Bunge Limited Earnings Cheat Sheet: Increased Costs Strains Margins as Profit Drops

Rising costs hurt Bunge Limited (NYSE:BG) in the third quarter as profit dropped from a year earlier. Bunge is a global agribusiness and food company, operating in the farm-to-consumer food chain. It conducts its operations in three divisions: agribusiness, fertilizer, and food and ingredients.

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

Bunge Earnings Cheat Sheet for the Third Quarter

Results: Net income for Bunge Limited fell to $140 million (89 cents per share) vs. $212 million ($1.36 per share) a year earlier. This is a decline of 34% from the year earlier quarter.

Revenue: Rose 33.9% to $15.62 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: BG fell short of the mean analyst estimate of $1.65 per share. It beat the average revenue estimate of $14.32 billion.

Quoting Management: Alberto Weisser, Bunge’s Chairman and Chief Executive Officer stated, “The third quarter was a particularly volatile period where managing risk in our agribusiness and sugarand bioenergy segments proved to be challenging. Lower than planned sugarcane milling volume due to the continued impact of the drought on our sugarcane yields also weighed on results in the quarter. However, we expect a stronger fourth quarter and see optimistic signs for Bunge in 2012.”

Key Stats:

Gross margin shrank 1.6 percentage points to 4.5%. The contraction appeared to be driven by increased costs, which rose 36.2% from the year earlier quarter while revenue rose 33.9%.

Revenue has risen the past four quarters. Revenue increased 32% to $14.49 billion in the second quarter. The figure rose 17.9% in the first quarter from the year earlier and climbed 21.9% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the second quarter, net income fell 82.2% from the year earlier quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by 31 cents, and in the first quarter, it was ahead by 20 cents.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from $1.62 a share to $1.83 over the last ninety days. For the fiscal year, the average estimate has moved up from $6.35 a share to $6.80 over the last ninety days.

Competitors to Watch: Archer Daniels Midland Co. (NYSE:ADM), Corn Products Intl., Inc. (NYSE:CPO), MGP Ingredients, Inc. (NASDAQ:MGPI), CHS Inc. (NASDAQ:CHSCP), Westway Group, Inc. (NASDAQ:WWAY), SunOpta, Inc. (NASDAQ:STKL), Darling International Inc. (NYSE:DAR), AgFeed Industries, Inc. (NASDAQ:FEED), and The Mosaic Company (NYSE:MOS).

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Source: Xignite Financials)