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Bear of the Day: Bunge Limited (BG)

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Headquartered in White Plains, NY, Bunge Limited (BG - Free Report) is a leading agribusiness and food company with integrated operations all over the world. It is a global leader in oilseed processing, and grain & oilseed marketing. The company has five business segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer.

The company IPO’d in 2001 and has expanded though many significant acquisitions since then.

Disappointing Fourth Quarter Results

The company reported a GAAP loss of 48 cents per share for the fourth quarter due to charges related to restructuring and tax reform

Adjusted earnings of 67 cents per share missed the Zacks Consensus Estimate of $1.48. Their Agribusiness division was impacted by weak margins whereas Sugar & Bioenergy was hurt by adverse weather.

"While industry headwinds persisted through the end of the year, we made good progress in 2017 towards our strategic objectives by taking proactive steps to improve our cost structure and create a more balanced business, said the CEO.

“Fourth quarter oilseed margins did not recover as quickly as expected, and sugarcane milling results were negatively impacted by a sustained period of rain late in the quarter.”

Falling Estimates

Analysts have been slashing their estimates for the company after weak results. Zacks Consensus Estimates for the current and next year have fallen to $4.16 per share and $5.05 per share from $4.53 and $5.39 respectively, 30 days back.

The Bottom Line

Farmers and agribusinesses have been struggling due to bumper crops over the past few years.

As the company generates most of its revenues from its Agribusiness segment, it remains vulnerable to commodity price, weather and foreign exchange trends. Further the company does not have any pricing power and operates on thin margins.


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