If you’re an agricultural-commodity trader, you already know times are tough. The latest comments from merchant Bunge Ltd. aren’t likely to lift the gloom.
The company said Thursday that travel and entertainment will be among the areas where it’s looking to cut costs as part of a drive to eventually save $250 million a year.
“All areas of the company will be impacted,” Chief Executive Officer Soren Schroder said on a conference call. The cost-cutting plan “is a game-changer.”
Bunge is among several big agricultural-trading houses struggling after a multi-year drop in commodity prices eroded profits and crushed margins. The White Plains, New York-based company’s performance is also under a microscope after Switzerland’s Glencore said in May it approached Bunge about a friendly merger.
Schroder on Thursday reiterated his view that the industry has too much capacity and needs to be consolidated, and that his company would like to take the lead in any mergers. He added that the commodity cycle is close to the bottom, and that Bunge will see improved margins in Brazil in the second half of the year.
Bunge buys and sells crops such as soybeans and corn, operates factories that process farm commodities, and has traders operating out of offices across the globe. The company has been working on the cost-cutting program for about six months, Chief Financial Officer Thomas Boehlert said on the call.