01—Abstract
Summary
Summary of the 8-K filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Bunge Global SA (NYSE: BG) reported second quarter 2024 results on July 31, 2024, showing sharp year-over-year declines in profitability.
GAAP diluted EPS fell to $0.48a from $4.09, and adjusted EPS (excluding mark-to-market timing differences and certain charges) fell to $1.73 from $3.72. Net income attributable to Bunge was $70 million versus $622 million a year earlier. Management attributed the weakness to a more balanced global supply environment that reduced Agribusiness results, with Refined and Specialty Oils also down from a strong prior year.
Core Segment EBIT dropped to $361 millionb from $1,016 million. The company updated its full-year 2024 adjusted EPS outlook to approximately $9.25, and management said visibility into the second half remains limited even though market conditions improved in some regions. Cash flow weakened significantly, with operating cash flow of negative $480 million for the first half compared with positive $472 million in the prior year, driven by inventory build and working capital changes.
Adjusted funds from operations fell to $895 millionc from $1,360 million. Strategically, Bunge is progressing on integration planning for its pending Viterra combination and agreed on June 19, 2024 to sell its 50% stake in the BP Bunge Bioenergia joint venture, with closing expected in late 2024. Acquisition and integration costs related to Viterra rose to $62 million in the quarter, and the company's cash balance declined to $1.16 billion from $2.60 billion at year-end 2023, while short-term debt increased.
02—Key points
Key Highlights
- GAAP diluted EPS of $0.48 vs. $4.09 in Q2 2023; adjusted EPS of $1.73 vs. $3.72, a steep year-over-year decline
- Full-year 2024 adjusted EPS outlook updated to approximately $9.25
- Agribusiness Segment EBIT fell to $138 million from $785 million as supply conditions normalized
- Operating cash flow was negative $480 million for the first half of 2024 vs. positive $472 million a year earlier; adjusted FFO fell to $895 million from $1,360 million
- Cash and equivalents declined to $1.16 billion from $2.60 billion at December 31, 2023, while inventories rose to $8.06 billion
- Agreed to sell its 50% interest in BP Bunge Bioenergia (announced June 19, 2024), with closing expected in late 2024
- Viterra integration planning is ongoing, with Q2 acquisition and integration costs of $62 million
03—Questions
Frequently Asked Questions
Why did Bunge's earnings decline so sharply in the second quarter of 2024?
Management attributed the decline mainly to a more balanced global supply environment, which lowered Agribusiness results, particularly in Merchandising where higher volumes were offset by lower margins. Refined and Specialty Oils also declined from a record prior year. Processing results fell in North and South America and Asia, partly offset by stronger European soy and softseed crush.
Has Bunge changed its full-year 2024 guidance?
Yes. Bunge updated its full-year 2024 adjusted EPS outlook to approximately $9.25. Agribusiness is expected in line with prior guidance, Refined and Specialty Oils is expected above prior guidance but below 2023, and Milling is expected similar to prior guidance. The company also guided to an adjusted tax rate of 22% to 25%, net interest expense of $280 to $310 million, capital expenditures of $1.2 to $1.4 billion, and D&A of about $450 million.
Why was operating cash flow negative in the first half of 2024?
Operating cash flow was negative $480 million, compared with positive $472 million in the prior year. The decline was driven by lower reported net income and working capital changes, including a $1,273 million increase in inventories and a $315 million increase in margin deposits, partly offset by a $329 million unrealized derivative loss add-back.
What is the status of the Viterra combination and the BP Bunge Bioenergia sale?
Integration planning for the pending Viterra combination is progressing, and management is optimistic about the opportunities it will create. Bunge recorded $62 million of Viterra-related acquisition and integration costs in Q2 2024. Separately, Bunge agreed on June 19, 2024 to sell its 50% stake in BP Bunge Bioenergia, with closing expected in late 2024, subject to customary conditions.
04—Continue