01—Abstract
Summary
Summary of the 8-K filed February 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Bunge Global SA reported fourth-quarter and full-year 2023 results on February 7, 2024.
Full-year GAAP diluted EPS rose to $14.87a from $10.51, while adjusted EPS (excluding mark-to-market timing differences and certain charges) was $13.66, down from $13.91. Q4 GAAP diluted EPS was $4.18 versus $2.21, and adjusted Q4 EPS was $3.70 versus $3.24. Net income attributable to Bunge was $2.24 billion for the year, up from $1.61 billion.
Core Segment EBIT increased to $3.72 billionb from $2.62 billion, driven largely by the Processing business, and adjusted funds from operations were about $2.47 billion. Balance sheet liquidity improved, with cash rising to $2.6 billion from $1.1 billion and long-term debt rising to $4.1 billion from $3.3 billion. The key forward-looking item is 2024 guidance of approximately $9.00 adjusted EPS, a sharp decline from 2023 that management attributes to margin compression in Processing and a normalization from the record prior-year Refined and Specialty Oils results.
The guidance excludes pending acquisitions, notably the Viterra transaction, which management describes as transformational. Management expects a less robust market environment in 2024. Guidance also calls for an adjusted tax rate of 21% to 25%, net interest expense of $300 to $330 millionc, capex of $1.2 to $1.4 billion, and D&A of about $450 million.
For investors, the headline is a strong 2023 that masks a materially weaker 2024 outlook. Valuation and the investment case will hinge on whether the Viterra combination delivers the expected scale and diversification and whether margins recover. Note that the earnings release is furnished under Item 2.02 and is not deemed filed for Section 18 liability purposes.
02—Key points
Key Highlights
- Full-year 2023 GAAP diluted EPS of $14.87 versus $10.51 in 2022; adjusted EPS of $13.66 versus $13.91, a slight decline.
- Q4 2023 GAAP diluted EPS of $4.18 versus $2.21; adjusted Q4 EPS of $3.70 versus $3.24.
- Core Segment EBIT rose to $3.72 billion from $2.62 billion, led by Processing EBIT of $2.49 billion versus $1.13 billion.
- Adjusted funds from operations were approximately $2.47 billion, up from $2.36 billion, and cash provided by operating activities was $3.31 billion.
- 2024 guidance calls for adjusted EPS of approximately $9.00, implying a steep decline driven by compressed Processing margins and lower Refined and Specialty Oils results.
- Pending Viterra combination is excluded from 2024 guidance; Q4 included $49 million of after-tax acquisition and integration costs, and full-year 2023 included $122 million.
- Full-year adjusted effective tax rate rose to 22.7% from 17.0%, reflecting higher pre-tax income and earnings mix, and 2024 guidance is 21% to 25%.
03—Questions
Frequently Asked Questions
Why did Bunge's 2023 adjusted EPS decline slightly despite higher GAAP earnings?
GAAP EPS benefited from large mark-to-market timing differences (a $2.36 per share favorable reversal in 2023 versus a $1.61 gain in 2022 that was excluded from adjusted results) and different treatment of certain charges. Adjusted EPS of $13.66 was modestly below $13.91, primarily because the adjusted effective tax rate rose to 22.7% from 17.0%, which offset higher operating earnings.
What is driving the expected drop in 2024 earnings?
Management expects lower Processing results because crush margins have compressed in most regions, and Merchandising is expected to be down slightly. Refined and Specialty Oils is expected to fall from a record 2022 base due to a shift in the U.S. supply environment. Non-core Sugar & Bioenergy results are expected to be significantly lower on weaker Brazilian ethanol prices. Milling and Corporate and Other are expected to improve.
How does the pending Viterra transaction affect the outlook?
The $9.00 adjusted EPS guidance explicitly excludes announced or pending acquisitions expected to close in 2024, so investors should evaluate the combined company separately once the deal closes. The company recorded $122 million of after-tax acquisition and integration costs in 2023, and these costs are likely to continue until closing.
How strong is Bunge's cash generation and balance sheet?
Adjusted FFO was about $2.47 billion for 2023, and reported operating cash flow was $3.31 billion, against a 2022 operating outflow of $5.55 billion that was distorted by the receivables securitization structure change. Cash rose to $2.6 billion, while long-term debt increased to $4.1 billion and total equity to $11.8 billion. Share repurchases of $600 million and dividends of $383 million were funded during the year.
What should investors note about how these results are presented?
Bunge's headline adjusted metrics exclude mark-to-market timing differences tied to forward contracts, readily marketable inventories and hedges, which the company says will reverse over time. The earnings release is furnished under Item 2.02 and is not deemed filed for Section 18 purposes. Investors should reconcile non-GAAP measures to GAAP figures in the release, which also reflects the November 2023 redomestication of the parent to Switzerland.
04—Continue