IN its second-quarter earnings report, agribusiness heavyweight Bunge Ltd. reported a steep drop in its quarterly performance due to lingering effects from the record drought in 2012.
The company said its net income — after paying preferred dividends — fell to $110 million for the quarter from last year's $265 million.
"We navigated the choppy markets well but faced some challenges in North America, Europe and Argentina, which suffered from the continued effects of last year's poor oilseed and grain crops," Bunge chief executive officer Soren Schroder said. "The first half of the year came in generally as we expected, and we are anticipating a strong second half."
Stronger grain prices led to larger revenues, but higher product prices also cut into profitability. The company's quarterly revenues were $15.5 billion, up from $14.5 billion for the same quarter last year.
With earnings missing analysts' pre-release estimates by 52 cents per share, Bunge's share price fell by more than 4% following the report, nearing $71. The share price recovered over the following several sessions, however, trading back above $75 throughout the past week and settling above $76 last Thursday.
On the positive side, Bunge reported record business for its agribusiness division in Brazil during the second quarter. Earnings in Brazil were viewed as the primary driver of results in the agribusiness division as a whole, given challenges the company faced in other regions.
Earnings for the division fell to $170 million from a whopping $310 million during the prior year's second quarter.
Schroder told investors that the company would reduce its capital investment by $200 million, spending $1 billion this year to improve efficiencies and competitiveness.
On July 31, Bunge announced that Carol Browner, a former energy and environmental adviser to President Barack Obama, would join the company's board as an independent director, effective Aug. 5.
Browner led the Environmental Protection Agency for the duration of the Clinton Administration and served as Obama's director of the White House Office of Energy & Climate Change Policy in 2009-11.