Bunge Shares Drop After Poor Earnings

wheat field
wheat field

Bunge Ltd. (NYSE: BG) reported fourth-quarter and full-year 2012 earnings before markets opened this morning.

For the quarter, the agribusiness giant posted adjusted diluted earnings per share (EPS) of $0.57 on revenues of $17.04 billion. In the same period a year ago, the company reported EPS of $1.80 on revenues of $15.69 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $2.36 and $18.81 billion in revenues.

For the full year, Bunge reported adjusted EPS of $4.62 on revenues of $60.99 billion, compared with a consensus call for EPS of $6.20 on revenues of $64.18 billion.

On a GAAP basis, the company posted a quarterly net loss of $1.99 per share, down sharply from a profit of $1.80 in the fourth quarter of 2011. GAAP results include an after-tax noncash charge of $683 million, which comprises a goodwill impairment charge of $339 million, a charge of $266 million related to the sale of the company's Brazilian business and other charges.

The company's CEO said:

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. … Looking to 2013, the agribusiness environment is robust. The world needs to rebuild grain and oilseed stocks to meet growing consumption.

The company called out lower U.S. grain exports, low ethanol prices and unprofitable hedging as primary causes for the poor quarterly results.

Without providing EPS or revenue guidance, the company's outlook for 2013 includes to continue growing its food and ingredients segment, to achieve greater productivity in its sugar and bioenergy business, and to improve its storage and export business.

The consensus first0quarter EPS estimate is $1.27 on revenues of $14.85 billion. For the full year, EPS is estimated at $7.63 on revenues of $66.63 billion. Given Bunge's 2012 performance, that full-year estimate could be impossibly high - a 10% jump in revenues and a 65% boost in EPS.

Bunge's shares are trading down about 3.3% at $76.80 in the premarket this morning, in a 52-week range of $57.10 to $80.99. The consensus target price for the shares was around $83.70 before today's report.

Filed under: 24/7 Wall St. Wire, Agriculture, Earnings Tagged: BG