Bunge Ltd. posted a surprise loss for the second quarter after it was wrong-footed by price moves in the soybean market due to the U.S. trade war with China and a drought in Latin America, reports Bloomberg.
The loss will increase the pressure on Chief Executive Officer Soren Schroder to turn the company’s performance around. Bunge has been the subject of takeover speculation for more than a year, with rivals Archer-Daniels-Midland Co. and the agriculture unit of Glencore Plc making approaches.
Schroder told analysts on a conference call Wednesday that Bunge "went long" -- a bullish bet -- on Chicago soybean futures, speculating the trade war between the U.S. and China would be brief.
Highlights of the company's second quarter reports include:
- Q2 GAAP EPS of $(0.20); $0.10 on an adjusted basis
- Agribusiness impacted by ~$125 million of new negative mark-to-market on forward soy crushing contracts; positioned for strong second half of the year
- Food & Ingredients slightly higher than last year, driven by improved results in Milling
- Global Competitiveness Program exceeding expectations; increasing 2018 savings target to $150 million from $100 million
"While total company performance in the second quarter came in below our estimates, we expect a strong second half driven by another step up in performance in soy crushing as we have committed most of the open capacity for the balance of the year at very attractive margins," says Schroder. "We are confident in our ability to deliver on our targets for the full year."
