St. Louis, MO February 12, 2020 Bunge Limited (NYSE: BG) today reported Q4 2019 and full year 2019 results.
• Full year 2019 GAAP EPS of $(9.34) vs. $1.57 in the prior year; $4.58 vs. $2.72 on an
• Q4 GAAP EPS of $(0.48) vs.$(0.51) in the prior year; $1.27 vs. $0.08 on an adjusted basis
• Agribusiness results driven by excellent execution and a better than expected market
• Food & Ingredients results benefited from improved performance in North America and Asia, as well as favorable timing differences
• Substantial progress on key priorities in 2019 streamlined portfolio; implemented disciplined
approach to risk management; improved operations and created new operating model
Greg Heckman, Bunge's Chief Executive Officer, commented, “We finished 2019 on a strong note, driven by solid operating performance and market conditions that moved in our favor during the quarter. The improvements we’ve made to our business and our more rigorous approach to risk management enabled us to adapt quickly and benefit from upside opportunities.
"As we look back across 2019, our team executed well despite the complex environment and the substantial changes that are underway at Bunge. Looking ahead to 2020, we will remain nimble and prudent in order to maximize the earnings potential of our global platform, while continuing to optimize our portfolio and operations."
Fourth Quarter Results
Higher segment results in the quarter reflected improved execution, particularly in managing risk throughout the Company's value chains.
In Oilseeds, softseed results improved when compared to last year due to strong oil demand. Lower soy processing results in the U.S., Europe and Asia were partially offset by higher results in South America. Results were negatively impacted by approximately $95 million of mark to market reversals on soy crushing contracts, which favorably impacted the third quarter. An increase in soy crush margins during the fourth quarter resulted in new mark to market losses on forward contracts; however, these losses were largely offset by mark to market gains on forward hedges related to our softseed and palm oil pipeline that serves our downstream Edible Oils customers. Improved results in oilseed trading and distribution were primarily due to better positioning.
In Grains, higher results were primarily driven by origination in South America. Brazilian farmer selling increased as local prices improved. In Argentina, farmers accelerated sales in anticipation of a change in export taxes. Ocean freight results benefited from good fleet positioning and management.
Edible Oil Products
Higher results in North America and Asia were largely offset by lower results in South America. Results in Europe were comparable with last year. Excluding approximately $13 million of favorable timing differences related to hedges that are expected to reverse in 2020, results were slightly lower than prior year.
Segment performance for the quarter was similar to the prior year as higher results in Mexico were offset by lower results in the U.S. and Brazil.
Sugar & Bioenergy
Results for this segment reflect Bunge's 100 percent ownership through November 2019. In December, we completed the formation of the Brazilian Sugar and Bioenergy 50/50 joint venture with BP.
Higher results in the quarter were primarily due to improved agricultural yields and operational execution that drove lower unit costs, as well as higher ethanol pricing and higher sugar pricing and volume. Results benefited from approximately $38 million of lower depreciation when compared to last year due primarily to the business being classified as held for sale.
Fertilizer results in the quarter were in line with the prior year.
Cash used by operations in the year ended December 31, 2019 was $814 million compared to cash used of approximately $1.3 billion in the same period last year. Adjusting for the beneficial interest in securitized trade receivables, cash provided by operating activities was $475 million compared with cash provided by operating activities of $645 million in the prior year. This decrease was primarily driven by
higher working capital. Adjusted funds from operations was approximately $1.1 billion for the year ended December 31, 2019.
Cash proceeds before customary closing adjustments of $775 million, received as part of the formation of the Brazilian Sugar and Bioenergy 50/50 joint venture with BP, were largely used to pay down debt.
For the year ended December 31, 2019, income tax expense was $86 million. Adjusting for all notable items, the effective tax rate for the year ended December 31, 2019 was approximately 16%. The lower than expected tax rate was primarily due to earnings mix.
Taking into account the current margin environment and lack of visibility into the back half of the year, we expect full--year 2020 EPS to be broadly in line with 2019, when excluding notable items, our gain on Beyond Meat and the depreciation benefit in the Sugar & Bioenergy segment.
In Agribusiness, full--year results are expected to be down from 2019. Actual origination, processing and distribution margins will evolve based upon the fulfillment of U.S.--China trade agreements, crop sizes and farmer commercialization.
In Food & Ingredients, full--year results in Edible Oils and Milling are expected to be similar to the prior year, excluding approximately $13 million of favorable Q4 timing differences, which are expected to negatively impact 2020.
In Fertilizer, full--year results are expected to be down from a particularly strong prior year and more similar to 2018.
In Sugar and Bioenergy, market fundamentals have improved vs. 2019, driven by sustained Brazilian ethanol market prospects and better sugar prices.
Additionally, the Company expects the following for 2020: an adjusted annual effective tax rate in the range of 19% to 23%; net interest expense of approximately $230 million; capital expenditures in the range of $400 to $450 million; and depreciation and amortization of approximately $465 million.
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