Bunge Ltd. Earnings: Here’s Why Investors Don’t Like These Results

Bunge Ltd. (NYSE:BG) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 2.55%

Bunge Ltd. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 38.33% to $0.74 in the quarter versus EPS of $1.20 in the year-earlier quarter.

Revenue: Rose 2.66% to $15.49 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Bunge Ltd. reported adjusted EPS income of $0.74 per share. By that measure, the company missed the mean analyst estimate of $1.3. It missed the average revenue estimate of $15.81 billion.

Quoting Management: Soren Schroder, Bunge’s Chief Executive Officer, stated, “The first half of the year came in generally as we expected, and we are anticipating a strong second half. In the second quarter, in agribusiness our Brazilian operations generated strong results executing record volumes under challenging logistical conditions. We navigated the choppy markets well, but faced some challenges in North America, Europe and Argentina, which suffered from the continued effects of last year’s poor oilseed and grain crops.

“In sugar & bioenergy, we are pleased to see our improvements in industrial operations, global risk and trade flow management begin to be reflected in better results. And food & ingredients delivered a record first half of the year due to improved volumes, margins, service levels and working closely with customers on procurement strategies.

“Good demand and big Northern Hemisphere crops should drive robust commercial activity, asset utilization and global trade in agribusiness during the remainder of the year. Sugar & bioenergy will enter the peak milling season. In food & ingredients we expect continued strong performance in both milling and edible oils, as we launch new consumer and B2B edible oil products and continue to improve total supply chain efficiency.

“We are optimistic about the long term as well. Our markets, while competitive, are growing steadily, and Bunge is well positioned for the future. We recognize, however, that growth must be balanced with good returns, and Bunge’s must improve. Our improvement plan for sugar & bioenergy is an essential part of elevating overall returns above our cost of capital, but we can do more in other segments as well. To support this goal, we are taking steps such as enhancing our global performance management system, which will intensify our continuous improvement and operational excellence efforts to drive higher returns through more granular management of business unit performance.

“We are also adjusting our capital management and investment approach. As a first step, we are reducing our 2013 capex by $200 million and commencing a review of 2014 plans. Projects that more immediately improve efficiencies and competitiveness—and that generate faster payback—will be priorities for Bunge. We’ll also be mindful of balancing the need to continue to pursue growth opportunities while generating compelling, consistent value for shareholders as we assess our capital management framework. We look forward to sharing more details in the coming months.”

Key Stats (on next page)…

Revenue increased 4.78% from $14.79 billion in the previous quarter. EPS decreased 35.65% from $1.15 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $2.65 to a profit $2.64. For the current year, the average estimate is a profit of $7.34, which is the same with that ninety days ago.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)