ST. LOUIS — As it heads into fiscal 2023, executives at Bunge Ltd. expect the company to face challenges across its three main business units, including its core agribusiness segment, which is expected to be dragged down by the unit’s merchandising business. The sluggish outlook was presented against a backdrop of full-year financial results that included a 14% spike in sales.
Bunge net income in the year ended Dec. 31, 2022, was $1.61 billion, equal to $10.51 per share on the common stock, down 23% from $2.08 billion, or $13.64 per share, in fiscal 2021. Adjusted total segment EBIT, though, increased to $2.86 billion from $2.53 billion. On an adjusted basis, earnings per share were $13.91 in 2022, up from $12.93 in 2021.
Sales in 2022 were $67.23 billion, up 14% from $59.15 billion.
Shares of Bunge climbed to $103.39 in mid-day trading on the New York Stock Exchange on Feb. 8, the day results were announced, before falling back to close at $98.69, down narrowly from the previous day’s close of $98.96.
In a Feb. 8 conference call with securities analysts, Gregory A. Heckman, chief executive officer of Bunge, said the past year demonstrated the critical role Bunge plays in global food security and maintaining flows of crops from farmers to consumers.
“To ensure we can continue to deliver, we further strengthened our core business and built relationships with partners whose capabilities complement Bunge’s,” he said. “For example, our Orígeo joint venture with UPL began operating in the fourth quarter, providing end-to-end solutions to farmers in Brazil. We also announced a partnership with BZ Group in France to strengthen our global platform by connecting with BZ’s network of independent farmers to bring more opportunities and flexible solutions to them and end users globally.”
Mr. Heckman also pointed to Bunge’s progress on finding innovative, sustainable solutions in the renewable space. To that end, the company announced joint ventures with Chevron and Orígeo, as well as a partnership with CoverCress in 2022. Bunge also invested in plant-based lipids and proteins at its R&D and innovation facilities.
“Our team is working alongside customers as they create unique solutions with plant-based ingredients,” Mr. Heckman said. “We continued investing in data science and technology to better connect farmers and consumers by making our operations even more efficient in delivering real-time insights to help us manage our business.
“And science and technology are also key, as we continue to make great strides in our sustainability efforts. Thanks to expanding satellite monitoring, we were able to announce this week that through the Bunge sustainable partnership, we have now achieved traceability and monitoring for 80% of our indirect supply chain in the Brazilian Cerrado. This is in addition to our ability to trace 100% of direct purchases in the priority regions of South America. Improving traceability through our indirect sources of product is a critical step in meeting our industry-leading goal of achieving deforestation-free supply chains in 2025. While we’re proud of the progress we’ve made, a more sustainable tomorrow requires everyone across the value chain to work together.”
Adjusted segment EBIT within the Agribusiness unit totaled $2.134 billion in 2022, virtually unchanged from $2.131 billion in 2021. Fiscal 2022 results included $80 million of charges resulting from the Ukraine-Russe war as well as $40 million related to the sale of the company’s Russian oilseed processing business, while fiscal 2021 results included a $158 million gain on sale of a portfolio of interior grain elevators located in the United States. Net sales in the division increased 9% to $47.7 billion from $43.64 billion, while volumes slipped to 77,492,000 tonnes from 83,957,000 tonnes.
In the Refined and Specialty Oils unit, adjusted segment EBIT totaled $811 million, up 52% from $534 million in fiscal 2021. Net sales in the division increased 26% to $16.85 billion from $13.33 billion. Volumes, meanwhile, were slightly higher, climbing to 9,201,000 tonnes from 9,155,000 tonnes.
Adjusted segment EBIT within the Milling unit was $167 million, up 94% from $86 million in fiscal 2021. Fiscal 2021 results included $170 million of impairment charges on the classification of the company’s Mexican wheat milling business as held-for-sale. Net sales in the division increased 25%, climbing to $2.39 billion from $1.91 billion. Volumes fell to 4,331,000 tonnes from 4,509,000 tonnes.
In the fourth quarter of 2021, Bunge net income was $336 million, or $2.21 per share, up 45% from $231 million, or $1.52 per share, the year before. Sales were $16.66 billion, down from $16.68 billion, in the final quarter of 2022. Adjusted earnings per share were $3.24, down from $3.49.
Looking ahead, John W. Neppl, executive vice president and chief financial officers, expects Bunge to face its fair share of challenges across all its businesses.
“In Agribusiness, full-year results are forecasted to be down from last year as slightly higher results in processing are more than offset by lower results in merchandising, which had a very strong prior year,” he said. “While we are not forecasting the same magnitude of margin-enhancing opportunities that we captured in the past year, we do see potential upside to our outlook if strong demand and tight commodity supplies continue throughout the year.
“In Refined and Specialty Oils, we expect a favorable environment to continue in 2023. However, we expect segment results to be modestly down from 2022’s record year, which reflect very strong results in all regions. In Milling, full-year results are expected to be down from last year, but in line with historical performance. In Corporate and Other, results are expected to be in line with last year.
“In noncore, full-year results in our Sugar & Bioenergy joint venture are expected to be in line with last year. Additionally, the company expects the following for 2023: an adjusted annual effective tax rate in the range of 20% to 24%. However, note that this will ultimately be driven by geographic earnings mix of the company. Net interest expense in the range of $380 million to $410 million. Capital expenditures in the range of $800 million to $1 billion, down slightly from our earlier expectation of just over $1 billion … and depreciation and amortization of approximately $415 million.”