_ .. | --- | --- | --- | --- | |------------------|-------|-------|-------| | | | | | | Q3 2024 Earnings | | | | | Results Review | | | | | | | | | | October 30, 2024 | | | | 2 • Today's presentation includes forward-looking statements that reflect Bunge's current views with respect to future events, financial performance and industry conditions. 2 Forward-Looking Statements • These forward-looking statements are subject to various risks and uncertainties. Bunge has provided additional information in its re ...

BUNGE Bunge Reports Third Quarter 2024 Results St. Louis, MO - October 30, 2024 - Bunge Global SA (NYSE: BG) today reported third quarter 2024 results | --- | --- | |-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | • | Q3 GAAP diluted EPS of $1.56 vs. $2.47 in the prior year; $2.29 vs. $2.99 on an adjusted basis excluding certa ...

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The Zacks Agriculture - Products industry has been bearing the brunt of high input costs, labor shortages and supply-chain headwinds. The decline in commodity prices adds to the concerns. Nevertheless, increasing consumer awareness regarding food ingredients and the preference for healthier alternatives will support the industry. Alternative agricultural technologies like hydroponics and vertical farming are expected to be other key catalysts, given their inherent benefits.Players like Bunge (BG) , West Fra ...

Group 1: Company Strategy and Transactions - Bunge Global SA has completed the sale of its 50% share in BP Bunge Bioenergia to BP plc for $800 million, marking its exit from the bioenergy and sugarcane ethanol business in Brazil [1][3] - The joint venture BP Bunge Bioenergia was established in 2019 and operates 11 mills across Brazil [2] Group 2: Financial Performance - Bunge Global reported Q2 2024 adjusted earnings of $1.73 per share, missing the Zacks Consensus Estimate of $1.79, and reflecting a 53% year-over-year decline [4] - Net sales for Q2 2024 were $13.2 billion, down 12% from the previous year, and also missed the consensus estimate of $13.69 billion [4] - The decline in Agribusiness results was attributed to a 15% decrease in Processing net sales due to lower average sales prices in global soybean oilseed processing [5] Group 3: Future Outlook - Bunge Global expects adjusted earnings per share to be approximately $9.25 in 2024, indicating a 32% decline from 2023 [6] - The merger with Viterra, announced in June 2023, is progressing well and is expected to enhance Bunge Global's global network and operational efficiency [7][8] Group 4: Market Performance - Bunge Global's shares have declined 7.6% over the past year, contrasting with the industry's 8% growth [10]

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Investors in Bunge Global SA (BG) need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 17, 2025 $60 Call had some of the highest implied volatility of all equity options today. What is Implied Volatility? Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mea ...

Sometimes, even the most boring stocks hold big potential. Look at plant-based food stocks, for example. While these may not be the most exciting stocks, statistics point to strong future growth. Younger generations, including Generation Z, just saw a five percentage-point increase in their adoption of plant-based food since 2021. All of which presents "a significant opportunity for sustainable food brands," as noted by Trellis.net. In addition, according to analysts at the Brightfield Group, "Gen Z is opti ...

Financial Performance - Net income attributable to Bunge for Q2 2024 was $70 million, a decrease of $552 million compared to $622 million in Q2 2023[155] - Diluted earnings per share for Q2 2024 was $0.48, a decrease of $3.61 compared to $4.09 in Q2 2023[156] - Total Segment EBIT for Q2 2024 was $185 million, a decrease of $727 million compared to $912 million in Q2 2023[157] - Segment EBIT decreased by 72% to $416 million for the six months ended June 30, 2024, with a 75% decrease in Processing and a 57% decrease in Merchandising[171] - Corporate and Other EBIT remained flat at a loss of $155 million for the three months ended June 30, 2024, with SG&A expenses increasing by 18% due to acquisition and integration costs[180] - Corporate and Other EBIT decreased by 20% to a loss of $283 million for the six months ended June 30, 2024, primarily due to increased SG&A expenses from acquisition and integration costs[181] - Cash used for operating activities was $480 million for the six months ended June 30, 2024, a decrease of $952 million compared to the same period in 2023, driven by lower net income and increased working capital needs[211] - Cash used for investing activities was $548 million for the six months ended June 30, 2024, a decrease of $164 million compared to the same period in 2023, primarily due to lower proceeds from disposals and higher net payments for investments[213] - Cash used for financing activities was $388 million for the six months ended June 30, 2024, a decrease of $480 million compared to the same period in 2023, driven by share repurchases and dividend payments[214] Segment Performance - Agribusiness segment EBIT for Q2 2024 was $138 million, a decrease of 82% compared to $785 million in Q2 2023[164] - Refined and Specialty Oils segment EBIT for Q2 2024 was $185 million, a decrease of 15% compared to $217 million in Q2 2023[163] - Milling segment EBIT for Q2 2024 was $38 million, an increase of 171% compared to $14 million in Q2 2023[163] - Sugar & Bioenergy segment EBIT for Q2 2024 was a loss of $21 million, compared to a profit of $51 million in Q2 2023[163] - Agribusiness segment net sales decreased 11% to $9,657 million in Q2 2024, primarily due to lower average sales prices[165] - Agribusiness segment cost of goods sold decreased 5% to $9,368 million in Q2 2024, primarily due to lower net sales[166] - Net sales in the Merchandising segment decreased by 3%, primarily due to lower average sales prices in global corn, wheat, and oil businesses, partially offset by increased volumes[169] - Refined and Specialty Oils segment net sales decreased by 13% to $3,121 million for the three months ended June 30, 2024, driven by lower sales prices and increased supply[173] - Milling segment net sales decreased by 18% to $401 million for the three months ended June 30, 2024, due to lower sales prices in South American wheat milling and North American corn milling businesses[176] - Refined and Specialty Oils segment EBIT decreased by 9% to $411 million for the six months ended June 30, 2024, primarily due to unfavorable foreign exchange losses[174] - Milling segment EBIT increased by 209% to $71 million for the six months ended June 30, 2024, driven by higher gross profit in South America[177] - Net sales for the Sugar and Bioenergy Segment decreased by 32% to $49 million for the three months ended June 30, 2024, compared to $72 million in the same period in 2023[183] - Segment EBIT for the Sugar and Bioenergy Segment decreased by 141% to a loss of $21 million for the three months ended June 30, 2024, primarily due to unfavorable results from the investment in BP Bunge Bioenergia[184] Working Capital and Liquidity - Working capital decreased by $1,063 million to $7,846 million at June 30, 2024 compared to June 30, 2023[158] - Working capital decreased by $817 million to $7,846 million at June 30, 2024, compared to $8,663 million at December 31, 2023[190] - Cash and cash equivalents decreased by $1,441 million to $1,161 million at June 30, 2024, compared to $2,602 million at December 31, 2023[191] - Trade accounts receivable decreased by $315 million to $2,277 million at June 30, 2024, compared to $2,592 million at December 31, 2023[192] - Inventories increased by $952 million to $8,057 million at June 30, 2024, compared to $7,105 million at December 31, 2023[192] - Short-term debt increased by $152 million to $954 million at June 30, 2024, compared to $802 million at December 31, 2023[195] - Trade accounts payable decreased by $235 million to $3,429 million at June 30, 2024, compared to $3,664 million at December 31, 2023[195] - The company had $5,665 million unused and available committed borrowing capacity under revolving credit facilities as of June 30, 2024[197] - Total debt increased to $5,040 million at June 30, 2024, up by $158 million from December 31, 2023, and $91 million from June 30, 2023, primarily due to higher short-term bank borrowings[199] - Short-term debt at June 30, 2024, was $949 million, with a weighted average interest rate of 12.20%, including $376 million in local currency bank borrowings at a weighted average interest rate of 21.16%[201] Credit and Risk Management - The company uses derivative instruments to manage exposures related to commodity prices, transportation costs, foreign currency exchange rates, interest rates, and energy costs, primarily through commodity exchanges and major financial institutions[220] - Credit and counterparty risks are actively monitored, with exposure measured based on unpaid accounts receivable, unrealized gains from forward contracts, and OTC derivatives, including sovereign credit risk[221] - During 2023, heightened credit and counterparty risks were observed due to concerns about the financial condition of banking institutions, leading to reduced exposures and position limits in certain cases[222] - Agricultural commodities, such as soybeans, palm oil, and wheat, are subject to price fluctuations due to unpredictable factors like inflation, with counterparty non-performance risks under forward contracts[223] - The company employs stress-testing techniques and daily monitoring of commodity positions, with a hypothetical 10% adverse price change resulting in a potential loss of $53 million in market risk as of June 30, 2024[226] - Ocean freight costs are hedged using financial derivatives, with time charter agreements ranging from two months to two years to manage transportation risks[227] - Energy commodities, including natural gas and bunker fuel, are subject to price risks, with derivatives used to manage volatility in energy costs[228] - Foreign exchange risks are mitigated through derivative instruments, with a hypothetical 10% adverse change in exchange rates resulting in no material loss as of June 30, 2024[229] - A hypothetical 100 basis point change in interest rates would result in a $53 million change in interest expense on variable rate debt as of June 30, 2024[232] - Inflationary pressures impact labor, overhead, and commodity costs, with historical recovery through price increases, though future recovery remains uncertain[233] - The company's daily net agricultural commodity position includes inventory, forward purchase and sales contracts, and OTC and exchange-traded derivative instruments, with a fair value calculated at quoted market prices or close proxies[226] - The highest daily aggregated position value for agricultural commodities was $530 million for the six months ended June 30, 2024, with a market risk of $53 million[226] - The lowest daily aggregated position value for agricultural commodities was $407 million for the six months ended June 30, 2024, with a market risk of $41 million[226] - The company uses freight forward agreements (FFAs) to hedge portions of its ocean freight costs, with changes in fair values recorded in Cost of goods sold[236] - The company's energy derivatives are used to manage exposure to volatility in energy costs, with changes in fair values recorded in Cost of goods sold[236] - The company's foreign exchange losses related to permanently invested intercompany loans were $60 million for the six months ended June 30, 2024[230] - The company's foreign exchange gains related to permanently invested intercompany loans were $111 million for the year ended December 31, 2023[230] - The aggregate fair value of the company's short and long-term debt was $5,087 million at June 30, 2024, with a carrying value of $5,040 million[231] - A hypothetical 100 basis point increase or decrease in interest yields on the company's fixed rate debt and related interest rate swaps would result in a less than 1% change in fair value[231] - A hypothetical 100 basis point change in the applicable reference rate would result in a change of approximately $53 million in interest expense on the company's variable rate debt at June 30, 2024[232] Capital Structure and Shareholder Equity - Bunge secured $8.0 billion in Acquisition Financing, with plans to use a portion for the cash portion of the Transaction Consideration and the remainder to repay Viterra's indebtedness[202] - Bunge's credit ratings at June 30, 2024, were A-2 (S&P), P-2 (Moody's), and F-2 (Fitch) for short-term debt, and BBB+ (S&P), Baa2 (Moody's), and BBB (Fitch) for long-term debt, with positive outlooks for potential upgrades[203][205] - Total Bunge shareholders' equity decreased by $849 million to $10,002 million at June 30, 2024, primarily due to share repurchases, losses in other comprehensive income, and dividends[207] - Bunge repurchased 4,376,974 shares for $400 million during the six months ended June 30, 2024, with $1.0 billion remaining under the share repurchase program[208] - Bunge paid a quarterly cash dividend of $0.68 per share on June 3, 2024, representing a 3% increase from the previous dividend of $0.6625 per share[216] Cost of Goods Sold and Foreign Exchange - Cost of goods sold decreased by 6% to $18,654 million for the six months ended June 30, 2024, driven by lower net sales and unfavorable mark-to-market results[169] - Foreign exchange losses increased by 304% to a loss of $101 million for the six months ended June 30, 2024, primarily due to the impact of a stronger U.S. dollar[170] - Interest income decreased by 8% to $37 million for the three months ended June 30, 2024, while interest expense decreased by 5% to $123 million[186]

Financial Data and Key Metrics Changes - Reported second quarter earnings per share was $0.48 compared to $4.09 in the second quarter of 2023, reflecting a significant decline [6] - Adjusted EPS was $1.73 in the quarter versus $3.72 in the prior year, indicating a decrease in profitability [7] - Adjusted core segment EBIT was $519 million in the quarter, down from $893 million last year [7] - Full year adjusted EPS is now expected to be approximately $9.25, revised from previous guidance [12] Business Line Data and Key Metrics Changes - Agribusiness processing results were $265 million in the quarter, down from last year, with higher results in Europe soy and soft seed crush offset by lower results in North and South America and Asia [7] - Merchandising results were lower primarily due to global grains, with volumes offset by lower margins [7] - Milling results improved, driven by higher volumes and margins in South America, while U.S. results were in line with the prior year [8] - Non-core sugar and bioenergy joint venture results were negatively impacted by lower Brazil ethanol prices [8] Market Data and Key Metrics Changes - The overall market environment remains balanced, with demand good but visibility limited due to spot market dynamics [5] - In Argentina, slow farmer selling is influenced by government policy and lower prices, while Brazil faced a smaller crop than expected, affecting logistics and margins [25][26] - North America is experiencing slower farmer selling as producers are hesitant to sell at lower prices, with weather conditions being a critical factor [27] Company Strategy and Development Direction - The strategic combination with Viterra is expected to enhance diversification and capabilities to address food security needs [15] - The company is progressing on various strategic initiatives, including the sale of its interest in the sugar and bioenergy joint venture to BP [15] - Investments in lower-carbon solutions and traceability platforms are being pursued to meet sustainability commitments [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to evolving supply and demand environments [5] - The company is focused on controlling what it can amid market uncertainties and expects to close the Viterra transaction in the coming months [5][22] - Management noted that while demand remains strong, visibility for Q4 is limited due to inverted margin curves [19] Other Important Information - The company generated $895 million of adjusted funds from operations in the first half of the year, with $704 million available for discretionary cash flow [10] - The adjusted leverage ratio was 0.5 times at the end of the quarter, indicating a strong liquidity position [11] - Capital expenditures for the year are expected to be in the range of $1.2 billion to $1.4 billion, with a potential increase depending on project developments [12][44] Q&A Session Summary Question: Understanding the drivers behind the guidance - Management noted that gross margin improved late in Q2, providing visibility into Q3, but Q4 margins remain uncertain due to limited visibility [19] Question: Comments on regulatory approvals with Viterra - The majority of jurisdictions have issued clearances, and management expects to close the transaction in the next several months [21][22] Question: Insights on merchandising and farmer selling - In Argentina, the crop recovery is slow, and farmer selling is impacted by government policy and lower prices, while Brazil's smaller crop has affected logistics and margins [25][26] Question: Coverage going into Q3 and Q4 - Management indicated that they are largely covered for Q3, especially on the canola side, but visibility for Q4 remains low [33][34] Question: Normalized merchandising earnings outlook - Management acknowledged that current earnings are below baseline expectations due to market transitions and farmer behavior [38] Question: Performance of refined products - Both food and energy demand have been resilient, contributing to better-than-expected performance in refined products [40] Question: Capital allocation and share repurchases - Management indicated that share repurchases are unlikely until after the Viterra transaction closes, focusing on leverage commitments [42] Question: Thoughts on capital expenditures for the next couple of years - Capital expenditures are expected to be at the high end of the range this year, with a potential increase in 2025 due to ongoing projects [44]