Shares for Bunge Ltd. (NYSE:BG) were down nearly 14% Thursday after the company reported worse-than expected second quarter earnings, driven largely by low volumes in agribusiness, and pushing the company to slash its full-year outlook.
The global agribusiness and food company reported a net income of $1.87 billion, or $11.72 a share, up from $21 million, or 15 cents a share, in the same quarter last year, and landing ahead of average analyst estimates of $1.28 a share, according to a Thomson Reuters poll.
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Third quarter sales for the White Plains, New York-based company were virtually flat at $10.97 billion from the prior year quarter, short of the Street’s view of $12.17 billion.
The company closed on a sale last quarter of its fertilizer nutrients assets, which, together with the acquisition of Moema, changed Bunge’s Brazilian portfolio immensely, expecting $120 million in annual cost savings from the deal starting in 2011.
Despite beating the Street in profit gains, Bunge CEO Alberto Weisser said the second quarter results were “disappointing,” though he noted the company expects “significant improvement” in the second half of the year.
“In agribusiness, demand should be stronger and Northern Hemisphere harvests will contribute to new market conditions,” he said, noting sugar and ethanol production are expected to peak.
Due to the surprisingly negative results the company cut its full-year outlook to $3.25 to $3.50 a share, down from its previous expectation of $5.30 to $5.80.