Bunge Limited (BG)

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Bunge Limited (BG)

CLSA AsiaUSA Forum Call

November 9, 2011 01:30 p.m. ET

Executives

Christopher White – CEO, Bunge Asia

Analysts

Diane Geisler – CLSA

Presentation

Diane Geisler – CLSA

Good morning, again, I’m Diane Geisler, the Senior Analyst at CLSA covering food, agri-business and restaurants. I’m delighted today to welcome the management team from Bunge. Joining us today is Chris White who’s CEO of Bunge Asia, which is a role he has held since the group’s formation in 2006.

Chris actually joined Bunge in 2003 as the Regional General Manager of Asia, and prior to that he spent 20 years in various roles with Bristol-Meyers-Squibb including most recently as President of Mead Johnson Nutritionals worldwide.

Also joining me today is Mark Hayden, who I’m sure a lot of you know, he is the Vice-President of Investor Relations. Keeping in mind that Chris is Head of the Asia business, if you have questions on general Bunge then we’ll sort of funnel those over to Mark in the Q&A session. Anyway, thank you very much.

Christopher White

Thank you Diane. It’s a pleasure to be here this morning, thank you all for attending. Bunge’s role helping the ‘Feed a Growing World’ is obviously a compelling and an important one. As Diane said, my job is to give you a sense of how we’re building our business in Asia, but as a first cut for those of you who don’t know Bunge quite so well let me give you a quick overview of the company.

Bunge is a leading agri-business and food company, truly global with roughly $46 billion in 2010 revenues, 32,000 employees spread over 400 facilities in 30 operating countries. It’s built on four business legs or segments. Agri business, which includes our oilseed and grains; merchandising and processing; sugar and bio energy, which is our relatively new commitment; principally in Brazil at this juncture; over the last five years, food ingredients, downstream oils, fats and grain milling which is a good extension of our commodity chains. Lastly, fertilizers for which we’re still a significant blender and marketer in Brazil, Argentina and the U.S.

The company’s history dates back to 1818 when it was founded in Amsterdam, and its subsequent migrations over the 180 years reflect the constant search for agri-business opportunity. Headquarters moved from Amsterdam to Antwerp and then to Argentina in the late 1880s during the time of the big agricultural boom in Argentina.

Headquarters moved to Sao Paolo in the 1970s, into White Plains New York in 1999 in anticipation of going public on the New York Stock Exchange. That migration, that search for opportunity obviously suggests that our next move with the headquarters will be somewhere in Asia at some point in the not too distant future but I’m a little biased.

The company’s growth strategy rests on three strategic pillars. First, is about strengthening our leadership in our core businesses, that’s about optimizing, expanding and extending the businesses and our presence where we exist today. Second is to expand into adjacent businesses where we can leverage our core competencies to be successful. Example would be in the new products areas where we recently entered the rice milling business in the U.S. We announced a palm oil, palm plantation joint venture last week, which I’ll talk a little bit more about later.

It’s about entering new geographies, as we continue to stretch out our physical footprint in Asia or Africa or in middle-eastern North Africa, and it’s about extending our value chains to ensure that we are capturing maximum value across that chain particularly as opportunities migrate within those links. Example there would be, we are building our first feed milling plant in China this year, which will give us another leg to our crush complex.

Executing against those three strategic pillars and imperatives, Bunge has changed its complexion over the last 10 years quite dramatically. As you see here in 2001, essentially all the assets are located in three countries, the U.S., Argentina and Brazil, with $2 billion in long-lived assets. Ten years later, our footprint has expanded substantially. We now have $7 billion in long-lived assets around the world, $1.5 billion in those 10 years outside of those three original markets, and we now touch all the major origination – growing origination areas for our products of interests inclusive of the Americas but also Eastern Europe, also now Australia and Africa as well as the critical destinations particularly in Asia.

Asia is now representing only 4% with significant room to continue growing and growing. The logic for Asian focus and interest is obvious; the demand for our agricultural commodities and the end products is highly correlated with changes in per capita incomes. As you see here with the exception of South Korea, Japan and Taiwan which are already well advanced, most of those key Asian markets, South East Asia, China, India are still at the lower or more convex portions of the curve which means on the assumption that as they continue to grow demand for our products of interests will be disproportionately faster.

The evolving demand is a function of income, but it’s also a function of the growing sophistication and commercialization of feed and oils in these parts of the world. This chart here gives you an idea, if you look at the bars on the left these are where pigs are produced in China and at each one of those stages of relative sophistication, commercialization, formalization, going from backyard farming to specialized households to commercial, that important yellow line is the inclusion of soybean meal into the food rations, and that transition as you see on the curves to the right is happening quite rapidly.

Read the rest of this transcript for free on seekingalpha.com