Bunge Surges After Squeezing Profit Out of Downtrodden Soybeans

09:49AM May 08, 2019
( Bunge )

(Bloomberg) -- Bunge Ltd. rose the most in more than a year after posting a surprise profit, driven by soybean processing, and announcing a management shakeup to better cope with tough agricultural commodity markets.

The shares climbed as much as 7.6 percent, the steepest intraday gain since early last year. A decision to hedge some of its soybean capacity swelled crush margins, helping the White Plains, New York-based company defy analyst predictions of a first-quarter loss. Outlook for the full year was left unchanged.

Bunge is “off to a good start to 2019,” Citigroup Inc. analyst David Driscoll wrote in a note to clients. “Going forward, current soy crush conditions and the emergence of African Swine Fever in China could potentially add upside to consensus earnings expectations.”

The 201-year-old firm -- among the worst performers among major agricultural stocks in the past year -- has been adjusting its business amid thin industry margins and a trade war that has made trading less predictable. Poor results led to speculation Bunge would look to sell itself after previous approaches from rivals Glencore Plc and Archer-Daniels-Midland Co.

In response, the firm is making changes to its operating model.

John Neppl, previously at ethanol producer Green Plains Inc., will replace Thomas Boehlert as chief financial officer. Raul Padilla, president of South America and the sugar unit, will head global operations, while head of agribusiness segment Christos Dimopoulos will now lead global supply chains.

Brian Zachman, tapped by Bunge in January to lead its global risk management division, will remain in that role, “working to improve returns while reducing volatility across the company,” the firm said. In December, it announced that its then-chief executive officer Soren Schroder was stepping down, before naming Gregory Heckman as his replacement.

“Shifting away from our regional, matrix-based structure will simplify the organization and speed up decision making,” Heckman said in the statement. “These changes support our strategic priorities: driving operational performance, optimizing the portfolio and strengthening financial discipline.”

Neppl, who became CFO of Green Plains in September 2017, previously held that title at Gavilon, where Heckman was previously CEO.

Little known outside the agribusiness industry, Bunge is the “B” of the four storied “ABCD” group of companies that have dominated agriculture for more than a century. ADM, Cargill Inc. and Louis Dreyfus Co. round out the quartet, known for the initials of each company.

Sugar has been a major drag for Bunge, which has found it hard to sell its milling business in top producer Brazil. Global sugar prices have been depressed amid a global glut after bumper crops in Thailand and India, hurting profits for traders.


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