reuters, adding that Bunge's target was to increase earnings per share by an average 10 per cent to 12 per cent per year over the next five years.

Bunge posted a net profit of $95 million, or 96 cents a share, for the third quarter, compared with $57 million, or 76 cents a share, a year earlier. The per-share profit was based on a weighted average of 99 million shares, compared with 75 million in the 2001 quarter.

Last month, Bunge raised its third-quarter earnings forecast to between $80 million and $85 million, or 81 cents to 86 cents per share, from July guidance of $65 million to $70 million, or 65 cents to 71 cents a share.

Net sales reached $3.60 billion in the quarter, up from $3.15 billion a year ago.

Bunge said earnings in its agribusiness and fertiliser divisions improved strongly, helped by a steep decline in the Brazilian currency. Bunge's costs in Brazil are in the local real currency, while exports are in US dollars.

The Brazilian currency - battered by concerns that a left-wing victory in the 27 October runoff in Brazil's presidential election would lead to mismanagement of Latin America's biggest economy - has tumbled some 40 per cent in value against the dollar this year.

Bunge said its agribusiness volume decreased 4 per cent but the division's gross profit increased 86 per cent over the year-ago period. Fertilizer sales volume rose 20 per cent as South American farmers bought supplies ahead of the planting season, and gross profit increased 11 per cent. Sales volume in its food products division rose 1 per cent while gross profit fell 5 per cent.

Bunge has gained from strong demand and the highest prices for soyoil and soymeal in three years. Argentina and Brazil, where Bunge is the dominant producer, are expected to surpass the United States in soybean production next year.

Analysts had forecast third-quarter earnings of 82 cents to 86 cents a share, with an average estimate of 84 cents, according to research firm Thomson First Call.

Looking ahead, Bunge said it was confident in its fourth-quarter net profit forecast of $55 million to $60 million, or 55 cents to 60 cents per share.

Analysts tracked by Thomson First Call were expecting fourth-quarter net earnings of 58 cents to 63 cents, with an average of 60 cents per share.

Bunge shares closed $1.30 higher, or up 5.4 per cent, at $25.20 on the New York Stock Exchange, after reaching $25.75 - above their 52-week high of $25.18, which was hit on 4 October.

Bunge processes and exports grains and oilseeds and is also a leading producer of fertiliser. Its food division makes chocolate syrup and hot fudge toppings as well as fruit toppings, flavouring syrup and icings used in bakeries and restaurants.

Bunge expanded its market reach through its recent acquisition of a 54.69 per cent stake in rival French-based Cereol which has oilseed processing and animal feed operations in North America and Europe.