By Karl Plume
(Reuters) – Bunge Ltd raised its full-year earnings outlook on Wednesday after improved processing margins helped the agri-trader post a second-quarter profit above Wall Street estimates, sending shares up sharply.
Bunge forecast full-year adjusted profit to be at least $11.75 per share on an improving margin outlook, up from guidance of $11 previously and above the average analyst estimate of $11.60, according to Refinitiv data.
Bunge shares were up 5.2% at $114.03, a 14-month high.
“Shares are up due to a strong quarter and raised guidance. The company continues to execute well in what remains a highly volatile macro environment,” said Arun Sundaram, senior equity analyst at CFRA Research.
The earnings beat 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.
Global grains merchants have capitalized on robust demand for food, animal feed and biofuel and higher crop prices due to a string of supply chain disruptions, most recently 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 due to 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 full-year guidance, citing improving market conditions in the second half of 2023.
Bunge said second-quarter adjusted earnings in Agribusiness, its largest segment in terms of sales and volumes, jumped 75% as a record-large Brazilian soybean crop boosted processing operations.
The surge more than offset mixed results from Bunge’s Refined & 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.
(Additional reporting by Saikeerthi in Bengaluru; Editing by Shilpi Majumdar, Nick Zieminski, Marguerita Choy, Kirsten Donovan)
