Bunge Limited (BG)

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Bunge Limited (BG)

Q4 2012 Earnings Call

February 07, 2013 10:00 am ET

Executives

Mark Haden

Alberto Weisser - Chairman and Chief Executive Officer

Andrew J. Burke - Chief Financial Officer and Global Operational Excellence Officer

Soren W. Schroder - Chief Executive Officer of Bunge North America

Analysts

Ryan Oksenhendler - BofA Merrill Lynch, Research Division

Kenneth B. Zaslow - BMO Capital Markets U.S.

David Driscoll - Citigroup Inc, Research Division

Diane Geissler - Credit Agricole Securities (USA) Inc., Research Division

Ann P. Duignan - JP Morgan Chase & Co, Research Division

Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division

Robert Moskow - Crédit Suisse AG, Research Division

Giovana Araujo - Itaú Corretora de Valores S.A., Research Division

Presentation

Operator

Welcome to the Fourth Quarter 2012 Bunge Earnings Conference Call. My name is Ellen, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Mark Haden, Investor Relations. Mr. Haden, you may begin.

Mark Haden

Thank you, Ellen and thank you, everyone, for joining us this morning. Welcome to Bunge Limited Fourth Quarter 2012 Earnings Conference Call. Before we get started, I want to inform you that we have prepared a slide presentation to accompany our discussion. It can be found in the Investors section of our website at bunge.com under Investor Presentations. Reconciliations of non-GAAP measures disclosed verbally on this conference call to the most directly comparable GAAP financial measure are posted on our website in the Investors section.

I'd like to direct you to Slide 2 and remind you that today's presentation includes forward-looking statements that reflect Bunge's current views with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Bunge has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation, and encourages you to review these factors.

Participating on the call this morning are Alberto Weisser, Bunge's Chairman and Chief Executive Officer; Drew Burke, Bunge's Chief Financial Officer; and Soren Schroder, CEO of Bunge North America. I'll now turn the call over to Alberto.

Alberto Weisser

Good morning, everyone. Let me start by addressing the news of our leadership transition, which we announced this morning and is effective on June 1. I will then provide some insight into our results. Drew will provide details on the notable items, the quarter and our outlook. And Soren will say a few words and we will transition to Q&A.

This transition is a very positive step for Bunge. With Soren, we have a great leader who has built a track record of success in various roles within Bunge. He helped build our global marketing and trading unit, established our Agribusiness franchise in Europe and the Middle East, and since 2010, has led one of our largest operating companies, Bunge North America. In this role, he has overseen the full breadth of our oilseed and grain value chains. In addition, he has deep understanding of our industry, markets and customers. He lives on our business, having spent his entire professional life in it. For all of these reasons, he has my full confidence and that of the board. Soren's selection is the combination of a deliberate and thoughtful process. We have a robust and ongoing succession plan in process at Bunge for the CEO and other management positions. The board and I started working on this particular issue a couple of years ago and established a specific board committee last year to manage the final steps. As part of the process, we have allowed the time and resources to ensure a smooth transition.

For the next 4 months, I will continue as CEO and Soren will focus on running Bunge North America. During that time, Soren will gain exposure to additional parts of the business and meet with employees around the world. As investors, you will see more of him as well. In the second half of the year, I will serve as Executive Chairman, and in this role, my priority will be ensuring that Soren has what he needs to succeed. I will be there to provide support, input and perspective.

So in short, this is the right choice at the right time. That is true for Bunge and for me personally. 2013 is my 15th year as Chairman and CEO. That's a good number. It's right time for me to move on and to hand the reins to the next generation of leaders in our company.

Now let me touch upon the quarter and the year. As mentioned, 2012 ended weaker than we expected, but looking at the full year, we had a record performance in Agribusiness and very solid results in Food & Ingredients. We believe both of these businesses are very well positioned for continued growth and positive returns. We are confident in the long-term potential of Sugar & Bioenergy as well. Clearly, this business is not producing the results we expect or demand. Poor weather conditions and low Brazilian ethanol margins continue to be a challenge. That said, we are making progress to realize the full earnings and returns potential of this business.

Our primary goal is to lower unit production costs. Increasing capacity utilization is a big part. Last year, we reached our planting target of nearly 70,000 hectares, which should allow us to operate at full capacity in 2013. We are making operational improvements to lower costs as well. This include improving industrial planting and harvesting efficiency. Lastly, increases in yield of both cane and ATR, from the low levels seen today throughout the industry will also benefit margins. In fact, I would like to remind that in 2011 and 2012, these yields, both tons per hectare and ATR, were the lowest in the last 20 years.

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