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Bunge SA(BG) - 2024 Q2 - Quarterly Report
BGBunge SA(BG)2024-08-01 14:55
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Financial Performance - Net income attributable to Bunge for Q2 2024 was 70million,adecreaseof70 million, a decrease of 552 million compared to 622millioninQ22023[155]−DilutedearningspershareforQ22024was622 million in Q2 2023[155] - Diluted earnings per share for Q2 2024 was 0.48, a decrease of 3.61comparedto3.61 compared to 4.09 in Q2 2023[156] - Total Segment EBIT for Q2 2024 was 185million,adecreaseof185 million, a decrease of 727 million compared to 912millioninQ22023[157]−SegmentEBITdecreasedby72912 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 480millionforthesixmonthsendedJune30,2024,adecreaseof480 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 548millionforthesixmonthsendedJune30,2024,adecreaseof548 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 388millionforthesixmonthsendedJune30,2024,adecreaseof388 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 138million,adecreaseof82138 million, a decrease of 82% compared to 785 million in Q2 2023[164] - Refined and Specialty Oils segment EBIT for Q2 2024 was 185million,adecreaseof15185 million, a decrease of 15% compared to 217 million in Q2 2023[163] - Milling segment EBIT for Q2 2024 was 38million,anincreaseof17138 million, an increase of 171% compared to 14 million in Q2 2023[163] - Sugar & Bioenergy segment EBIT for Q2 2024 was a loss of 21million,comparedtoaprofitof21 million, compared to a profit of 51 million in Q2 2023[163] - Agribusiness segment net sales decreased 11% to 9,657millioninQ22024,primarilyduetoloweraveragesalesprices[165]−Agribusinesssegmentcostofgoodssolddecreased59,657 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 3,121millionforthethreemonthsendedJune30,2024,drivenbylowersalespricesandincreasedsupply[173]−Millingsegmentnetsalesdecreasedby183,121 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 411millionforthesixmonthsendedJune30,2024,primarilyduetounfavorableforeignexchangelosses[174]−MillingsegmentEBITincreasedby209411 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 49millionforthethreemonthsendedJune30,2024,comparedto49 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 21millionforthethreemonthsendedJune30,2024,primarilyduetounfavorableresultsfromtheinvestmentinBPBungeBioenergia[184]WorkingCapitalandLiquidity−Workingcapitaldecreasedby21 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 7,846millionatJune30,2024comparedtoJune30,2023[158]−Workingcapitaldecreasedby7,846 million at June 30, 2024 compared to June 30, 2023[158] - Working capital decreased by 817 million to 7,846millionatJune30,2024,comparedto7,846 million at June 30, 2024, compared to 8,663 million at December 31, 2023[190] - Cash and cash equivalents decreased by 1,441millionto1,441 million to 1,161 million at June 30, 2024, compared to 2,602millionatDecember31,2023[191]−Tradeaccountsreceivabledecreasedby2,602 million at December 31, 2023[191] - Trade accounts receivable decreased by 315 million to 2,277millionatJune30,2024,comparedto2,277 million at June 30, 2024, compared to 2,592 million at December 31, 2023[192] - Inventories increased by 952millionto952 million to 8,057 million at June 30, 2024, compared to 7,105millionatDecember31,2023[192]−Short−termdebtincreasedby7,105 million at December 31, 2023[192] - Short-term debt increased by 152 million to 954millionatJune30,2024,comparedto954 million at June 30, 2024, compared to 802 million at December 31, 2023[195] - Trade accounts payable decreased by 235millionto235 million to 3,429 million at June 30, 2024, compared to 3,664millionatDecember31,2023[195]−Thecompanyhad3,664 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 5,040millionatJune30,2024,upby5,040 million at June 30, 2024, up by 158 million from December 31, 2023, and 91millionfromJune30,2023,primarilyduetohighershort−termbankborrowings[199]−Short−termdebtatJune30,2024,was91 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 376millioninlocalcurrencybankborrowingsataweightedaverageinterestrateof21.16376 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 53millionchangeininterestexpenseonvariableratedebtasofJune30,2024[232]−Inflationarypressuresimpactlabor,overhead,andcommoditycosts,withhistoricalrecoverythroughpriceincreases,thoughfuturerecoveryremainsuncertain[233]−Thecompany′sdailynetagriculturalcommoditypositionincludesinventory,forwardpurchaseandsalescontracts,andOTCandexchange−tradedderivativeinstruments,withafairvaluecalculatedatquotedmarketpricesorcloseproxies[226]−Thehighestdailyaggregatedpositionvalueforagriculturalcommoditieswas53 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 53million[226]−Thelowestdailyaggregatedpositionvalueforagriculturalcommoditieswas53 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 41million[226]−Thecompanyusesfreightforwardagreements(FFAs)tohedgeportionsofitsoceanfreightcosts,withchangesinfairvaluesrecordedinCostofgoodssold[236]−Thecompany′senergyderivativesareusedtomanageexposuretovolatilityinenergycosts,withchangesinfairvaluesrecordedinCostofgoodssold[236]−Thecompany′sforeignexchangelossesrelatedtopermanentlyinvestedintercompanyloanswere41 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 111millionfortheyearendedDecember31,2023[230]−Theaggregatefairvalueofthecompany′sshortandlong−termdebtwas111 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 5,040million[231]−Ahypothetical100basispointincreaseordecreaseininterestyieldsonthecompany′sfixedratedebtandrelatedinterestrateswapswouldresultinalessthan15,040 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 10,002millionatJune30,2024,primarilyduetosharerepurchases,lossesinothercomprehensiveincome,anddividends[207]−Bungerepurchased4,376,974sharesfor10,002 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 1.0billionremainingunderthesharerepurchaseprogram[208]−Bungepaidaquarterlycashdividendof1.0 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 0.6625pershare[216]CostofGoodsSoldandForeignExchange−Costofgoodssolddecreasedby60.6625 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 101millionforthesixmonthsendedJune30,2024,primarilyduetotheimpactofastrongerU.S.dollar[170]−Interestincomedecreasedby8101 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]