Bunge's Latest Profit Warning Shows the Toll of China Trade War

10:40AM Jan 22, 2019

Bunge( Bunge )

(Bloomberg) -- Agribusiness giant Bunge Ltd.’s profit warning Tuesday is the latest example of how tough it is for companies to navigate President Donald Trump’s trade war with Beijing.

Bunge now expects adjusted earnings before interest and taxes to be below the $1 billion low-end of its previous outlook. It said it expects as much as a $100 million shortfall in its agribusiness segment amid trade-war disruptions.

Last year, China placed retaliatory tariffs on U.S. products, thereby killing demand for American-grown soybeans as Chinese buyers turned to South American supplies. As the world’s largest processor of the oilseed, Bunge was pegged by investors as well-suited to navigate the spat given its large South American footprint.

Instead, it has suffered missteps. The latest being that Bunge was caught out by a collapse in the Brazilian soybean premium as China dipped its toe back into the U.S. bean market during a temporary trade truce.

In October, the company trimmed its full-year earnings outlook to $1.2 billion from $1.3 billion. For the second-quarter, it registered a surprise loss, saying it “went long” on Chicago soybean futures, speculating the trade war would be brief.

 

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