Bunge Limited Earnings: Margins Suffer as Costs Rise, Profit Falls

Rising costs hurt Bunge Limited (NYSE:BG) in the fourth 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.

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Bunge Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Bunge Limited fell to $254 million ($1.65 per share) vs. $301 million ($1.95 per share) a year earlier. This is a decline of 15.6% from the year earlier quarter.

Revenue: Rose 29.2% to $16.45 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Bunge Limited was about in line with expectations as the mean analyst estimate of $1.64 per share. It beat the average revenue estimate of $13.73 billion.

Quoting Management: Alberto Weisser, Bunge’s Chairman and Chief Executive Officer stated, “In 2011 Bunge produced strong results in many parts of our business, but faced significant headwinds in others. On a combined basis, our agribusiness, edible oils and milling segments generated record full-year results of over $1.1 billion. However, reduced sugarcane production yields in Brazil due to back-to-back years of poor weather had a material impact on volumes in our sugar & bioenergy segment.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 27%, with the biggest boost coming in the third quarter when revenue rose 33.9% from the year earlier quarter.

Gross margin shrank two percentage points to 4.5%. The contraction appeared to be driven by increased costs, which rose 32% from the year earlier quarter while revenue rose 29.2%.

The company has now seen net income fall in each of the last three quarters. In the third quarter, net income fell 34% from the year earlier, while the figure fell 82.2% in the second quarter.

The company topped expectations last quarter after falling short of forecasts in the third quarter with net income of 86 cents versus a mean estimate of net income of $1.65 per share.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for first quarter of the next fiscal year has fallen from $1.30 per share to $1.24. Over the past sixty days, the average estimate for the fiscal year has reached $5.90 abs per share, a decline from $5.95.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com