(Reuters) — Bunge Ltd. has raised its full-year earnings outlook after improved processing margins helped the agri-trader post a second-quarter profit above Wall Street estimates.
Bunge forecast full-year adjusted profit to be at least US$11.75 per share on an improving margin outlook, up from guidance of $11 a share previously and above the average analyst estimate of $11.60 per share, according to Refinitiv data.
The earnings news comes as Bunge is working to close a merger deal with crop handler Viterra that would create a global agribusiness powerhouse worth about $34 billion with annual earnings projected around $4 billion.
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Global grains merchants have capitalized on robust demand for food, animal feed and biofuel. They further profited from higher crop prices because of a string of supply chain disruptions,including the COVID-19 pandemic, an historic Argentine drought and a war in major grains exporter Ukraine.
But profits for Bunge and grain trading rivals such as Archer-Daniels-Midland, Cargill and Louis Dreyfus have moderated from record levels last year because of rising operating costs and tighter oilseed processing margins, which have now started to rebound.
ADM reported a drop in second-quarter profit last month but raised its full-year guidance, citing improving market conditions in the second half of the year.
Bunge said second-quarter adjusted earnings in Agribusiness, its largest segment in terms of sales and volumes, jumped 75 percent as a record-large Brazilian soybean crop boosted its processing operations.
The surge in processing profit more than offset mixed results from Bunge’s Refined and Specialty Oils unit and lower profit from its Milling segment.
Bunge’s adjusted profit was $3.72 per share for the three months ended June 30, compared with analysts’ estimate of $2.69 per share.
