AgriCensus Report

Bunge cuts 2018 EBIT outlook on trade war, appoints new CEO

Bunge, one of the world’s biggest agribusiness companies, has cited the impact of the US-China trade war in lowering its income outlook for the full 2018 fiscal year ending in December, according to a statement released Tuesday.

The company rolled the revision into an announcement over the appointment of a new CEO, with current board member Gregory A. Heckman revealed as the acting CEO with immediate effect. 

Adjusted EBIT will fall by about $90-$100 million in the Agribusiness segment and $60-$70 million in the Sugar and Bioenergy segment, compared to the low end of its previous forecast which was $1.045 billion.

“The Agribusiness shortfall was largely due to the reduction in value of the company’s Brazilian soybean ownership as factors related to China trade and demand caused Brazilian prices to converge with US prices,” the company said.

“The Sugar and Bioenergy shortfall was primarily due to lower Brazilian ethanol prices, and a weather-related reduction in yields as a poor crop year came to a close.”

The New York-based agribusiness has been suffering from a global glut of grains and oilseeds in the past year, with its share price falling over 30% in the past year.

Despite the downward revision in its EBIT outlook, Bunge’s share price rose 1.5% Tuesday as the company also announced Heckman had replaced former CEO Soren Schroder who announced in December he was stepping down after five years in the role.

“I look forward to further collaboration with Kathi (Bunge’s Non-Executive Board Chair, Kathleen Hyle), the Board and our management team, focusing on ways to improve performance and create shareholder value,” Heckman said in response to his appointment.

At the end of October, Bunge – part of the industry’s ABCD quartet of agri-trading giants – agreed to add four directors to its board after pressure from investors to create a strategic review committee to examine the company’s operations.

Last year, the company became a takeover target for Glencore and rival agribusiness giant Archer Daniels Midland (ADM), but ADM’s CEO debunked that in a January interview with newswire Reuters saying it is the wrong time for “monster” acquisitions.

In the 2017 fiscal year, Bunge’s turnover rose 7.3% to $45.79 billion, resulting in a total EBIT of $436 million, down nearly 61% on the year, with 60% attributed to its Agribusiness segment, and with the Sugar and Bioenergy making a loss of $12 million.

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