Bunge hopes market rebound will keep company off auction block

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(Reuters) — Bunge Ltd. kept the door open last week to a sale of the company as it reported a 34 percent drop in quarterly earnings and cut its full-year outlook.


However, its chief executive officer predicted a grain market rebound that would reverse the slide.


Soren Schroder said planned cost cuts should also help improve performance by the agricultural commodities trader after its second straight weak quarterly result.


When analysts on a conference call asked whether selling the company was an option, Schroder said Bunge would “evaluate the best path.” 


He forecasted a turnaround in agricultural commodities markets that have burdened Bunge and the broader grain trading industry for more than two years with a string of huge global harvests and record supplies.


“Global corn stocks, while ample, are going down. Wheat stocks are going down. Soybean stocks, depending on how the U.S. crop comes out, probably have peaked,” Schroder said in an interview.


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“You’re setting yourself up for a rebound.”


However, analysts, some of whom have cut outlooks for Bunge, were skeptical of an imminent recovery.


“That’s been a common refrain for the last several quarters among agribusiness companies, yet we continue to see downward earnings revisions,” said Farha Aslam, an analyst with Stephens Inc.


Bunge slashed its full-year agribusiness earnings target to US$550-$650 million from $800-$925 million in the first quarter, and its food and ingredients target to $210-$230 million from $245-$265 million. Both were cut for a second straight quarter.


Net income available to shareholders fell to $72 million, or 51 cents per share, in the quarter, from $109 million, or 78 cents per share, a year earlier.

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