Bunge Limited (BG)

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Bunge Limited (BG)

Q2 2011 Earnings Call

July 28, 2011 10:00 am ET

Executives

Mark Haden - Investor Relations

Andrew Burke - Chief Financial officer and Global Operational Excellence officer

Alberto Weisser - Chairman and Chief Executive Officer

Analysts

Ryan Oksenhendler - BofA Merrill Lynch

Diane Geissler - Credit Agricole Securities (USA) Inc.

Christina McGlone - Deutsche Bank AG

Vincent Andrews - Morgan Stanley

Robert Moskow - Crédit Suisse AG

Kenneth Zaslow - BMO Capital Markets U.S.

Cornell Burnette

Jeffrey Farmer - Jefferies & Company, Inc.

Christine McCracken - Cleveland Research Company

Christine Healy - Scotia Capital Inc.

Tim Tiberio - Chardan Capital Markets, LLC

Presentation

Operator

Welcome to Bunge Second Quarter 2011 Earnings Call. My name is Mitch, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded.

I would now like to turn the call over to Mark Haden. Mr. Haden, you may begin.

Mark Haden

Thank you, Mitch, and thank you, everyone, for joining us this morning. Welcome to Bunge Limited's Second Quarter 2011 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 Investor Information section of our website, www.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 Investor Information 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; and Drew Burke, Bunge's Chief Financial Officer.

I'll now turn the call over to Alberto, and he'll begin with Slide 3.

Alberto Weisser

Good morning, everyone. Bunge posted good second quarter results. Agribusiness and food & ingredients did well in the quarter, and we anticipate a solid performance in these segments in the second half of the year. Sugar & bioenergy and fertilizer performed as expected, and we expect increased contribution from both as they enter their high-volume season. Overall demand for agriculture products is good. Global trade is robust, and the steady growth in demand that characterize our industry continues.

Moving to Slide 4. Bunge is investing accordingly. Over the next 18 months, we will bring online a number of facilities that will increase our scale and flexibility and contribute to our bottom line results. For example, we will have 11 million tons of new port capacity by the end of 2011, first, through our new deepwater port terminal in Ukraine, which provides an ideal logistics outlet for Black Sea grain production; and second, through our new terminal in the U.S. Pacific Northwest.

We'll support these facilities with inland assets as well. In the U.S., we are adding 7 new grain facilities. These elevators will help us better serve domestic and international trade flows.

We will also add processing capacity in key locations. Just last week, we broke ground on expansion of our Altona Canada canola processing facility. The project will more than double our capacity in this location and make the plant one of the most efficient in the industry. In total, we are adding more than 2.5 million metric tons of annual crush capacity to our global network.

These investments, in addition to the ones in sugarcane and bioenergy and food & ingredients, will help us outpace market growth rates and meet our annual earnings per share growth target of 10% to 12% per year on average over the next 5 years.

Before I turn it over to Drew, I want to take a minute to mention a special milestone. Next Tuesday, Bunge will celebrate its 10th anniversary as a public company by ringing the closing bell at the New York Stock Exchange. Bunge has a long and accomplished 200-year history. But surely, the last decade has been one of the most transformative. Our IPO was instrumental to the company's global expansion and our creation of leading positions in oilseeds, grains, sugar, food and other markets. We are proud of what our team has accomplished and proud of our total shareholder returns, 18% per year on average. Today, we are well positioned, well capitalized and have an excellent team. We look forward to another decade of inspiring growth.

Now I will turn it over to Drew, who will discuss our second quarter financial results and the outlook.

Andrew Burke

Thank you, Alberto. Let's turn to Page 5 of the presentation.

Bunge had a strong second quarter. Total segment EBIT was $373 million. The prior year EBIT was $2.4 billion, and that included a $2.4 billion gain on the sale of our fertilizer and nutrients business. Net income for the quarter was $316 million. In the prior year, it was $1.8 billion, and that included a gain of $1.9 billion on the sale of our fertilizer and nutrients business.

Agribusiness performed well with an EBIT of $319 million. That amount includes $37 million from the sale of our 50% share of a crushing joint venture in Europe. Our results were driven by strong performance in South America, as large harvest and good margins drove good earnings in our grains and oilseeds business. Results in Europe and North America exceeded the prior year.

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