Company estimates Agribusiness shortfall of approximately $90-100 million due to impact of China trade war.

January 22, 2019

3 Min Read
Bunge warns of lower profits, appoints acting CEO

Bunge Ltd., a leader in agriculture, food and ingredients, provided an update this week on its fiscal 2018 results, warning that the adjusted earnings before tax and interest (EBIT) will be below the previously disclosed $1.045 billion low end of its outlook range. The company also announced that board member Gregory Heckman, a seasoned agribusiness executive, has been appointed acting chief executive officer, effective immediately. He replaces Soren Schroder, who previously announced his intention to step down.

According to the company, net debt at year-end 2018 was approximately $5 billion, reduced from approximately $7 billion at the end of the third quarter of 2018. For the full year, Bunge estimates an adjusted EBIT shortfall of approximately $90-100 million in the Agribusiness segment and a shortfall of approximately $60-70 million in the Sugar & Bioenergy segment compared to the low end of the previously disclosed ranges.

The company said the Agribusiness shortfall was largely due to a reduction in value of the company’s Brazilian soybean ownership as factors related to trade with China and demand caused Brazilian prices to converge with U.S. prices. The Sugar & Bioenergy shortfall was primarily due to lower Brazilian ethanol prices and a weather-related reduction in yields as a poor crop year came to a close, Bunge noted.

The company said actual results could differ materially from the preliminary results included in this release. Bunge will report fourth-quarter and full-year 2018 results before the market opens on Feb. 21, 2019.

In regard to Heckman’s appointment, Bunge’s non-executive board chair, Kathleen Hyle, said, “Greg has been a valuable addition to our board and strategic review committee, and we are pleased to appoint him as our acting CEO. Our committee has benefited from his counsel and expertise. With Greg in this role, we have a greater opportunity to leverage his perspective, deep industry knowledge and leadership experience as we take action to improve our results and sharpen our operational focus and execution.”

Heckman, 56, joined the Bunge board in 2018. He has more than 30 years of experience in the agriculture, energy and food processing industries, having served as CEO of The Gavilon Group and in senior executive roles at ConAgra Foods.

“I look forward to further collaboration with [Hyle], the board and our management team, focusing on ways to improve performance and create shareholder value,” Heckman said. “Bunge is a great company, and our strong foundation and global leadership scale in Agribusiness and Food & Ingredients positions us well for future growth. As a team, we will build on the forward momentum of our strategic review, which is focused on our portfolio, key business drivers and opportunities to enhance shareholder value.”

Bunge’s CEO search committee continues its work and will seek to conclude the search as soon as practicable while ensuring that the process is thorough and deliberate, according to the announcement.

Additionally, as part of Bunge’s ongoing board refreshment process, the company announced that L. Patrick Lupo, Ernest Bachrach and Enrique Boilini, three of its longest-serving board members, will not stand for re-election at the company’s 2019 Annual General Meeting of Shareholders. The company said each will remain on the board until his current term expires in May 2019.

“On behalf of the board and the company, I want to thank Soren for his leadership of Bunge during this period and to thank Pat, Ernest and Enrique for their many years of dedicated service as directors,” Hyle added.

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