Milling & Baking News - February 15, 2005 - 18

F I N A N C I A L

R E S U L T S

Bunge bests income record by 14%,
sees another strong year ahead
WHITE PLAINS, N.Y. - Boosted by
rising volumes in all its businesses,
net income in 2004 at Bunge Ltd. rose
14% from 2003, marking the company's
fourth consecutive year of record net
income and earnings per share.
In the year ended Dec. 31, Bunge
earnings surged to $469 million, equal
to $4.42 per share on the common stock,
up 14% from $411 million, or $4.12 per
share, in 2003. During the year, the
company incurred an impairment
and restructuring charge of $15
million related to the agribusiness
segment in Western Europe and the
edible oil products segment in North
and South America. Partially offsetting the decline was a $3 million gain
on the exchange of Bunge's retail
flour business. The moves resulted in
a charge of 11c per share for the year.
A year earlier, Bunge booked charges
of 37c per share for impairment and
restructuring and 21c related to a South
American tax provision.
Excluding from 2003 results the $111
million gain on the sale of the Brazilian
soy ingredients business, 2004 net income was up 56% from 2003.
Net sales during the year climbed 14%
to $25.2 billion, up from $22.2 billion in
fiscal 2003. Aggregate sales volume grew
3% to 108.9 million tonnes from 106.2
million last year.
"2004 was an extraordinary year for
Bunge," said Alberto Weisser, chairman
and chief executive officer. "Our 2004
results were excellent and above our
expectations. Each of our businesses
showed strength in dealing with volatile
markets. We attribute this performance in
large part to Bunge's integrated and balanced operations. We captured value at a
variety of points on the food production
chain, while effectively mitigating risk."
Results for the fourth quarter were not
quite as strong as year-over-year results.
In the fourth quarter ended Dec. 31, net
income rose 5% to $105 million. Meanwhile, sales fell 2% to $6.2 billion.
Commenting in a Feb. 8 conference
call with securities analysts, Mr. Weisser
said Bunge and the industry at large was
boosted by the 2003-04 U.S. soybean
crop, which at 2,418 million bus led to
futures prices that hovered near $10 per
bu, a level rarely seen in the past. He
also pointed to volatility in ocean freight
rates and unexpected disruptions in
trade with China.
The market has returned to more normal conditions during the past several
months, Mr. Weisser said, with soybean
bakingbusiness.com / world-grain.com

and the U.S. government for food aid
programs, as well as higher volumes
and margins in Bunge's Brazilian wheat
milling business contributed to a 37%
futures easing to around $5 per bu since year-over-year gain in operating profit
September. He added that 2005 supplies in the company's Milling Products segment. For the fourth quarter, operating
"should be ample and demand strong."
"The U.S.D.A. projects global soybean profit climbed 30% to $13 million. Net
meal consumption in 2005 at 140 mil- sales in the segment climbed 7% to $804
lion tonnes, an 8% increase over 2004," million for the year, but fell 1% to $198
Mr. Weisser said. "We expect long-term million for the quarter.
Operating profit in the Agribusiness
demand to grow by over 4% per year.
Global vegetable oil demand growth segment climbed 42% in the year to $358
is forecast at a similar rate. In addi- million, up from $252 million. However,
fourth-quarter profit tumbled 49%
to $49 million. Bunge said the steep
Bunge net income
decline was a reflection of a return
(in millions)
to more typical seasonal patterns,
Fiscal 2004 Fiscal 2003 Fiscal 2002 Fiscal 2001
whereas record soybean prices that
$469
$411
$255
$134
caused a wave of farmer selling in
North and South America during the
Bunge net sales
fourth quarter of 2003 contributed to
(in millions)
extraordinary results the previous
Fiscal 2004 Fiscal 2003 Fiscal 2002 Fiscal 2001
year.
$25,168
$22,165
$13,882
$11,484
Sales in the Agribusiness segment
tion, favorable legislation in Europe, rose 10% to $17.9 billion during the year,
North America and Brazil should drive but for the fourth quarter fell 11% to $4.2
increased demand for biofuels, further billion.
Operating profit in the Edible Oil
stimulating vegetable oil demand."
Bunge took several steps in 2004 to Products division declined 8% for the
capitalize on increased demand for its year to $79 million despite a 22% improducts. The company invested in a provement in sales to $3.9 billion. For the
new port complex in Argentina, com- quarter, operating profit in the division
menced construction of a new sunflow- fell 29% to $12 million on sales of $937
erseed crushing plant in the Ukraine and million. Fourth-quarter results included
purchased an edible oils manufacturer in a $4 million pre-tax, non-cash impairPoland. Bunge's efforts were not isolated ment charge related to Bunge's Brazilian
to the international market. The compa- packaged oil operations.
In North America, greater competition
ny joined E.I. du Pont de Nemours and
Co. in launching a low-linolenic soybean and higher logistics and energy costs adversely affected the edible oils business,
oil to be marketed in the United States.
Responding to a question regarding Mr. Wells said.
Sales in the Fertilizer division rose
acquisitions and associated synergies,
Bill Wells, chief financial officer, told 32% to $2.6 billion during the year, and
securities analysts during the confer- operating profit rose 54% to $372 milence call that the company is getting lion. For the fourth quarter, operating
good return on its acquisitions. Using profit soared 60% to $109 million on a
the acquisition of Cereol S.A. in 2002 as 40% gain in sales to $830 million. The
an example, he said Bunge is on track to division benefited from higher sales volachieve the $40 million to $45 million umes, particularly in Bunge's retail busisynergy run rate that it set as a goal at ness, and higher average selling prices.
the time of the acquisition.
However, he said the company is Outlook for 2005
Assuming stable currencies in South
"nowhere near the limit" of certain
synergies related to some of its other America and Europe and a return to
normal harvests in Europe and the
acquisitions.
"We know there are a lot of things we Americas, net income in 2005 is expected
can do to improve productivity within to fall in the range of $455 million to $475
million, Mr. Wells said. He projected that
our business," Mr. Wells said.
the earnings likely will be split 30% in
Volumes up across the board
the first half and 70% in the second half
Volume in each of the company's four of 2005.
main segments - Agribusiness, FertilMr. Wells noted that the 2005 guidizer, Edible Oil Products and Milling ance represents an 11% increase in e.p.s.,
Products - increased during the year.
in line with the company's long-term
Higher volumes of corn milling prod- goal of a 10% to 12% average annual
ucts sold to both commercial customers increase. MBN
Milling & Baking News, February 15, 2005 / 19

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - February 15, 2005

Table of Contents for the Digital Edition of Milling & Baking News - February 15, 2005