CHICAGO, Ill. (Reuters) — Bunge Ltd. expects a challenging year in 2016, chief executive officer Soren Schroder said earlier this month as the global grain trader reported a lower-than-expected quarterly profit.
The company, which is also a major agricultural processor, faces pressure from massive global supplies of corn and soybeans that farmers have accumulated after years of large harvests, Schroder said.
Historically, large crops have benefited traders and processors by providing more grain for them to transport, store and sell.
However, Bunge said slow selling by farmers and weak export demand hurt results in its U.S. grain operations.
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Low crop prices have prompted farmers to keep their grain in storage instead of selling it, while importers are snapping up even cheaper supplies from other parts of the world.
“Northern Hemisphere oilseed processing margins and grain exports will be pressured until markets adjust to the increased level of global supplies,” Schroder said.
The results in Bunge’s grain and oilseeds businesses this year should be driven largely by operations in South America, where Bunge is a major player, said chief financial officer Drew Burke.
Agribusiness, the company’s largest unit, will probably “start the year slow,” with results weighted toward the second half of the year, he said.
Fourth quarter net income available to shareholders was US$188 million, or $1.30 per share, compared with a year-earlier loss of $62 million, or 43 cents per share.
Excluding discontinued operations and other charges, earnings rose to $1.49 per share from $1.12. Analysts on average expected $1.56, according to Thomson Reuters.
Revenue dropped to $11.13 billion from $13.23 billion.
