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Bunge Limited
CEO : Mr. Gregory A. Heckman

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2023 Q2	-16.1% YoY	120.7%	203.7%	2023-08-02

John Neppl says,

Key Earnings Highlights

• Reported Q2 earnings per share of $4.09, compared to $1.34 in Q2 2022
• Adjusted EPS was $3.72, compared to $2.97 in the prior year
• Adjusted EBIT was $893 million, compared to $709 million last year
• Agribusiness adjusted results were up, driven by strong Brazil soybean origination and higher crush results
• Merchandising results were higher in global oils and grains but lower in financial services and ocean freight operations

Capital Allocation and Liquidity

• $1.4 billion of adjusted funds from operations generated year-to-date
• Approximately $1.2 billion of discretionary cash flow available after allocating for sustaining CapEx
• $180 million paid in common dividends
• $360 million invested in growth and productivity related CapEx
• Board expanded existing share repurchase program to $2 billion
• RMI exceeded net debt by approximately $3.6 billion
• All $5.7 billion of committed credit facilities were unused and unavailable at quarter-end
• $8 billion in term loan commitments secured to fund combination with Viterra

Outlook for 2023

• Adjusted EPS outlook increased to at least $11.75 per share
• Agribusiness full year results expected to be down, but with potential upside depending on market conditions
• Refined Specialty Oils full year results expected to be up from prior outlook
• Milling full year results expected to be lower than prior outlook
• Corporate and other results expected to be in line with last year
• Non-Core full year results in sugar and bioenergy joint venture expected to be in line with last year
• Adjusted annual effective tax rate expected to be in the range of 20% to 24%
• Net interest expense expected to be in the range of $350 million to $370 million
• Capital expenditures expected to be in the range of $1 billion to $1.2 billion
• Depreciation and amortization expected to be approximately $415 million

Gregory Heckman says,

Key Points from Speech #2

• The company entered into a business combination agreement with Viterra, focusing on creating a premier Agribusiness solutions company.
• The team showed agility in managing both downside risks and opportunities in a dynamic market environment.
• They were able to optimize margins by utilizing their footprint and value chain connectivity as market conditions changed.
• Investments in maintenance and productivity resulted in improved reliability and reduced unplanned downtime.
• Based on the current market environment, the company is increasing its full-year adjusted EPS outlook to at least $11.75 per share.

Q & A sessions,

Strategic Priorities

• Bunge remains focused on executing top strategic priorities to better serve the needs of customers, both farmers and consumers, regardless of the market environment.
• Challenges such as food security, market access, and increasing demand for sustainable food, feed, and fuel production are being addressed.
• Bunge and Viterra will utilize their combined platforms and capabilities to support sustainable and transparent value chains, including promoting low carbon product streams, regenerative agriculture, and end-to-end traceability across major crops.

Regenerative Agricultural Program

• Bunge announced the creation of a regenerative agricultural program in Brazil in partnership with Orígeo to support Brazilian farmers in transitioning to low carbon agriculture.
• The program has already enrolled large scale farmers covering more than 250,000 hectares.

Alliance with Nutrien Ag Solutions

• Bunge launched a strategic alliance and commercial agreement with Nutrien Ag Solutions to support US farmers in implementing sustainable farming practices.
• The alliance aims to increase the development of lower carbon products and strengthen Bunge’s connection with farmers in the US.

Evaluation of M&A Opportunities

• Bunge continues to evaluate and execute on its pipeline of bolt-on M&A opportunities while working on the process of combining with Viterra.

Factors Affecting Stock Movement

• Meal and oil demand drivers remain intact, with stable numbers in global pork and poultry markets and tighter wheat supply favoring meal inclusion in rations.
• Food and fuel demand for oil remain solid.
• Potential for improved demand in China with its recovery.
• Dislocation from the small crop in Argentina may impact crush margins and create potential upside.
• RD capacity is running stronger, leading to increased demand for oil in the US.
• Weather, including crop performance in North America, and the closure of the humanitarian corridor in Ukraine, could create volatility and affect supply.
• The macroeconomic and geopolitical environment, including interest rates and FX rates, adds complexity and uncertainties to the second half of the year.

Execution and Performance

• The team demonstrated strong execution and performance, effectively hedging capacity and managing logistics, storage, and handling challenges in South America.
• Rapidly changing market conditions provided opportunities to optimize margins.

Specialty Oils and Demand

• Bunge’s RSO and specialty oils team continues to serve customers, with over 80% of its oil going into the food channels.
• The team benefits from supply chain challenges during the pandemic.
• Bunge’s new refinery in Louisiana has been a valuable addition, supplying seed and tropical oils to food customers.
• Overall, the demand for oil in North America remains strong, with some channel switching observed.

Managing Volatility and Dislocation

• Bunge manages volatility and dislocation through careful evaluation of earnings, monitoring geopolitical situations, weather conditions, and China demand.
• The global footprint and nonbank lender status provide a competitive advantage.
• Focus on protecting the balance sheet and ensuring liquidity to support working capital needs.
• The complex macroeconomic and geopolitical environment requires agility and operational excellence.