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Tuesday, September 24, 2019

Maritime Logistics Professional

February 21, 2019

Bunge Posts Q4 Loss as Trade War Hits Soy Prices

File Image: CREDIT AdobeStock / © Lidian Neeleman

File Image: CREDIT AdobeStock / © Lidian Neeleman

Global grains merchant Bunge Ltd reported a fourth-quarter loss on Thursday as fallout from the U.S.-China trade war dragged down soybean prices in Brazil.

Shares of the White Plains, New York-based company slumped nearly 4 percent in premarket trading to $50.75 per share.

Brazilian soy prices had swelled to a steep premium to U.S. beans after China slapped steep tariffs on shipments from the United States in July. But that premium narrowed after the countries declared a temporary truce in their trade war on Dec. 1, devaluing Bunge's soybean inventory.

The company said gross profit at its agribusiness segment, historically responsible for about 80 percent of company revenue, fell to $203 million from $238 million in the fourth quarter.

Bunge had warned of lower full-year earnings in the segment as well as in its sugar and bioenergy business, which was hurt by lower Brazilian ethanol prices and weather-reduced crops.

The company has been under investor pressure and the target of takeover attempts after an earlier string of weak profits. It removed long-time CEO Soren Schroder and is conducting a strategic review of its businesses that may include a sale of the 200-year-old company.

"We are committed to addressing underperforming assets as part of our effort to enhance shareholder value, and we are strengthening our risk management capabilities, as they are foundational to everything we do," Kathleen Hyle, Bunge's non-executive board chair, said in a release.

Bunge's recent woes are expected to stretch into the current year. Agribusiness results in 2019 are expected to be below 2018 due to narrowing soybean crush margins, while its struggling sugar and bioenergy unit's results are likely to be "about break-even," the company said.

The company's net loss available to shareholders widened to $74 million, or 52 cents per share, in the fourth quarter ended Dec. 31, as it lost about $125 million due to lower prices of its Brazilian soybeans.

Excluding one-time items, the company earned 8 cents per share, missing the average analyst estimate of 20 cents per share, according to IBES data from Refinitiv.

The company, one of the "ABCD" companies that dominate global grains trading along with Archer Daniels Midland Co , Cargill Inc and Louis Dreyfus Co, said net sales fell 0.5 percent to $11.54 billion.

Reporting by Karl Plume