World Grain - March 2014 - 20

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GrainCorp chairman warns of empty bins, reduced receivals
SYDNEY, AUSTRALIA - In his address at GrainCorp.'s annual general meeting, company Chairman Don Taylor warned that in contrast to
the strong crops of recent years, this year's drought impacted wheat crop
would mean significantly lower grain volumes in GrainCorp's elevators.
This drop in receivals will negatively impact the company's profit.
"We are clearly entering an environment with new challenges. The
drought conditions that have prevailed in northern NSW and Queensland
had a big impact on growers and their crops - substantially reducing the
volumes coming into our network," Taylor said. "Coupled with an export program that is heavily skewed to the first months of this financial
year, much of our country network will stand almost empty for the second half of our financial year. We are also looking at increasingly intense
competition - both up-country and at the ports."
During his address, he noted that GrainCorp recorded another
strong result for 2013 and continued to deliver on corporate objectives. "The underlying net profit after tax of A$175 million reflected
strong grain volumes, but it also highlighted the benefits of our diversification strategy, with strong contributions from our marketing
and downstream processing businesses, including the new business,
GrainCorp Oils. The total dividend of A$0.45 cents per share reflects
our objective to be a reliable dividend payer, by distributing approximately 40%-60% of NPAT through the cycle.
"We measure our overall performance against return on equity. We
achieved a 10.1% return in 2013 and have averaged 12.5% over the
last three years," Taylor said.
Taylor further emphasized the disappointment in the Australian
government's rejection of the takeover bid by Decatur, Illinois, U.S.based Archer Daniels Midland Company (ADM). "As you know,

after rejecting two earlier offers GrainCorp's board unanimously recommended a third offer from ADM, as we firmly believed this materially improved offer was in the best interests of our shareholders.
"The rejection of the offer was obviously very disappointing.
However, that decision is made and we cannot afford to dwell on it."
Taylor noted that GrainCorp is assessing how the company can
strengthen its network and free up capital to allow investment in the
core sites that growers strongly support. This will involve some sites
growing, some sites shifting focus, and some unviable sites closing.
It's a process we are working through carefully, methodically and in
close consultation with our customers," he said. "We are also working closely with governments, as investment to improve the rail link
between country and port remains critical to the competitiveness of
our entire industry.
Taylor added that the company's challenges further demonstrate
the importance of the board's diversification strategy.
"The solid performances of GrainCorp Marketing, GrainCorp
Malt, GrainCorp Oils and Allied Mills this year mean that they now
make up almost 60% of our earnings. This proportion is up from
25% just four years ago, and we expect it to grow further, to around
a two-thirds contribution in a 'normal' year. By reducing our reliance
on the contribution of one single business unit, we place our business
on a much more sustainable footing."
In closing his speech, Taylor commented that the GrainCorp
board is in the process of looking for a new chief executive officer
(CEO). "I have given a commitment to the board that I will continue
as interim CEO until the appointment of a new CEO. I am hopeful
that this process will be completed by mid-year."

Agribusiness segment boosts Bunge's earnings
WHITE PLAINS, NEW YORK, U.S. - Bunge reported on Feb. 13
a significant increase in 2013 earnings, due to record results from its
agribusiness, edible oils and milling segments.
Combined, the three segments generated approximately $1.3 billion in EBIT and returns above cost of capital, said Soren Schroder,
Bunge's chief executive officer.
Earnings for the year increased $306 million or $1.55 per share,
compared to $64 million or 19¢ per share in 2012. The company
returned to profit in the fourth quarter, with earnings for $138 million
or 78¢ per share, compared to a loss of $599 million or $4.17 per
share in the same period in 2012.
"Our agribusiness team effectively managed risks as markets transitioned from extreme tightness to emerging surpluses, while capitalizing on strong oilseed processing margins in the Northern Hemisphere and navigating unpredictable farmer selling patterns," Schroder said. "Food & Ingredients achieved a record quarter and fullyear results with all regions reporting higher year-over-year annual
earnings. Our food team has made big strides in its effort to engage
with customers and extract more value from operations and category
management, which are all part of a larger performance management
program we are rolling out across our business."
The agribusiness segment more than doubled its results from the
challenging year-ago period, Bunge said. Higher results in the quarter were primarily driven by strong oilseed processing margins in
North America, Europe and China, which benefited from the combination of strong demand, large harvests and a lack of oilseed exports
out of South America.
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Higher results in Bunge's merchandising operations were driven
by large export programs to Asia, the Middle East and Europe. In
South America, which was in the slow season, domestic oilseed processing results were higher in Brazil and Argentina.
Results in the fourth quarter 2012 included charges of $76 million,
primarily related to the loss on sale of certain long-term recoverable
tax assets for cash.
Higher results for the quarter in the milling segment were primarily driven by improved performances in corn milling and Brazilian
wheat milling operations. Corn milling results benefited from improved margins and higher volumes, which were due in part to the
arrival of the U.S. corn crop and strong demand from customers who
had delayed purchases in anticipation of record corn production.
In Brazil, results benefited from improved customer mix and wellexecuted wheat import programs from North America, which replaced
wheat volumes from Argentina. Wheat milling results in Mexico were
solid and up from last year, and rice milling results were comparable
to the year-ago period. Results in the fourth quarter 2012 included a $6
million valuation adjustment for certain value added taxes in Brazil.
"We enter 2014 with good momentum. Lower commodity prices are
spurring growth in demand and trade. Soybean crops in South America
are on track to set another record level of production. Similar to last year,
this will put a premium on logistics expertise and assets, which fits our
capabilities well," Schroder said. "We expect our Food & Ingredients
segment to extract even greater value from the downstream chains, and
we will have incremental contribution from our acquisition of Grupo
Altex's wheat mills in Mexico, which we completed at the end of 2013."
March 2014 / World Grain / www.World-Grain.com

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World Grain - March 2014

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