(Reuters) —Bunge Ltd. has reported a better-than-expected quarterly profit and forecast strong earnings growth in 2017 on expected massive corn and soybean harvests in South America.
Earnings were propelled by higher sugar and ethanol prices and improved edible oil margins in Brazil.
Bunge reiterated its optimistic outlook for 2017. The company expects its agribusiness unit, the largest in terms of revenue and volumes, to start the year slow and progressively improve as volumes and margins pick up in South America.
“We enter 2017 with confidence and expect strong growth in earnings. After disappointing crops in South America last year, the region is on track to produce record harvests this season, which aligns well with our footprint,” chief executive officer Soren Schroder said.
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South American farmers are expected to harvest bumper corn and soybean crops this year, including record-large crops in Brazil, the continent’s largest producer and exporter.
Last year’s weather-reduced Brazilian harvests prompted farmers to hold back supplies. That weighed on processing margins and limited trading opportunities. Bunge’s agribusiness earnings slumped nearly 12 percent in the fourth quarter.
A record U.S. harvest and brisk U.S. exports in the quarter only partly offset the reduced crop volumes in South America, home to a large share of Bunge’s operations.
Bunge’s other business segments all posted higher year-on-year results.
Net income available to shareholders rose to $262 million, or $1.82 per share, in the fourth quarter, from $188 million, or $1.30 per share, a year earlier.
Excluding one-time items, the company earned $1.70 per share.
