UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 20222023
OR
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-16625
BUNGE LIMITED
(Exact name of registrant as specified in its charter)
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Bermuda | | 98-0231912 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
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1391 Timberlake Manor Parkway | | |
Chesterfield | | |
Missouri | | 63017 |
(Address of principal executive offices) | | (Zip Code) |
(314) 292-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Shares, $0.01 par value per share | | BG | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ý | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ý
As of October 21, 2022,23, 2023, the number of common shares outstanding of the registrant was:
Common shares, par value $.01 per share:149,800,163145,287,978
BUNGE LIMITED
TABLE OF CONTENTS
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PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BUNGE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(U.S. dollars in millions, except per share data)
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | | 2023 | | 2022 |
Net sales | Net sales | $ | 16,759 | | | $ | 14,117 | | | $ | 50,572 | | | $ | 42,469 | | Net sales | $ | 14,227 | | | $ | 16,759 | | | $ | 44,604 | | | $ | 50,572 | |
Cost of goods sold | Cost of goods sold | (15,871) | | | (13,255) | | | (47,708) | | | (39,795) | | Cost of goods sold | (13,182) | | | (15,871) | | | (41,013) | | | (47,708) | |
Gross profit | Gross profit | 888 | | | 862 | | | 2,864 | | | 2,674 | | Gross profit | 1,045 | | | 888 | | | 3,591 | | | 2,864 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | (337) | | | (327) | | | (979) | | | (896) | | Selling, general and administrative expenses | (447) | | | (337) | | | (1,220) | | | (979) | |
Interest income | Interest income | 30 | | | 19 | | | 50 | | | 34 | | Interest income | 38 | | | 30 | | | 121 | | | 50 | |
Interest expense | Interest expense | (103) | | | (57) | | | (306) | | | (184) | | Interest expense | (133) | | | (103) | | | (374) | | | (306) | |
Foreign exchange (losses) gains | Foreign exchange (losses) gains | (52) | | | (36) | | | (150) | | | (11) | | Foreign exchange (losses) gains | (47) | | | (52) | | | (64) | | | (150) | |
Other income (expense) – net | Other income (expense) – net | 40 | | | 220 | | | (13) | | | 519 | | Other income (expense) – net | 8 | | | 40 | | | 35 | | | (13) | |
Income (loss) from affiliates | Income (loss) from affiliates | 30 | | | 60 | | | 95 | | | 133 | | Income (loss) from affiliates | 39 | | | 30 | | | 83 | | | 95 | |
Income (loss) before income tax | Income (loss) before income tax | 496 | | | 741 | | | 1,561 | | | 2,269 | | Income (loss) before income tax | 503 | | | 496 | | | 2,172 | | | 1,561 | |
Income tax (expense) benefit | Income tax (expense) benefit | (113) | | | (92) | | | (257) | | | (334) | | Income tax (expense) benefit | (114) | | | (113) | | | (495) | | | (257) | |
Net income (loss) | Net income (loss) | 383 | | | 649 | | | 1,304 | | | 1,935 | | Net income (loss) | 389 | | | 383 | | | 1,677 | | | 1,304 | |
| Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | (3) | | | 4 | | | (30) | | | (88) | | Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | (16) | | | (3) | | | (50) | | | (30) | |
Net income (loss) attributable to Bunge | Net income (loss) attributable to Bunge | 380 | | | 653 | | | 1,274 | | | 1,847 | | Net income (loss) attributable to Bunge | $ | 373 | | | $ | 380 | | | $ | 1,627 | | | $ | 1,274 | |
Convertible preference share dividends | — | | | (8) | | | — | | | (25) | | |
| | | 0 | | 0 | | | | |
Net income (loss) available to Bunge common shareholders | $ | 380 | | | $ | 645 | | | $ | 1,274 | | | $ | 1,822 | | |
| Earnings per common share—basic (Note 20) | | | | | | | | |
| Earnings per common share—basic (Note 18) | | Earnings per common share—basic (Note 18) | | | | | | | |
| Net income (loss) attributable to Bunge common shareholders - basic | Net income (loss) attributable to Bunge common shareholders - basic | $ | 2.52 | | | $ | 4.56 | | | $ | 8.59 | | | $ | 12.91 | | Net income (loss) attributable to Bunge common shareholders - basic | $ | 2.50 | | | $ | 2.52 | | | $ | 10.85 | | | $ | 8.59 | |
| Earnings per common share—diluted (Note 20) | | | | | | | | |
Earnings per common share—diluted (Note 18) | | Earnings per common share—diluted (Note 18) | | | | | | | |
| Net income (loss) attributable to Bunge common shareholders - diluted | Net income (loss) attributable to Bunge common shareholders - diluted | $ | 2.49 | | | $ | 4.28 | | | $ | 8.30 | | | $ | 12.12 | | Net income (loss) attributable to Bunge common shareholders - diluted | $ | 2.47 | | | $ | 2.49 | | | $ | 10.71 | | | $ | 8.30 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
BUNGE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(U.S. dollars in millions)
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | | 2023 | | 2022 |
Net income (loss) | Net income (loss) | $ | 383 | | | $ | 649 | | | $ | 1,304 | | | $ | 1,935 | | Net income (loss) | $ | 389 | | | $ | 383 | | | $ | 1,677 | | | $ | 1,304 | |
Other comprehensive income (loss): | Other comprehensive income (loss): | | | | | | | | Other comprehensive income (loss): | | | | | | | |
Foreign exchange translation adjustment | Foreign exchange translation adjustment | (344) | | | (230) | | | (244) | | | (159) | | Foreign exchange translation adjustment | (166) | | | (344) | | | 102 | | | (244) | |
Unrealized gains (losses) on designated hedges, net of tax (expense) benefit of zero and $(2) in 2022 and $1 and $(2) in 2021 | 32 | | | 43 | | | (38) | | | (51) | | |
Unrealized gains (losses) on designated hedges, net of tax (expense) benefit of $1 and $(2) in 2023 and zero and $(2) in 2022 | | Unrealized gains (losses) on designated hedges, net of tax (expense) benefit of $1 and $(2) in 2023 and zero and $(2) in 2022 | 31 | | | 32 | | | (61) | | | (38) | |
| Pension adjustment, net of tax (expense) benefit of zero and zero in 2022 and $2 and zero in 2021 | — | | | 2 | | | — | | | — | | |
Reclassification of net (gains) losses to net income, net of tax expense (benefit) of zero and $12 in 2022 and zero and zero in 2021 | 141 | | | (1) | | | 107 | | | (3) | | |
| Reclassification of net (gains) losses to net income, net of tax expense (benefit) of $3 and $2 in 2023 and zero and $12 in 2022 | | Reclassification of net (gains) losses to net income, net of tax expense (benefit) of $3 and $2 in 2023 and zero and $12 in 2022 | (2) | | | 141 | | | 101 | | | 107 | |
Total other comprehensive income (loss) | Total other comprehensive income (loss) | (171) | | | (186) | | | (175) | | | (213) | | Total other comprehensive income (loss) | (137) | | | (171) | | | 142 | | | (175) | |
Total comprehensive income (loss) | Total comprehensive income (loss) | 212 | | | 463 | | | 1,129 | | | 1,722 | | Total comprehensive income (loss) | 252 | | | 212 | | | 1,819 | | | 1,129 | |
| Comprehensive (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | Comprehensive (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | 8 | | | 15 | | | 20 | | | (65) | | Comprehensive (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | (12) | | | 8 | | | (45) | | | 20 | |
Comprehensive income (loss) from acquisition of redeemable noncontrolling interest | Comprehensive income (loss) from acquisition of redeemable noncontrolling interest | (15) | | | — | | | (15) | | | — | | Comprehensive income (loss) from acquisition of redeemable noncontrolling interest | — | | | (15) | | | — | | | (15) | |
Total comprehensive income (loss) attributable to Bunge | Total comprehensive income (loss) attributable to Bunge | $ | 205 | | | $ | 478 | | | $ | 1,134 | | | $ | 1,657 | | Total comprehensive income (loss) attributable to Bunge | $ | 240 | | | $ | 205 | | | $ | 1,774 | | | $ | 1,134 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
BUNGE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(U.S. dollars in millions, except share data)
| | | September 30, 2022 | | December 31, 2021 | | September 30, 2023 | | December 31, 2022 |
ASSETS | ASSETS | | | | | ASSETS | | | | |
Current assets: | Current assets: | | | | | Current assets: | | | | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 956 | | | $ | 902 | | Cash and cash equivalents | | $ | 2,173 | | | $ | 1,104 | |
| Trade accounts receivable (less allowances of $94 and $85) (Note 5) | | 2,336 | | | 2,112 | | |
Inventories (Note 6) | | 8,112 | | | 8,431 | | |
Assets held for sale (Note 3) | | 58 | | | 264 | | |
Other current assets (Note 7) | | 5,733 | | | 4,751 | | |
Trade accounts receivable (less allowances of $101 and $90) (Note 4) | | Trade accounts receivable (less allowances of $101 and $90) (Note 4) | | 2,509 | | | 2,829 | |
Inventories (Note 5) | | Inventories (Note 5) | | 7,548 | | | 8,408 | |
Assets held for sale (Note 2) | | Assets held for sale (Note 2) | | 1 | | | 36 | |
Other current assets (Note 6) | | Other current assets (Note 6) | | 4,393 | | | 4,381 | |
Total current assets | Total current assets | | 17,195 | | | 16,460 | | Total current assets | | 16,624 | | | 16,758 | |
Property, plant and equipment, net | Property, plant and equipment, net | | 3,408 | | | 3,499 | | Property, plant and equipment, net | | 4,283 | | | 3,617 | |
Operating lease assets | Operating lease assets | | 1,091 | | | 912 | | Operating lease assets | | 864 | | | 1,024 | |
Goodwill | Goodwill | | 445 | | | 484 | | Goodwill | | 472 | | | 470 | |
Other intangible assets, net | Other intangible assets, net | | 350 | | | 431 | | Other intangible assets, net | | 417 | | | 360 | |
Investments in affiliates | Investments in affiliates | | 981 | | | 764 | | Investments in affiliates | | 1,201 | | | 1,012 | |
Deferred income taxes | Deferred income taxes | | 638 | | | 550 | | Deferred income taxes | | 632 | | | 712 | |
| Other non-current assets (Note 8) | | 684 | | | 719 | | |
Other non-current assets (Note 7) | | Other non-current assets (Note 7) | | 640 | | | 627 | |
Total assets | Total assets | | $ | 24,792 | | | $ | 23,819 | | Total assets | | $ | 25,133 | | | $ | 24,580 | |
LIABILITIES AND EQUITY | LIABILITIES AND EQUITY | | | | | LIABILITIES AND EQUITY | | | | |
Current liabilities: | Current liabilities: | | | | | Current liabilities: | | | | |
Short-term debt (Note 14) | | $ | 1,327 | | | $ | 673 | | |
Current portion of long-term debt (Note 14) | | 773 | | | 504 | | |
Short-term debt (Note 13) | | Short-term debt (Note 13) | | $ | 914 | | | $ | 546 | |
Current portion of long-term debt (Note 13) | | Current portion of long-term debt (Note 13) | | 301 | | | 846 | |
| Trade accounts payable (includes $906 and $568 carried at fair value) | | 4,455 | | | 4,250 | | |
Trade accounts payable (includes $926 and $643 carried at fair value) (Note 11) | | Trade accounts payable (includes $926 and $643 carried at fair value) (Note 11) | | 3,975 | | | 4,386 | |
Current operating lease obligations | Current operating lease obligations | | 436 | | | 350 | | Current operating lease obligations | | 317 | | | 425 | |
Liabilities held for sale (Note 3) | | 13 | | | 122 | | |
Other current liabilities (Note 11) | | 3,563 | | | 3,425 | | |
Liabilities held for sale (Note 2) | | Liabilities held for sale (Note 2) | | — | | | 18 | |
Other current liabilities (Note 10) | | Other current liabilities (Note 10) | | 2,738 | | | 3,379 | |
Total current liabilities | Total current liabilities | | 10,567 | | | 9,324 | | Total current liabilities | | 8,245 | | | 9,600 | |
Long-term debt (Note 14) | | 2,997 | | | 4,787 | | |
Long-term debt (Note 13) | | Long-term debt (Note 13) | | 3,967 | | | 3,259 | |
Deferred income taxes | Deferred income taxes | | 335 | | | 338 | | Deferred income taxes | | 380 | | | 365 | |
Non-current operating lease obligations | Non-current operating lease obligations | | 602 | | | 506 | | Non-current operating lease obligations | | 495 | | | 547 | |
Other non-current liabilities (Note 17) | | 918 | | | 658 | | |
Other non-current liabilities (Note 16) | | Other non-current liabilities (Note 16) | | 900 | | | 849 | |
| Redeemable noncontrolling interest (Note 18) | | 2 | | | 381 | | |
Equity (Note 19): | | | | | |
Convertible perpetual preference shares, par value $.01; authorized – 21,000,000 shares, issued and outstanding: 2022 - zero shares, 2021 - 6,899,683 shares (liquidation preference $100 per share) | | — | | | 690 | | |
Common shares, par value $.01; authorized – 400,000,000 shares; issued and outstanding: 2022 –149,796,910 shares, 2021 – 141,057,414 shares | | 1 | | | 1 | | |
Redeemable noncontrolling interest | | Redeemable noncontrolling interest | | 3 | | | 4 | |
Equity (Note 17): | | Equity (Note 17): | | | | |
Common shares, par value $.01; authorized – 400,000,000 shares; issued and outstanding: 2023 – 146,368,303 shares, 2022 – 149,907,932 shares | | Common shares, par value $.01; authorized – 400,000,000 shares; issued and outstanding: 2023 – 146,368,303 shares, 2022 – 149,907,932 shares | | 1 | | | 1 | |
Additional paid-in capital | Additional paid-in capital | | 6,655 | | | 5,590 | | Additional paid-in capital | | 6,727 | | | 6,692 | |
Retained earnings | Retained earnings | | 9,980 | | | 8,979 | | Retained earnings | | 11,555 | | | 10,222 | |
Accumulated other comprehensive income (loss) (Note 19) | | (6,611) | | | (6,471) | | |
Treasury shares, at cost; 2022 - 18,835,812 shares, 2021 - 16,726,697 shares | | (1,320) | | | (1,120) | | |
Accumulated other comprehensive income (loss) (Note 17) | | Accumulated other comprehensive income (loss) (Note 17) | | (6,224) | | | (6,371) | |
Treasury shares, at cost; 2023 - 23,163,348 shares and 2022 - 18,835,812 shares | | Treasury shares, at cost; 2023 - 23,163,348 shares and 2022 - 18,835,812 shares | | (1,808) | | | (1,320) | |
Total Bunge shareholders’ equity | Total Bunge shareholders’ equity | | 8,705 | | | 7,669 | | Total Bunge shareholders’ equity | | 10,251 | | | 9,224 | |
Noncontrolling interests | Noncontrolling interests | | 666 | | | 156 | | Noncontrolling interests | | 892 | | | 732 | |
Total equity | Total equity | | 9,371 | | | 7,825 | | Total equity | | 11,143 | | | 9,956 | |
Total liabilities, redeemable noncontrolling interest and equity | Total liabilities, redeemable noncontrolling interest and equity | | $ | 24,792 | | | $ | 23,819 | | Total liabilities, redeemable noncontrolling interest and equity | | $ | 25,133 | | | $ | 24,580 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
BUNGE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(U.S. dollars in millions)
| | | Nine Months Ended September 30, | | Nine Months Ended September 30, |
| | | 2022 | | 2021 | | | 2023 | | 2022 |
OPERATING ACTIVITIES | OPERATING ACTIVITIES | | | | | OPERATING ACTIVITIES | | | | |
Net income (loss) | Net income (loss) | | $ | 1,304 | | | $ | 1,935 | | Net income (loss) | | $ | 1,677 | | | $ | 1,304 | |
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities: | Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities: | | | | | Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities: | | | | |
Impairment charges | Impairment charges | | 86 | | | — | | Impairment charges | | 56 | | | 86 | |
| Foreign exchange (gain) loss on net debt | Foreign exchange (gain) loss on net debt | | (96) | | | 7 | | Foreign exchange (gain) loss on net debt | | (151) | | | (96) | |
Bad debt expense | Bad debt expense | | 23 | | | 4 | | Bad debt expense | | 8 | | | 23 | |
Depreciation, depletion and amortization | Depreciation, depletion and amortization | | 305 | | | 317 | | Depreciation, depletion and amortization | | 317 | | | 305 | |
Share-based compensation expense | Share-based compensation expense | | 47 | | | 46 | | Share-based compensation expense | | 51 | | | 47 | |
Deferred income tax expense (benefit) | Deferred income tax expense (benefit) | | (92) | | | (263) | | Deferred income tax expense (benefit) | | 115 | | | (92) | |
(Gain) loss on sale of investments and property, plant and equipment | | (7) | | | (416) | | |
| Results from affiliates | | Results from affiliates | | (100) | | | (95) | |
Other, net | Other, net | | (8) | | | (105) | | Other, net | | 57 | | | 80 | |
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions: | Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions: | | | | | Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions: | | | | |
Trade accounts receivable | Trade accounts receivable | | (359) | | | (785) | | Trade accounts receivable | | 306 | | | (359) | |
Inventories | Inventories | | (229) | | | (771) | | Inventories | | 933 | | | (229) | |
Secured advances to suppliers | | Secured advances to suppliers | | (228) | | | 26 | |
Trade accounts payable and accrued liabilities | Trade accounts payable and accrued liabilities | | 259 | | | 1,268 | | Trade accounts payable and accrued liabilities | | (690) | | | 259 | |
Advances on sales | Advances on sales | | (81) | | | (129) | | Advances on sales | | (227) | | | (81) | |
Net unrealized (gains) losses on derivative contracts | Net unrealized (gains) losses on derivative contracts | | (456) | | | 559 | | Net unrealized (gains) losses on derivative contracts | | (247) | | | (456) | |
Margin deposits | Margin deposits | | (55) | | | 280 | | Margin deposits | | (111) | | | (55) | |
Recoverable and income taxes, net | Recoverable and income taxes, net | | (201) | | | 254 | | Recoverable and income taxes, net | | (19) | | | (201) | |
Marketable securities | Marketable securities | | 341 | | | (95) | | Marketable securities | | (17) | | | 341 | |
Beneficial interest in securitized trade receivables | Beneficial interest in securitized trade receivables | | (5,288) | | | (3,621) | | Beneficial interest in securitized trade receivables | | — | | | (5,288) | |
Other, net | Other, net | | (524) | | | (127) | | Other, net | | 130 | | | (550) | |
Cash provided by (used for) operating activities | Cash provided by (used for) operating activities | | (5,031) | | | (1,642) | | Cash provided by (used for) operating activities | | 1,860 | | | (5,031) | |
INVESTING ACTIVITIES | INVESTING ACTIVITIES | | | | | INVESTING ACTIVITIES | | | | |
Payments made for capital expenditures | Payments made for capital expenditures | | (353) | | | (239) | | Payments made for capital expenditures | | (805) | | | (353) | |
| Proceeds from investments | Proceeds from investments | | 217 | | | 171 | | Proceeds from investments | | 21 | | | 217 | |
Payments for investments | Payments for investments | | (225) | | | (217) | | Payments for investments | | (26) | | | (225) | |
Settlements of net investment hedges | Settlements of net investment hedges | | (153) | | | (29) | | Settlements of net investment hedges | | (57) | | | (153) | |
Proceeds from beneficial interest in securitized trade receivables | Proceeds from beneficial interest in securitized trade receivables | | 5,176 | | | 3,432 | | Proceeds from beneficial interest in securitized trade receivables | | 85 | | | 5,176 | |
Payments for beneficial interest in securitized trade receivables | | — | | | (177) | | |
| Proceeds from disposals of businesses and property, plant and equipment | Proceeds from disposals of businesses and property, plant and equipment | | 496 | | | 646 | | Proceeds from disposals of businesses and property, plant and equipment | | 165 | | | 496 | |
Proceeds from sale of investments in affiliates | | — | | | 11 | | |
| Payments for investments in affiliates | Payments for investments in affiliates | | (55) | | | (46) | | Payments for investments in affiliates | | (136) | | | (55) | |
Other, net | Other, net | | 10 | | | 10 | | Other, net | | 107 | | | 10 | |
Cash provided by (used for) investing activities | Cash provided by (used for) investing activities | | 5,113 | | | 3,562 | | Cash provided by (used for) investing activities | | (646) | | | 5,113 | |
FINANCING ACTIVITIES | FINANCING ACTIVITIES | | | | | FINANCING ACTIVITIES | | | | |
| Proceeds from short-term debt | | 28,232 | | | 24,157 | | |
Repayments of short-term debt | | (27,398) | | | (25,798) | | |
Net change in short-term debt with maturities of three months or less | | Net change in short-term debt with maturities of three months or less | | 161 | | | 842 | |
Proceeds from short-term debt with maturities greater than three months | | Proceeds from short-term debt with maturities greater than three months | | 848 | | | 1,592 | |
Repayments of short-term debt with maturities greater than three months | | Repayments of short-term debt with maturities greater than three months | | (593) | | | (1,600) | |
Proceeds from long-term debt | Proceeds from long-term debt | | 48 | | | 998 | | Proceeds from long-term debt | | 975 | | | 48 | |
Repayments of long-term debt | Repayments of long-term debt | | (1,029) | | | — | | Repayments of long-term debt | | (879) | | | (1,029) | |
Proceeds from the exercise of options for common shares | Proceeds from the exercise of options for common shares | | 30 | | | 72 | | Proceeds from the exercise of options for common shares | | 7 | | | 30 | |
Repurchases of common shares | Repurchases of common shares | | (200) | | | (100) | | Repurchases of common shares | | (466) | | | (200) | |
Dividends paid to common and preference shareholders | Dividends paid to common and preference shareholders | | (256) | | | (240) | | Dividends paid to common and preference shareholders | | (287) | | | (256) | |
Dividends paid to noncontrolling interest | | — | | | (75) | | |
| Capital contributions from (Return of capital to) noncontrolling interest | | Capital contributions from (Return of capital to) noncontrolling interest | | 40 | | | — | |
Sale of noncontrolling interest | Sale of noncontrolling interest | | 521 | | | — | | Sale of noncontrolling interest | | — | | | 521 | |
Acquisition of redeemable noncontrolling interest and noncontrolling interest | Acquisition of redeemable noncontrolling interest and noncontrolling interest | | (102) | | | (147) | | Acquisition of redeemable noncontrolling interest and noncontrolling interest | | — | | | (102) | |
Other, net | Other, net | | 52 | | | (33) | | Other, net | | (19) | | | 52 | |
Cash provided by (used for) financing activities | Cash provided by (used for) financing activities | | (102) | | | (1,166) | | Cash provided by (used for) financing activities | | (213) | | | (102) | |
Effect of exchange rate changes on cash and cash equivalents, restricted cash, and cash held for sale | Effect of exchange rate changes on cash and cash equivalents, restricted cash, and cash held for sale | | 112 | | | (79) | | Effect of exchange rate changes on cash and cash equivalents, restricted cash, and cash held for sale | | 40 | | | 112 | |
Net increase (decrease) in cash and cash equivalents, restricted cash, and cash held for sale | Net increase (decrease) in cash and cash equivalents, restricted cash, and cash held for sale | | 92 | | | 675 | | Net increase (decrease) in cash and cash equivalents, restricted cash, and cash held for sale | | 1,041 | | | 92 | |
Cash and cash equivalents, restricted cash, and cash held for sale - beginning of period | Cash and cash equivalents, restricted cash, and cash held for sale - beginning of period | | 905 | | | 381 | | Cash and cash equivalents, restricted cash, and cash held for sale - beginning of period | | 1,152 | | | 905 | |
Cash and cash equivalents, restricted cash, and cash held for sale - end of period | Cash and cash equivalents, restricted cash, and cash held for sale - end of period | | $ | 997 | | | $ | 1,056 | | Cash and cash equivalents, restricted cash, and cash held for sale - end of period | | $ | 2,193 | | | $ | 997 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
BUNGE LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
(Unaudited)
(U.S. dollars in millions, except share data)
| | | Convertible Preference Shares | | Common Shares | | | | Convertible Preference Shares | | Common Shares | | |
| | Redeemable Non- Controlling Interests | Shares | | Amount | | Shares | | Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Shares | | Non- Controlling Interests | | Total Equity | | | Redeemable Non- Controlling Interests | Shares | | Amount | | Shares | | Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Shares | | Non- Controlling Interests | | Total Equity | |
Balance, July 1, 2022 | | $ | 351 | | — | | | $ | — | | | 151,885,454 | | | $ | 1 | | | $ | 6,595 | | | $ | 9,692 | | | $ | (6,436) | | | $ | (1,120) | | | $ | 457 | | | $ | 9,189 | | | |
Balance, July 1, 2023 | | Balance, July 1, 2023 | | $ | 4 | | — | | | $ | — | | | 150,630,209 | | | $ | 1 | | | $ | 6,706 | | | $ | 11,279 | | | $ | (6,091) | | | $ | (1,320) | | | $ | 783 | | | $ | 11,358 | | |
Net income (loss) | Net income (loss) | | 7 | | — | | | — | | | — | | | — | | | — | | | 380 | | | — | | | — | | | (4) | | | 376 | | | Net income (loss) | | (1) | | — | | | — | | | — | | | — | | | — | | | 373 | | | — | | | — | | | 17 | | | 390 | | |
| Other comprehensive income (loss) | Other comprehensive income (loss) | | 11 | | — | | | — | | | — | | | — | | | — | | | — | | | (160) | | | — | | | (22) | | | (182) | | | Other comprehensive income (loss) | | — | | — | | | — | | | — | | | — | | | — | | | — | | | (133) | | | — | | | (4) | | | (137) | | |
| Dividends on common shares, $0.625 per share | | — | | — | | | — | | | — | | | — | | | — | | | (92) | | | — | | | — | | | — | | | (92) | | | |
Dividends on common shares, $0.6625 per share | | Dividends on common shares, $0.6625 per share | | — | | — | | | — | | | — | | | — | | | — | | | (96) | | | — | | | — | | | — | | | (96) | | |
| Dividends to noncontrolling interests on subsidiary common stock | | Dividends to noncontrolling interests on subsidiary common stock | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2) | | | (2) | | |
Capital contribution (return) from (to) noncontrolling interest | | Capital contribution (return) from (to) noncontrolling interest | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 7 | | | 7 | | |
| Acquisition of redeemable noncontrolling interest (Note 18) | | (367) | | — | | | — | | | — | | | — | | | 45 | | | — | | | (15) | | | — | | | 235 | | | 265 | | | |
Acquisition of noncontrolling interest (Note 8) | | Acquisition of noncontrolling interest (Note 8) | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 91 | | | 91 | | |
| Share-based compensation expense | Share-based compensation expense | | — | | — | | | — | | | — | | | — | | | 15 | | | — | | | — | | | — | | | — | | | 15 | | | Share-based compensation expense | | — | | — | | | — | | | — | | | — | | | 17 | | | — | | | — | | | — | | | — | | | 17 | | |
| Repurchase of common shares | Repurchase of common shares | | — | | — | | | — | | | (2,109,115) | | | — | | | — | | | — | | | — | | | (200) | | | — | | | (200) | | | Repurchase of common shares | | — | | — | | | — | | | (4,327,536) | | | — | | | — | | | — | | | — | | | (488) | | | — | | | (488) | | |
| Issuance of common shares, including stock dividends | Issuance of common shares, including stock dividends | | — | | — | | | — | | | 20,571 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Issuance of common shares, including stock dividends | | — | | — | | | — | | | 65,630 | | | — | | | 4 | | | (1) | | | — | | | — | | | — | | | 3 | | |
Balance, September 30, 2022 | | $ | 2 | | — | | | $ | — | | | 149,796,910 | | | $ | 1 | | | $ | 6,655 | | | $ | 9,980 | | | $ | (6,611) | | | $ | (1,320) | | | $ | 666 | | | $ | 9,371 | | | |
Balance, September 30, 2023 | | Balance, September 30, 2023 | | $ | 3 | | — | | | $ | — | | | 146,368,303 | | | $ | 1 | | | $ | 6,727 | | | $ | 11,555 | | | $ | (6,224) | | | $ | (1,808) | | | $ | 892 | | | $ | 11,143 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Convertible Preference Shares | | Common Shares | | | | | | | | | | | | |
| | Redeemable Non- Controlling Interests | Shares | | Amount | | Shares | | Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Shares | | Non- Controlling Interests | | Total Equity |
Balance, July 1, 2021 | | $ | 483 | | 6,899,683 | | | $ | 690 | | | 141,714,847 | | | $ | 1 | | | $ | 5,512 | | | $ | 8,259 | | | $ | (6,258) | | | $ | (1,020) | | | $ | 147 | | | $ | 7,331 | |
Net income (loss) | | 2 | | — | | | — | | | — | | | — | | | — | | | 653 | | | — | | | — | | | (6) | | | 647 | |
| | | | | | | | | | | | | | | | | | | | | |
Other comprehensive income (loss) | | (11) | | — | | | — | | | — | | | — | | | — | | | — | | | (178) | | | — | | | — | | | (178) | |
| | | | | | | | | | | | | | | | | | | | | |
Dividends on common shares, $0.525 per share | | — | | — | | | — | | | — | | | — | | | — | | | (74) | | | — | | | — | | | — | | | (74) | |
Dividends on preference shares, $1.21875 per share | | — | | — | | | — | | | — | | | — | | | — | | | (8) | | | — | | | — | | | — | | | (8) | |
Dividends to noncontrolling interests on subsidiary common stock | | (71) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2) | | | (2) | |
Capital contribution (return) from (to) noncontrolling interest | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (3) | | | (3) | |
| | | | | | | | | | | | | | | | | | | | | |
Share-based compensation expense | | — | | — | | | — | | | — | | | — | | | 17 | | | — | | | — | | | — | | | — | | | 17 | |
Repurchase of common shares | | — | | — | | | — | | | (1,298,384) | | | — | | | — | | | — | | | — | | | (100) | | | — | | | (100) | |
Issuance of common shares, including stock dividends | | — | | — | | | — | | | 21,775 | | | — | | | 1 | | | — | | | — | | | — | | | — | | | 1 | |
Balance, September 30, 2021 | | $ | 403 | | 6,899,683 | | | $ | 690 | | | 140,438,238 | | | $ | 1 | | | $ | 5,530 | | | $ | 8,830 | | | $ | (6,436) | | | $ | (1,120) | | | $ | 136 | | | $ | 7,631 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Convertible Preference Shares | | Common Shares | | | | | | | | | | | | |
| | Redeemable Non- Controlling Interests | Shares | | Amount | | Shares | | Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Shares | | Non- Controlling Interests | | Total Equity |
Balance, July 1, 2022 | | $ | 351 | | — | | | $ | — | | | 151,885,454 | | | $ | 1 | | | $ | 6,595 | | | $ | 9,692 | | | $ | (6,436) | | | $ | (1,120) | | | $ | 457 | | | $ | 9,189 | |
Net income (loss) | | 7 | | — | | | — | | | — | | | — | | | — | | | 380 | | | — | | | — | | | (4) | | | 376 | |
| | | | | | | | | | | | | | | | | | | | | |
Other comprehensive income (loss) | | 11 | | — | | | — | | | — | | | — | | | — | | | — | | | (160) | | | — | | | (22) | | | (182) | |
| | | | | | | | | | | | | | | | | | | | | |
Dividends on common shares, $0.625 per share | | — | | — | | | — | | | — | | | — | | | — | | | (92) | | | — | | | — | | | — | | | (92) | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Acquisition of redeemable noncontrolling interest | | (367) | | — | | | — | | | — | | | — | | | 45 | | | — | | | (15) | | | — | | | 235 | | | 265 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Share-based compensation expense | | — | | — | | | — | | | — | | | — | | | 15 | | | — | | | — | | | — | | | — | | | 15 | |
| | | | | | | | | | | | | | | | | | | | | |
Repurchase of common shares | | — | | — | | | — | | | (2,109,115) | | | — | | | — | | | — | | | — | | | (200) | | | — | | | (200) | |
Issuance of common shares, including stock dividends | | — | | — | | | — | | | 20,571 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Balance, September 30, 2022 | | $ | 2 | | — | | | $ | — | | | 149,796,910 | | | $ | 1 | | | $ | 6,655 | | | $ | 9,980 | | | $ | (6,611) | | | $ | (1,320) | | | $ | 666 | | | $ | 9,371 | |
| | | | Convertible Preference Shares | | Common Shares | | | | Convertible Preference Shares | | Common Shares | |
| | | Redeemable Non- Controlling Interests | Shares | | Amount | | Shares | | Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Shares | | Non- Controlling Interests | | Total Equity | | | Redeemable Non- Controlling Interests | Shares | | Amount | | Shares | | Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Shares | | Non- Controlling Interests | | Total Equity |
Balance, January 1, 2022 | | $ | 381 | | 6,899,683 | | | $ | 690 | | | 141,057,414 | | | $ | 1 | | | $ | 5,590 | | | $ | 8,979 | | | $ | (6,471) | | | $ | (1,120) | | | $ | 156 | | | $ | 7,825 | | |
Balance, January 1, 2023 | | Balance, January 1, 2023 | | $ | 4 | | — | | | $ | — | | | 149,907,932 | | | $ | 1 | | | $ | 6,692 | | | $ | 10,222 | | | $ | (6,371) | | | $ | (1,320) | | | $ | 732 | | | $ | 9,956 | |
Net income (loss) | Net income (loss) | | 13 | | — | | | — | | | — | | | — | | | — | | | 1,274 | | | — | | | — | | | 17 | | | 1,291 | | Net income (loss) | | (1) | | — | | | — | | | — | | | — | | | — | | | 1,627 | | | — | | | — | | | 51 | | | 1,678 | |
| Other comprehensive income (loss) | Other comprehensive income (loss) | | (25) | | — | | | — | | | — | | | — | | | — | | | — | | | (125) | | | — | | | (25) | | | (150) | | Other comprehensive income (loss) | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 147 | | | — | | | (5) | | | 142 | |
| Dividends on common shares, $1.775 per share | | — | | — | | | — | | | — | | | — | | | — | | | (268) | | | — | | | — | | | — | | | (268) | | |
Dividends on common shares, $1.95 per share | | Dividends on common shares, $1.95 per share | | — | | — | | | — | | | — | | | — | | | — | | | (290) | | | — | | | — | | | — | | | (290) | |
| Dividends to noncontrolling interests on subsidiary common stock | Dividends to noncontrolling interests on subsidiary common stock | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (4) | | | (4) | | Dividends to noncontrolling interests on subsidiary common stock | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (17) | | | (17) | |
Capital contribution (return) from (to) noncontrolling interest | | Capital contribution (return) from (to) noncontrolling interest | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 40 | | | 40 | |
| Sale of noncontrolling interest | | — | | — | | | — | | | — | | | — | | | 234 | | | — | | | — | | | — | | | 287 | | | 521 | | |
Acquisition of redeemable noncontrolling interest (Note 18) | | (367) | | — | | | — | | | — | | | — | | | 45 | | | — | | | (15) | | | — | | | 235 | | | 265 | | |
Acquisition of noncontrolling interest (Note 8) | | Acquisition of noncontrolling interest (Note 8) | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 91 | | | 91 | |
| Share-based compensation expense | Share-based compensation expense | | — | | — | | | — | | | — | | | — | | | 47 | | | — | | | — | | | — | | | — | | | 47 | | Share-based compensation expense | | — | | — | | | — | | | — | | | — | | | 51 | | | — | | | — | | | — | | | — | | | 51 | |
Repurchase of common shares | Repurchase of common shares | | — | | — | | | — | | | (2,109,115) | | | — | | | — | | | — | | | — | | | (200) | | | — | | | (200) | | Repurchase of common shares | | — | | — | | | — | | | (4,327,536) | | | — | | | — | | | — | | | — | | | (488) | | | — | | | (488) | |
Conversion of preference shares to common shares | | — | | (6,899,683) | | | (690) | | | 8,863,331 | | | — | | | 690 | | | — | | | — | | | — | | | — | | | — | | |
| Issuance of common shares, including stock dividends | Issuance of common shares, including stock dividends | | — | | — | | | — | | | 1,985,280 | | | — | | | 49 | | | (5) | | | — | | | — | | | — | | | 44 | | Issuance of common shares, including stock dividends | | — | | — | | | — | | | 787,907 | | | — | | | (16) | | | (4) | | | — | | | — | | | — | | | (20) | |
Balance, September 30, 2022 | | $ | 2 | | — | | | $ | — | | | 149,796,910 | | | $ | 1 | | | $ | 6,655 | | | $ | 9,980 | | | $ | (6,611) | | | $ | (1,320) | | | $ | 666 | | | $ | 9,371 | | |
Balance, September 30, 2023 | | Balance, September 30, 2023 | | $ | 3 | | — | | | $ | — | | | 146,368,303 | | | $ | 1 | | | $ | 6,727 | | | $ | 11,555 | | | $ | (6,224) | | | $ | (1,808) | | | $ | 892 | | | $ | 11,143 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Convertible Preference Shares | | Common Shares | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | Redeemable Non- Controlling Interests | Shares | | Amount | | Shares | | Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Shares | | Non- Controlling Interests | | Total Equity |
Balance, January 1, 2021 | | $ | 415 | | 6,899,683 | | | $ | 690 | | | 139,790,238 | | | $ | 1 | | | $ | 5,408 | | | $ | 7,236 | | | $ | (6,246) | | | $ | (1,020) | | | $ | 136 | | | $ | 6,205 | |
Net income (loss) | | 81 | | ��� | | | — | | | — | | | — | | | — | | | 1,847 | | | — | | | — | | | 7 | | | 1,854 | |
Other comprehensive income (loss) | | (23) | | — | | | — | | | — | | | — | | | — | | | — | | | (190) | | | — | | | — | | | (190) | |
| | | | | | | | | | | | | | | | | | | | | |
Dividends on common shares, $1.550 per share | | — | | — | | | — | | | — | | | — | | | — | | | (221) | | | — | | | — | | | — | | | (221) | |
Dividends on preference shares, $3.65625 per share | | — | | — | | | — | | | — | | | — | | | — | | | (25) | | | — | | | — | | | — | | | (25) | |
Dividends to noncontrolling interests on subsidiary common stock | | (71) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (4) | | | (4) | |
Capital contribution (return) from (to) noncontrolling interest | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (3) | | | (3) | |
Acquisition of noncontrolling interest | | — | | — | | | — | | | — | | | — | | | — | | | (3) | | | — | | | — | | | — | | | (3) | |
Disposition of noncontrolling interest in a subsidiary | | 1 | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based compensation expense | | — | | — | | | — | | | — | | | — | | | 46 | | | — | | | — | | | — | | | — | | | 46 | |
Repurchase of common shares | | — | | — | | | — | | | (1,298,384) | | | — | | | — | | | — | | | — | | | (100) | | | — | | | (100) | |
Issuance of common shares, including stock dividends | | — | | — | | | — | | | 1,946,384 | | | — | | | 76 | | | (4) | | | — | | | — | | | — | | | 72 | |
Balance, September 30, 2021 | | $ | 403 | | 6,899,683 | | | $ | 690 | | | 140,438,238 | | | $ | 1 | | | $ | 5,530 | | | $ | 8,830 | | | $ | (6,436) | | | $ | (1,120) | | | $ | 136 | | | $ | 7,631 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Convertible Preference Shares | | Common Shares | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | Redeemable Non- Controlling Interests | Shares | | Amount | | Shares | | Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Shares | | Non- Controlling Interests | | Total Equity |
Balance, January 1, 2022 | | $ | 381 | | 6,899,683 | | | $ | 690 | | | 141,057,414 | | | $ | 1 | | | $ | 5,590 | | | $ | 8,979 | | | $ | (6,471) | | | $ | (1,120) | | | $ | 156 | | | $ | 7,825 | |
Net income (loss) | | 13 | | — | | | — | | | — | | | — | | | — | | | 1,274 | | | — | | | — | | | 17 | | | 1,291 | |
Other comprehensive income (loss) | | (25) | | — | | | — | | | — | | | — | | | — | | | — | | | (125) | | | — | | | (25) | | | (150) | |
| | | | | | | | | | | | | | | | | | | | | |
Dividends on common shares, $1.775 per share | | — | | — | | | — | | | — | | | — | | | — | | | (268) | | | — | | | — | | | — | | | (268) | |
| | | | | | | | | | | | | | | | | | | | | |
Dividends to noncontrolling interests on subsidiary common stock | | — | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (4) | | | (4) | |
| | | | | | | | | | | | | | | | | | | | | |
Sale of noncontrolling interest | | — | | — | | | — | | | — | | | — | | | 234 | | | — | | | — | | | — | | | 287 | | | 521 | |
Acquisition of redeemable noncontrolling interest | | (367) | | — | | | — | | | — | | | — | | | 45 | | | — | | | (15) | | | — | | | 235 | | | 265 | |
| | | | | | | | | | | | | | | | | | | | | |
Share-based compensation expense | | — | | — | | | — | | | — | | | — | | | 47 | | | — | | | — | | | — | | | — | | | 47 | |
Repurchase of common shares | | — | | — | | | — | | | (2,109,115) | | | — | | | — | | | — | | | — | | | (200) | | | — | | | (200) | |
Conversion of preference shares to common shares | | — | | (6,899,683) | | | (690) | | | 8,863,331 | | | — | | | 690 | | | — | | | — | | | — | | | — | | | — | |
Issuance of common shares, including stock dividends | | — | | — | | | — | | | 1,985,280 | | | — | | | 49 | | | (5) | | | — | | | — | | | — | | | 44 | |
Balance, September 30, 2022 | | $ | 2 | | — | | | $ | — | | | 149,796,910 | | | $ | 1 | | | $ | 6,655 | | | $ | 9,980 | | | $ | (6,611) | | | $ | (1,320) | | | $ | 666 | | | $ | 9,371 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
BUNGE LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION, PRINCIPLES OF CONSOLIDATION, AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements include the accounts of Bunge Limited ("Bunge" or the "Company"), its subsidiaries and variable interest entities ("VIEs") in which Bunge is considered to be the primary beneficiary, and as a result, include the assets, liabilities, revenues and expenses of all entities over which Bunge has a controlling financial interest. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended ("Exchange Act"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to Securities and Exchange Commission ("SEC") rules. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included. The condensed consolidated balance sheet at December 31, 20212022 has been derived from Bunge’s audited consolidated financial statements at that date. Operating results for the nine months ended September 30, 20222023 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.2023. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021,2022, forming part of Bunge’s 20212022 Annual Report on Form 10-K filed with the SEC on February 24, 2022.2023.
Effective January 1, 2023, the Company changed its reporting of cash proceeds from and repayments of short-term debt with maturities of three months or less to be presented on a net basis in its condensed consolidated statements of cash flows. Prior to January 1, 2023, the Company presented cash proceeds from and repayments of short-term debt with maturities of three months or less separately in its consolidated statements of cash flows. Prior period amounts have been reclassified to conform to current presentation.
On December 8, 2022, Bunge announced the Company's intention to change the place of incorporation of Bunge's ultimate parent company from Bermuda to Switzerland (the "Redomestication"). Bunge shareholders approved the Redomestication at the Extraordinary General Meeting held on October 5, 2023. Bunge expects the Redomestication to occur in the fourth quarter of 2023, subject to various conditions. Please refer to the Company's definitive proxy statement filed with the SEC on August 7, 2023 for further details.
On September 4,Throughout 2023 and 2022, Argentina’s government has published multiple Emergency Decree 576/2022,Decrees (collectively referred to as the “Export Programs”) which have introduced preferential U.S. dollar to Argentine Programa de Incremento Exportadorpeso (the "Export Program"),foreign exchange rates available exclusively during specific periods of time and payable to Argentinian farmers on qualifying Argentine peso denominated sales of certain commodities. The Export Programs are aimed at boosting farmer selling and in turn soybeancommodity exports. The Export Program introduced a new preferential U.S. dollar to Argentinian peso foreign exchange rate, available exclusively during the period between September 5 and September 30, 2022, payable to Argentinian farmers on qualifying Argentinian peso denominated sales of soybeans. Purchasers of the qualifying soybeans, including Bunge, received the same preferential rate on U.S. dollar funds placed onshore in Argentina and converted to Argentinian peso to fund soybean purchases.
Bunge is both a receiver of the preferential exchange rate for cash converted to ArgentinianArgentine peso, pesos, as well as a payer of the same preferential rate on purchases of soybeansvarious commodities from farmers and related export duties. Transactions and monetary balances related to thethese Export ProgramPrograms were accounted for at the preferential rate. The net impactPlease refer to Note 1 – Nature of the Export Program on Bunge's condensed consolidated statementsBusiness, Basis of income was not material.Presentation, and Significant Accounting Policies
On August 1, 2022, Bayer AG (FRA: BAYN) acquired a 65% controlling interest in CoverCress Inc. ("CCI"), a Bunge Ventures portfolio company that has developed a novel low carbon-intensity winter oilseed crop called CoverCress™, by purchasing all equity interestsincluded in CCI other than those held by Bunge Ventures and Chevron USA, Inc., a subsidiary of Chevron Corporation ("Chevron", NYSE: CVX).
As a result of the transaction, during the three months ended September 30, 2022, the Company recorded an $18 million unrealized gain on its remaining 21.93% ownership interest in CCI within Other income (expense) – net of the Company’s condensed consolidated statements of income. Additionally, the Company reclassified its $44 million investment in CCI as of September 30, 2022 from Long-term Investments, within Other Non-current Assets, to Investments in affiliates in the condensed consolidated balance sheet. Both Bunge's investment in CCI and the above mentioned related unrealized gain are recorded within Corporate and Other activities.
On May 1, 2022, Bunge completed a transaction with Chevron to create a joint venture, Bunge Chevron Ag Renewables LLC (the "Joint Venture"), leveraging Bunge’s expertise in oilseed processing and farmer relationships, and Chevron’s expertise in fuels manufacturing and marketing, to help meet the demandAnnual Report on Form 10-K for renewable fuels and to develop lower carbon intensity feedstocks. Bunge has a 50% ownership interest in the Joint Venture. Bunge contributed certain property, plant, and equipment related to two of its soybean processing facilities to the Joint Venture, with a fair value totaling approximately $521 million, and Chevron contributed an approximately equal value of cash and working capital. Bunge has also committed to undertake certain capital improvementsfurther details on the soybean processing facilities contributed to the Joint Venture, up to an estimated $80 million, at which point Chevron will contribute an additional equivalent amount in cash. Under the terms of the Joint Venture's agreements, Bunge will operate the Joint Venture’s facilities, and Chevron will have purchase rights for oil produced by the Joint Venture for use as a renewable feedstock to manufacture low lifecycle carbon intensity transportation fuels. See Note 9 - Variable Interest Entities for further accounting considerations related to this transaction.2022 Export Programs.
Ukraine-Russia War
Bunge has operations in Turkey, which until March 31, 2022, used the official exchange rate published by the Turkish government to translate the Company's commercial transactions and for financial statement re-measurement purposes. Over the last several years, Turkey has experienced negative economic trends, as evidenced by multiple periods of increasing inflation rates, depreciation of the Turkish lira, and increasing borrowing rates, which have required the Turkish government to take mitigating actions. During the first quarter of 2022, Turkey became a highly inflationary economy as defined under U.S. GAAP. In accordance with ASC 830, Foreign Currency Matters, the financial statements of foreign entities in highly inflationary economies are required to be remeasured as if the functional currency were the reporting currency, commencing in the period subsequent to such economies becoming highly inflationary. As a result, effective April 1, 2022, the financial statements of Bunge's Turkish subsidiary have been remeasured using the reporting currency, the U.S. dollar, rather than the Turkish lira. This change has not had a material impact on Bunge's condensed consolidated financial statements.
Cash, Cash Equivalents, Restricted Cash, and Cash held for sale
Restricted cash and cash held for sale is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the condensed consolidated statement of cash flows. The following table provides a reconciliation of cash and cash equivalents, restricted cash, and cash held for sale, reported within the condensed consolidated balance sheets, which sum to the total of the same such amounts shown in the condensed consolidated statement of cash flows.
| | | | | | | | |
(US$ in millions) | September 30, 2022 | September 30, 2021 |
Cash and cash equivalents | $ | 956 | | $ | 1,033 | |
Restricted cash included in Other current assets | 5 | | 23 | |
Cash and cash equivalents in Assets held for sale | 36 | | — | |
Total | $ | 997 | | $ | 1,056 | |
Cash paid for taxes, which primarily comprises income taxes and value added taxes, net of refunds, was $383 million and $309 million for the nine months ended September 30, 2022 and 2021, respectively. Cash paid for interest expense was $315 million and $231 million for the nine months ended September 30, 2022 and 2021, respectively.
Recently Adopted Accounting Pronouncements
On January 1, 2022, the Company adopted Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities About Government Assistance, which requires annual disclosures for transactions with a government authority that are accounted for by applying a grant or contribution accounting model by analogy. The guidance is effective for annual periods beginning after December 15, 2021. This guidance will be applied prospectively to all transactions within the scope of the standard that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application. As this standard requires annual disclosure only, the Company continues to identify its transactions that are subject to this guidance and evaluate the impact of this standard on its condensed consolidated financial statements.
On January 1, 2022, the Company adopted ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments and contracts in an entity’s own equity. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. This guidance will be applied prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The adoption of this guidance did not have a material impact on Bunge's condensed consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, with subsequent updates through ASU 2021-01, which collectively provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting, to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance, and per the guidance, the Company is applying it prospectively to all eligible contract modifications through December 31, 2022. In March 2021, the United Kingdom's Financial Conduct Authority ("FCA"), responsible for regulating LIBOR, announced that most LIBOR settings would be discontinued after December 31, 2021, except for certain USD LIBOR settings, which will continue through June 30, 2023. In September 2021, the FCA further announced that it will require the LIBOR benchmark administrator to publish sterling and Japanese yen LIBOR settings under a synthetic methodology based on term risk-free rates for the duration of 2022. These synthetic LIBOR settings will be available only for use in legacy contracts and are not for use in new business.
Bunge has utilized the relief provided by Topic 848 to ensure financial reporting results reflect the intended continuation of such contracts and arrangements during the period of the market-wide transition to alternative reference rates. The expedients allow an eligible modified contract to be accounted for and presented as a continuation of the existing contract.
The Company has identified its LIBOR-based contracts that have been, or will be, impacted by the cessation of LIBOR. The Company continues to actively work with counterparties to incorporate fallback language in negotiated contracts, in addition to incorporating non-LIBOR reference rate and fallback language, when applicable, in new contracts. The modification of contracts is ongoing; however, as of September 30, 2022, the adoption of this guidance has not had a material impact on Bunge's condensed consolidated financial statements.
2. UKRAINE-RUSSIA WAR
On February 24, 2022, Russia initiated a military invasion of Ukraine (the "war"). Bunge’s Ukrainian operations comprise two oilseed crushing facilities, located in Mykolaiv and Dnipropetrovsk, a grain export terminal in Mykolaiv commercial seaport, numerous grain elevators, and an office in Kiev. The Company also operates a corn milling facility in Ukraine forms partvia a joint venture. As of aSeptember 30, 2023, total assets and total liabilities associated with Bunge’s Ukrainian subsidiaries each comprise approximately 2% of Bunge’s consolidated Total assets and Total liabilities, respectively.
Bunge’s operational activities in Ukraine have steadily increased during recent months, but remain limited and are subject to Bunge's ability to perform activities safely. On July 17, 2023, an agreement allowing the safe export of grain from three Ukrainian ports (Pivdennyi/Yuzhnvi, Odesa, and Chornomorsk; the "POC corridor") on the Black Sea expired. Following the termination of the POC corridor agreement, Russian attacks on key international grain originating regionUkrainian export infrastructure locations intensified. As of October 26, 2023, the termination of the POC corridor agreement and is also the world’s largest supplier recent Russian attacks on key export infrastructure have not significantly impacted Bunge's results of sunflower seed and sunflower oil; commodities that cannot be completely replaced from other origins.operations in Ukraine as alternative routes to export product are being effectively utilized. The scope, intensity, duration, and outcome of the ongoing war is uncertain, and any continuation or escalation of the war may have a material adverse effect on Bunge, including its Ukrainian and Russian operations. Further details concerning the impact of the war and its corresponding accounting considerations relating to Bunge's Ukrainian and Russian operations are provided below.
Ukraine
Bunge's Ukrainian operations comprise two oilseed crushing facilities, located in Mykolaiv and Dnipropetrovsk, a grain export terminal in the Mykolaiv commercial seaport, numerous grain elevators, and an office in Kiev. The Company also operates a corn milling facility in Ukraine via a joint venture. Bunge currently maintains control over all of its material operations and facilities in Ukraine.
As of the date of this report, no material damage has been noted at any of Bunge's Ukrainian facilities, including its Mykolaiv port facility, which sustained minor shelling damage earlier in the year. However, due to safety concerns, it is not always possible to conduct onsite physical inspections of all of the Company's Ukrainian facilities.
Immediately after the start of the invasion, Bunge temporarily idled its Ukrainian operations. However, Bunge has subsequently restarted certain commercial and operational activities in Ukraine, including oilseed crushing activities at its Dnipropetrovsk facility, as well as certain exports from Ukraine, including via the Black Sea from three Ukrainian ports (Pivdennyi/Yuzhnvi, Odesa, and Chornomorsk; the "POC corridor”), under an agreement between Ukraine and Russia, brokered by the United Nations and Turkey. Although operations in Ukraine have steadily increased during recent months, they remain limited and are subject to Bunge's ability to perform activities safely. Furthermore, Bunge's ability to continue these activities indefinitely is unknown.
The Company’s Ukrainian operations employ over 1,000 employees. While, as of the date of this report, some of the Company’s Ukrainian employees have been forced to relocate to other countries or elsewhere within Ukraine, our workforce remains largely intact. The safety of Bunge's employees is its top priority. The Company is actively providing support and resources to employees and their families who have been impacted by these events, and Bunge employees in neighboring countries have mobilized to provide accommodation, food, clothing, toys and other supplies for displaced colleagues and their families. Bunge is also committed to supporting humanitarian efforts in Ukraine and has provided approximately $3 million in food products and monetary assistance to multiple relief organizations helping the people of Ukraine.
In accordance with industry standards, Bunge has insured against many types of risks, including against certain of the losses that we have or may experience in the future. However, the Company's level of insurance may not cover all losses the Company could incur.
The condensed consolidated balance sheet and related discussion below provides information on the Company’s major classes of assets and liabilities in Ukraine. As of September 30, 2022, total assets and total liabilities associated with Bunge’s Ukrainian subsidiaries each comprise approximately 1% of Bunge’s consolidated Total assets and Total liabilities, respectively.
Due to the nature of the war and its rapidly shifting areas of active combat, it is currently not possible to obtain all information necessary to determine all financial statement impacts. As such, the various financial statement impacts and related disclosures presented in these interim financial statements represent management’s best estimates considering available facts and circumstances as of the date of this report.
The functional currency of Bunge’s Ukrainian subsidiaries is the U.S. dollar and the foreign exchange rates used to convert assets and liabilities denominated in Ukrainian hryvnia represent the official exchange rates published by the National Bank of Ukraine. Following the onset of the war, the Ukrainian government imposed restrictions on companies’ abilities to repatriate or otherwise remit cash from their Ukrainian-based operations to locations outside Ukraine. However, these restrictions are not expected to persist indefinitely and the Ukrainian government has eased certain restrictions surrounding the payment of international purchase invoices during the three months ended September 30, 2022. The restrictions have not adversely impacted the Company's Ukrainian operations. Bunge is able to readily purchase U.S. dollars and other non-Ukrainian currencies onshore in Ukraine to pay for imports of goods and allowed services, where needed. Bunge is also able to sell foreign currency onshore in Ukraine. Bunge continues to exercise control of and consolidates its Ukrainian subsidiaries.
The condensed consolidated balance sheet related to the Company’s Ukrainian operations as of September 30, 2022 consists of the following:
| | | | | | |
(US$ in millions) | September 30, 2022 | |
Current assets: | | |
Cash and cash equivalents | $ | 1 | | |
Trade accounts receivable (less allowances of zero) | 4 | | |
Inventories | 39 | | |
Other current assets | 56 | | |
Total current assets | 100 | | |
Property, plant and equipment, net | 136 | | |
| | |
| | |
| | |
Other non-current assets | 57 | | |
Total assets | $ | 293 | | |
| | |
Current liabilities: | | |
Trade accounts payable and accrued liabilities | $ | 12 | | |
Short-term debt | 161 | | |
| | |
Other current liabilities | 3 | | |
Total current liabilities | 176 | | |
| | |
| | |
Non-current liabilities | 4 | | |
| | |
Total liabilities | $ | 180 | | |
Inventories—Bunge’s Ukrainian inventories generally comprise agricultural commodity inventories, primarily sunflower seeds, sunflower meal, sunflower oil, corn, and wheat. Due to their commodity characteristics, widely available markets, and international pricing mechanisms, such inventories are generally carried at fair value. Following the creation of the POC corridor during the three months ended September 30, 2022, Bunge is able to market and make available for immediate delivery certain of its Ukrainian inventories at internationally-quoted prices. These inventories were carried at fair value as of September 30, 2022. Where the Company's inventories do not qualify to be recorded at fair value, primarily due to their physical location being close to active combat zones or in difficult to access locations with high costs of recovery, they are recorded at the lower of cost or net realizable value, by product category. In such instances, a thorough onsite physical inspection of the inventories is not currently possible due to safety concerns. As such, significant judgments have been made in estimating the net realizable value of the Company’s Ukrainian inventories.
As of September 30, 2022, the Company evaluated the recoverability of its inventories inside Ukraine considering the latest information available to management regarding: the current status of the war; expectations regarding continued escalation of conflict and the likelihood and timing of a potential peaceful resolution to the war; the physical location and condition of Bunge's inventories, including expectations regarding the timing of spoilage and the rate at which inventories can be transported from their current location to markets in other parts of Ukraine or exported to adjacent markets. As a result of this analysis, during the three and nine months ended September 30, 2022, the Company recorded reserves of zero and $71 million, respectively, related to inventories physically located in occupied territories in Ukraine, or in difficult to access locations with high costs of recovery.
The Company also recorded zero and $6 million in corresponding allowances for recoverable tax assets generated on the purchase of such inventories during the three and nine months ended September 30, 2022, respectively.
Other current assets—Comprises $28 million of marketable securities and other short-term investments, $22 million of recoverable taxes, net, and $6 million of various other items, as follows:
•Marketable securities and other short-term investments—Primarily comprise Ukrainian (“on-shore”) government debt securities, denominated in Ukrainian hryvnia. Bunge classifies these securities as “trading securities”, carried at fair value in the Company’s condensed consolidated balance sheet, with changes in fair value recorded in the Company’s condensed consolidated statements of income in the period in which they occur.
In addition to the marketable securities and other short-term investments belonging to Bunge’s Ukrainian subsidiaries, as shown in the above balance sheet, certain of the Company’s non-Ukrainian subsidiaries hold certain U.S. dollar denominated, non-Ukrainian (“off-shore”) corporate debt securities of issuers with significant exposure to Ukraine. The values of these off-shore securities are directly impacted by the ongoing war. Such items, again reported within Other current assets as marketable securities and other short-term investments, totaled $8 million as of September 30, 2022.
As a result of the war, trading in the Ukrainian and Ukrainian-exposed debt securities has largely ceased. As such, at September 30, 2022, the prices of such securities were determined using pricing models with inputs based on similar securities adjusted to reflect management’s best estimate of the specific characteristics of the securities held by the Company. Such inputs represent a significant component of the fair value of the securities held by the Company, resulting in the securities being classified as Level 3 in the Company’s table of assets and liabilities accounted for at fair value on a recurring basis in Note 12 - Fair Value Measurements.
During the three and nine months ended September 30, 2022, the Company recorded a combined $7 million and $76 million loss, respectively, on its “on-shore” and “off-shore” portfolios, within Other income (expense) – net, in the condensed consolidated statement of income, of which $45 million relates to securities still held at September 30, 2022.
•Recoverable taxes, net—Comprise value-added taxes paid upon the acquisition of property, plant and equipment, raw materials, taxable services, and other transactional taxes, recoverable in cash from the Ukrainian government. Bunge has continued to receive refunds of recoverable taxes from the Ukrainian government since the start of the war, including as recently as early October, 2022. Therefore, as of September 30, 2022, and during the three and nine months then ended, Bunge has not recorded any change in allowances for recoverable taxes in Ukraine except for those associated with the Company's write-off of inventories, described above.
•Other—Primarily comprise prepaid expenses and advance payments against contracts for future deliveries of specified quantities of agricultural commodities.
Property, plant, and equipment, net—As described above, since the onset of the war, Bunge’s Mykolaiv port facility has sustained immaterial damage. Accordingly, the Company has recorded impairment provisions of zero and $2 million in relation to such damage, within Cost of goods sold, during the three and nine months ended September 30, 2022, respectively. The expense was recorded in the Agribusiness segment.
In light of the war, as of September 30, 2022, Bunge evaluated the recoverability of its Ukrainian property, plant and equipment using an income method based on forecasts of expected future cash flows attributable to the respective assets under a range of possible outcomes, including those with reduced or no future cash flows, and concluded that the Company's Ukrainian property, plant and equipment was recoverable. The recoverability tests depend on a number of significant estimates and assumptions, including the likelihood and timing of a potential peaceful resolution to the war, the likelihood and timing of resuming Bunge's remaining Ukrainian operations, expectations around the size of future harvests in Ukraine and the availability and costs of raw materials commodities and inputs, and market demand levels for products. The Company believes these estimates and assumptions are reasonable, and the reported amounts are not highly sensitive to any individual assumption underlying the recoverability tests. However, future changes in the judgments, assumptions, and estimates used in these recoverability tests could result in different conclusions regarding the recoverability of the Company's Ukrainian property, plant and equipment and may result in the need for the Company to record non-cash impairment charges of its Ukrainian property, plant and equipment at such time.
Other non-current assets—Comprises $34 million of deferred tax assets, $12 million of operating lease right-of-use assets associated with Bunge’s facilities, $5 million of recoverable taxes, net, expected to be realized in periods greater than twelve months from the balance sheet date, and $6 million of various other items.
Trade accounts payable and accrued liabilities—Comprise amounts owed by the Company’s Ukrainian subsidiaries for goods delivered to or services consumed by such subsidiaries in the ordinary course of business.
Short-term debt—Bunge's short-term debt represents Ukrainian hryvnia denominated debt, primarily used to fund working capital requirements, issued by Ukrainian branches of non-Ukraine-based financial institutions.
Russia
In response to Russia's invasion of Ukraine, the United States, other North Atlantic Treaty Organization ("NATO") member states, as well as non-member states, have announced targeted economic sanctions on Russia, certain Russian citizens and Russian enterprises. The continuation or escalation of the war may trigger additional economic and other sanctions. The scope or extent of potential additional sanctions, and the related impact on Bunge is unknown, as of the date of this report.
Bunge currently maintains control over its Russian subsidiary and related operations and continues to monitor developments regarding the legal and operational environments in Russia together with their related impacts on the Company’s operations. During the three and nine months ended September 30, 2022,2023, the Company's Russian subsidiaries have not experienced any material financial statement impactsCompany recognized mark-to-market gains of $10 million and $29 million, respectively, in Cost of goods sold in the condensed consolidated statements of income related to inventory recovered from its Mykolaiv and other facilities which had no carrying value as a result of December 31, 2022. No impairments or charges related to the war.
Onwar were recorded in the three and nine months ended September 16, 2022, Bunge signed an agreement to sell its remaining Russian operations, primarily comprising an oilseed crushing and refining facility in Voronezh, southwest Russia, to Karen Vanetsyan.30, 2023. Please refer to Note 32 - Acquisitions and DispositionsUkraine-Russia War, included in the Company's 2022 Annual Report on Form 10-K for further details regarding the transaction.
The functional currency of Bunge’s Russian subsidiaries is the Russian ruble (RUB) and the foreign exchange rates used to convert assets and liabilities denominated in Russian rubles represent the official exchange rates published by the Central Bank of the Russian Federation. Since the onsetimpact of the war on Bunge's financial statements.
Cash, Cash Equivalents and Restricted Cash
Restricted cash is included with cash and cash equivalents when reconciling the Russian governmentbeginning-of-period and end-of-period total amounts shown on the condensed consolidated statements of cash flows. The following table provides a reconciliation of cash and cash equivalents and restricted cash, reported within the condensed consolidated balance sheets, which sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.
| | | | | | | | |
(US$ in millions) | September 30, 2023 | September 30, 2022 |
Cash and cash equivalents | $ | 2,173 | | $ | 956 | |
Restricted cash included in Other current assets | 20 | | 5 | |
Cash and cash equivalents in Assets held for sale | — | | 36 | |
Total | $ | 2,193 | | $ | 997 | |
Cash paid for income taxes, net of refunds received, was $350 million and $383 million for the nine months ended September 30, 2023 and 2022, respectively. Cash paid for interest expense was $366 million and $315 million for the nine months ended September 30, 2023 and 2022, respectively.
Recently Adopted Accounting Pronouncements
In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848), to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting designed to ease the financial reporting burden related to reference rate reform. In December 2022, the FASB subsequently issued ASU 2022-06, Deferral of the Sunset Date of Topic 848, to ensure the relief in Topic 848 covers the period of time during which a significant number of modifications to eligible contracts and hedging relationships may take place. The ASU defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company is applying this guidance prospectively to all eligible contract modifications through December 31, 2024. As of September 30, 2023, Bunge has imposed restrictionsconcluded the modification of all eligible contracts and the adoption of this guidance did not have a material impact on companies’ abilitiesBunge's condensed consolidated financial statements.
2. ACQUISITIONS AND DISPOSITIONS
Acquisitions
Viterra Limited Business Combination Agreement
On June 13, 2023, Bunge entered into a definitive business combination agreement (the "Agreement") with Viterra Limited ("Viterra") and its shareholders including certain affiliates of Glencore PLC, Canada Pension Plan Investment Board, and British Columbia Investment Management Corporation (collectively, the "Sellers"), to repatriate or otherwise remitacquire Viterra in a stock and cash from their Russian-based operationstransaction. Bunge shareholders approved the acquisition at the Extraordinary General Meeting held October 5, 2023. The acquisition of Viterra by Bunge will create an innovative global agribusiness company well positioned to various locations outsidemeet the demands of Russia, including limiting capital repaymentsincreasingly complex markets and better serve farmers and end-customers.
Under the terms of the Agreement, Viterra shareholders are anticipated to non-Russian entitiesreceive approximately 65.6 million of common shares of Bunge issued stock, with an aggregate value of approximately $7.1 billion as of September 30, 2023 and receive approximately $2.0 billion in cash (together, the "Transaction Consideration"), in return for 100% of the outstanding equity of Viterra. The determination of the final value of the Transaction Consideration will depend on the Company's share price at the time of closing. Upon completion of the transaction, the Sellers are expected to RUB 10 million ($0.2 million) per month. However,own approximately 30% of the combined Bunge currently remains ablecompany on a fully diluted basis, before giving effect to readily purchase U.S. dollars and other non-Russian currencies onshore in Russia in order to make international payments for commercial contracts.any future share repurchases by Bunge occurring after June 13, 2023.
3. ACQUISITIONS AND DISPOSITIONSIn connection with the execution of the Agreement, Bunge has secured a total of $8.0 billion in acquisition debt financing ("Acquisition Financing"). Bunge intends to use a portion of the Acquisition Financing to fund the cash portion of the Transaction Consideration, and the remainder for repayment of certain indebtedness of Viterra, which is expected to be repaid at closing, and for the ongoing operations of the combined company following closing. See Note 13 - Debt for further information.
Assets heldThe acquisition is expected to close in mid-2024, subject to the satisfaction of regulatory approvals and other customary closing conditions. The Agreement may be terminated by mutual written consent of the parties and includes certain customary termination rights. If the Agreement is terminated in connection with certain circumstances relating to the failure to obtain certain antitrust and competition clearances that are conditions to closing, Bunge would be obligated to pay the Sellers a fee of $400 million in the aggregate.
Additionally, on June 12, 2023 in contemplation of the Agreement, Bunge's Board of Directors approved a $1.7 billion expansion of the existing share repurchase program for salethe repurchase of Bunge's issued and Liabilities heldoutstanding common shares. Approximately $300 million remained outstanding under the existing program prior to the expansion of the program, resulting in an aggregate program size of up to $2.0 billion of repurchases of Bunge's issued and outstanding common shares. Under this program, Bunge repurchased 4,327,536 common shares for sale$488 million during the three and nine months ended September 30, 2023. Therefore, as of September 30, 2023, $1.5 billion remains outstanding for repurchases under the program. See Note 17 - Equity for further details on share repurchases.
CJ Selecta Share Purchase Agreement
On October 10, 2023, Bunge entered into a definitive share purchase agreement with CJ CheilJedang Corporation and STIC CJ Global Investment Corporate Partnership Private Equity Fund to acquire 100% of outstanding equity of CJ Latam Participações Ltda. and CJ Selecta S.A. (collectively, “CJ”) for a total cash consideration of approximately $510 million to be adjusted for net debt, plus an additional sum in consideration for the value of net working capital. Operations of CJ primarily consist of an oilseed processing facility located in Brazil. Bunge expects to finance the transaction through cash from operations and existing financing facilities. The acquisition is expected to close in 2024, subject to customary closing conditions.
Fuji Oils New Orleans, LLC Port Based Refinery
On April 14, 2023, Bunge, through its 80% ownership of Bunge Loders Croklaan joint venture with IOI Corporation Berhad, completed its purchase of Fuji Oils New Orleans, LLC's port based refinery. The refinery is located in International-Matex Tank Terminals' Avondale Terminal, in Avondale, Louisiana in the United States. Cash consideration for the asset acquisition of $181 million was allocated to Property, plant and equipment, net ($220 million), inclusive of a finance lease right of use asset ($52 million), long-term finance lease obligations ($41 million) included in Long-term debt and Current portion of long-term debt, and other net working capital ($2 million).
Dispositions
Russian Oilseed Processing and Refining Operations Disposition
On September 16, 2022, Bunge signed an agreement to sell its remaining Russian operations, primarily comprising an oilseed crushing and refining facility in Voronezh, southwest Russia (referred to as the "disposal group"), to Karen Vanetsyan (the "Buyer"), in exchange for a cash price approximately equal to the book value of the disposal group's net assets. Additionally,On January 9, 2023, Bunge and the Buyer agreed to a purchase price adjustment. The purchase price adjustment and cumulative translation adjustment losses, among other items related to the disposal group, resulted in a corresponding impairment loss on sale of $84$103 million, recognized in Cost of goods sold duringfor the three andyear ended December 31, 2022. On February 3, 2023, the transaction closed in accordance with the terms of the agreement with no material impact to the condensed consolidated statement of income for the nine months ended September 30, 2022. 2023.
In connection with the transaction, Bunge has agreed to indemnify the Buyer against certain legal claims involving Bunge's Russian subsidiary. Management believeshas assessed the likelihood of any loss related to claims covered by the claims underlying the expected indemnity is remote. Completion of the sale is subject to customary closing conditions, including regulatory approvals.as remote, and recognized a liability in accordance with Accounting Standards Codification ("ASC") 460, Guarantees. See Note 15 - Commitments and Contingencies for more information.
The following table presents the disposal group'sbook values of the major classes of assets and liabilities that were included in Assets held for sale and Liabilities held for sale, respectively, on the condensed consolidated balance sheet as of September 30, 2022.disposal group at the closing date. Intercompany balances between the disposal group and other Bunge consolidated entities have been omitted. Assets held for sale comprise $15 million, $37included in the disposal group comprised $12 million and $6 million, reported under the Agribusiness segment, Refined and Specialty Oils segment, and Corporate and Other, respectively. Liabilities held for sale comprise $4 million and $9$21 million, reported under the Agribusiness segment and Refined and Specialty Oils segment, respectively. Liabilities included in the disposal group comprised $6 million and $13 million, reported under the Agribusiness segment and Refined and Specialty Oils segment, respectively.
| | | | | | |
(US$ in millions) | September 30, 2022 | |
Cash and cash equivalents | $ | 3619 | | |
Trade accounts receivable (less allowances of zero) | 2115 | | |
Inventories | 1733 | | |
| | |
Other current assets | 1214 | | |
Property, plant and equipment, net | 3024 | | |
| | |
Goodwill & Other intangible assets, net | 10 | | |
Other non-current assets | 168 | | |
Impairment reserve | (84)(90) | | |
Assets held for saleTotal assets | $ | 5833 | | |
| | |
Trade accounts payable and accrued liabilities | $ | 63 | | |
| | |
| | |
Other current liabilities | 716 | | |
| | |
| | |
Total liabilities held for sale | $ | 13 | | |
Mexico Wheat Milling Disposition
On October 12, 2021, Bunge entered into an agreement to sell substantially all of its wheat milling business in Mexico in exchange for cash proceeds approximately equal to the book value of Property, plant and equipment, net, plus an additional sum in consideration for the value of net working capital to be transferred on closing. Additionally, cumulative translation adjustments, among other items related to the disposal group, resulted in a corresponding impairment loss on sale of $170 million, recognized in Cost of goods sold for the year ended December 31, 2021. The Company also incurred a $30 million tax expense in connection with the disposal. On September 14, 2022, the transaction closed in accordance with the terms of the agreement.
The following table presents the book values of the major classes of assets and liabilities that were included in the disposal group, reported under the Milling segment:
| | | | | | |
(US$ in millions) | | |
Trade accounts receivable | $ | 73 | | |
Inventories | 187 | | |
Other current assets | 7 | | |
Property, plant and equipment, net | 164 | | |
Operating lease assets | 2 | | |
Goodwill & Other intangible assets, net | 86 | | |
Impairment reserve | (170) | | |
Total assets | $ | 349 | | |
| | |
Trade accounts payable | $ | 13 | | |
Current operating lease obligations | 1 | | |
Other current liabilities | 5 | | |
| | |
Total liabilities | $ | 19 | | |
4.3. TRADE STRUCTURED FINANCE PROGRAM
The Company engages in various trade structured finance activities to leverage the value of its global trade flows. These activities include programs under which the Company generally obtains U.S. dollar-denominated letters of credit ("LCs") from financial institutions, each based on an underlying commodity trade flow, and time deposits denominated in either the local currency of the financial institutions'institutions counterparties or in U.S. dollars, as well as foreign exchange forward contracts, in which trade related payables are set-off against receivables, all of which are subject to legally enforceable set-off agreements.
As of September 30, 20222023 and December 31, 2021,2022, time deposits and LCs of $6,123$5,551 million and $6,543$5,901 million, respectively, were presented net on the condensed consolidated balance sheets as the criteria of ASC 210-20, Offsetting, had been met. The net losses and gains related to such activities are included as an adjustment to Cost of goods sold in the accompanying condensed consolidated statements of income. AtAs of September 30, 20222023 and December 31, 2021,2022, time deposits, including those presented on a net basis, carried weighted-average interest rates of 2.84%5.71% and 1.08%3.46%, respectively. During the nine months ended September 30, 20222023 and 2021,2022, total net proceeds from issuances of LCs were $5,045$4,646 million and $5,379$5,045 million, respectively. These cash inflows were offset by the related cash outflows resulting from placement of the time deposits and repayment of the LCs. All cash flows related to the programs are included in operating activities in the condensed consolidated statements of cash flows.
As part of the trade structured finance activities, LCs may be sold to financial institutions on a discounted basis. Bunge does not service derecognized LCs. The terms of the sale may require the Company to continue to make periodic interest payments to financial institutions based on changes in the Secured Overnight Financing Rate ("SOFR"), or LIBOR for trades prior to January 1, 2022, for a period of up to 365 days.one year. Bunge’s payment obligation to financial institutions as part of the trade structured finance activities, reported in Other current liabilities, including any unrealized gain or loss on changes in SOFR or LIBOR for trades prior to January 1, 2022, is not significant as of September 30, 20222023 or December 31, 2021.2022. The notional amounts of LCs subject to continuing variable interest payments that have been derecognized from the Company's condensed consolidated balance sheets as of September 30, 20222023 and December 31, 20212022 are included in Note 1312 - Derivative Instruments And Hedging Activities. The net gain or loss included in Cost of goods sold resulting from the fair valuation of such variable interest rate obligations is not significant for the three and nine month periods ended September 30, 20222023 and 2021.2022.
5.4. TRADE ACCOUNTS RECEIVABLE AND TRADE RECEIVABLES SECURITIZATION PROGRAM
Trade Accounts Receivable
Changes to the allowance for lifetime expected credit losses related to tradeTrade accounts receivable were as follows: | | | Nine Months Ended September 30, 2022 | | Nine Months Ended September 30, 2023 |
Rollforward of the Allowance for Credit Losses (US$ in millions) | Rollforward of the Allowance for Credit Losses (US$ in millions) | Short-term | Long-term (1) | Total | Rollforward of the Allowance for Credit Losses (US$ in millions) | Short-term | Long-term (1) | Total |
Allowance as of January 1, 2022 | $ | 85 | | $ | 47 | | $ | 132 | | |
Allowance as of January 1, 2023 | | Allowance as of January 1, 2023 | $ | 90 | | $ | 46 | | $ | 136 | |
Current period provisions | Current period provisions | 49 | | 1 | | 50 | | Current period provisions | 55 | | — | | 55 | |
Recoveries | Recoveries | (27) | | (1) | | (28) | | Recoveries | (44) | | (2) | | (46) | |
Write-offs charged against the allowance | Write-offs charged against the allowance | (11) | | (3) | | (14) | | Write-offs charged against the allowance | (2) | | (12) | | (14) | |
Foreign exchange translation differences | Foreign exchange translation differences | (2) | | 1 | | (1) | | Foreign exchange translation differences | 2 | | — | | 2 | |
Allowance as of September 30, 2022 | $ | 94 | | $ | 45 | | $ | 139 | | |
Allowance as of September 30, 2023 | | Allowance as of September 30, 2023 | $ | 101 | | $ | 32 | | $ | 133 | |
(1) Long-term portion of the allowance for credit losses is included in Other non-current assets.
| | | Nine Months Ended September 30, 2021 | | Nine Months Ended September 30, 2022 |
Rollforward of the Allowance for Credit Losses (US$ in millions) | Rollforward of the Allowance for Credit Losses (US$ in millions) | Short-term | Long-term (1) | Total | Rollforward of the Allowance for Credit Losses (US$ in millions) | Short-term | Long-term (1) | Total |
Allowance as of January 1, 2021 | $ | 93 | | $ | 51 | | $ | 144 | | |
Allowance as of January 1, 2022 | | Allowance as of January 1, 2022 | $ | 85 | | $ | 47 | | $ | 132 | |
Current period provisions | Current period provisions | 25 | | — | | 25 | | Current period provisions | 49 | | 1 | | 50 | |
Recoveries | Recoveries | (20) | | (1) | | (21) | | Recoveries | (27) | | (1) | | (28) | |
Write-offs charged against the allowance | Write-offs charged against the allowance | (3) | | — | | (3) | | Write-offs charged against the allowance | (11) | | (3) | | (14) | |
Foreign exchange translation differences | Foreign exchange translation differences | (2) | | (2) | | (4) | | Foreign exchange translation differences | (2) | | 1 | | (1) | |
Allowance as of September 30, 2021 | $ | 93 | | $ | 48 | | $ | 141 | | |
Allowance as of September 30, 2022 | | Allowance as of September 30, 2022 | $ | 94 | | $ | 45 | | $ | 139 | |
(1) Long-term portion of the allowance for credit losses is included in Other non-current assets.
Trade Receivables Securitization Program
Bunge and certain of its subsidiaries participate in a trade receivables securitization program (the "Program") with a financial institution, as administrative agent, and certain commercial paper conduit purchasers and committed purchasers. On March 31, 2022,purchasers (collectively, the "Purchasers"). Koninklijke Bunge B.V., a wholly owned subsidiary of Bunge, acts as master servicer, responsible for servicing and certain of its subsidiaries renewed and amendedcollecting the accounts receivable for the Program. As a result, the aggregate sizeThe Program is designed to enhance Bunge’s financial flexibility by providing an additional source of the facility that provides funding against receivables sold into the Program increased by $175 million from $925 million to $1.1 billion. liquidity for its operations.
Bunge may also, from time to time with the consent of the administrative agent, request one or more of the existing committed purchasers or new committed purchasers to increase the total commitments by an amount not to exceed $250 million pursuant to an accordion provision. The Program will terminate on May 17, 2031; however, each committed purchaser's commitment to purchase trade receivables under the Program will terminate on May 17, 2025, unless extended for an additional period in accordance with the terms of the receivables transfer agreement. The Program was further amended to addincludes sustainability provisions, pursuant to which the applicable margin will be increased or decreased based on Bunge's performance in comparison withrelative to certain sustainability targets, including, but not limited to, recently established science-based targets that define Bunge's climate goals within its operations and a commitment to a deforestation-free supply chain in 2025.
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(US$ in millions) | September 30, 2022 | December 31, 2021 |
Receivables sold that were derecognized from Bunge's condensed consolidated balance sheet | $ | 1,712 | | $ | 1,426 | |
Deferred purchase price included in Other current assets (1) | $ | 607 | | $ | 496 | |
(1) Bunge's risk of loss followingOn June 21, 2023, Bunge and its finance subsidiaries terminated the saleBunge Master Trust and amended the Program to remove all references and all provisions related to the Bunge Master Trust and to automatically assign Bunge Limited’s obligations as existing guarantor to Bunge Global SA as successor guarantor, effective at the completion of the trade receivables is limited to the deferred purchase price ("DPP"), included in Other current assets in the condensed consolidated balance sheetsRedomestication (see Note 713 - Other Current AssetsDebt). The DPP will be repaid in cashIn addition, MUFG Bank, Ltd. and Gotham Funding Corporation were added as receivables are collected, generally within 30 days of collection. Provisions fora Purchaser under the Program.
delinquenciesOn November 16, 2022, Bunge and credit losses oncertain of its subsidiaries amended the Program from a deferred purchase price structure to a pledge structure. Under the new structure, Bunge Securitization B.V. ("BSBV"), a consolidated bankruptcy remote special purpose entity, transfers certain trade receivables to the Purchasers in exchange for a cash payment up to $1.1 billion and retains ownership of a population of unsold receivables. BSBV agrees to guaranty the collection of sold receivables and grants a lien to the administrative agent on all unsold receivables. Collections on unsold receivables and guarantee payments are classified as operating activities in Bunge’s condensed consolidated statements of cash flows.
At November 16, 2022, the effective date of the amended Program, $741 million of sold receivables were repurchased through a non-cash investing exchange of the Deferred Purchase Price ("DPP"). As of September 30, 2023, the Company had collected a total of $731 million of repurchased receivables, including $85 million collected in the first nine months of 2023, which are reported as Proceeds from beneficial interest in securitized trade receivables under investing activities in the condensed consolidated statements of cash flows.
The Program will terminate on May 17, 2031; however, each committed purchaser's commitment to purchase trade receivables under the Program were $5 million and $5 million at September 30, 2022 and December 31, 2021, respectively.will terminate earlier on May 17, 2025, unless extended for an additional period in accordance with the terms of the receivables transfer agreement.
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(US$ in millions) | September 30, 2023 | December 31, 2022 |
Receivables sold that were derecognized from Bunge's balance sheet | $ | 1,100 | | $ | 1,100 | |
Unsold receivables pledged to the administrative agent and included in Trade accounts receivable | $ | 343 | | $ | 583 | |
Bunge's risk of loss following the sale of trade receivables is limited to the assets of BSBV, primarily comprised of unsold receivables pledged to the administrative agent.
The table below summarizes the cash flows and discounts of Bunge’s trade receivables associated with the Program. Servicing fees under the Program were not significant in any period.
| | | Nine Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions) | (US$ in millions) | 2022 | 2021 | (US$ in millions) | 2023 | 2022 |
Gross receivables sold | Gross receivables sold | $ | 13,182 | | $ | 10,658 | | Gross receivables sold | $ | 10,231 | | $ | 13,182 | |
Proceeds received in cash related to transfers of receivables(1) | Proceeds received in cash related to transfers of receivables(1) | $ | 12,455 | | $ | 10,015 | | Proceeds received in cash related to transfers of receivables(1) | $ | 10,186 | | $ | 12,455 | |
Cash collections from customers on receivables previously sold | Cash collections from customers on receivables previously sold | $ | 13,035 | | $ | 10,061 | | Cash collections from customers on receivables previously sold | $ | 10,231 | | $ | 13,035 | |
Discounts related to gross receivables sold included in Selling, general and administrative expense | $ | 12 | | $ | 6 | | |
Discounts related to gross receivables sold included in Selling, general & administrative expenses | | Discounts related to gross receivables sold included in Selling, general & administrative expenses | $ | 45 | | $ | 12 | |
(1) Prior to November 16, 2022, the Company recognized these proceeds net of the DPP, consisting of a receivable from the Purchasers that entitled the Company to certain collections on the receivable. The Company recognized the collection of the DPP in net cash provided by investing activities in the condensed consolidated statements of cash flows. As a result of the November 16, 2022 amendment, Bunge reports collections on newly originated, unsold receivables held by BSBV as operating cash flows in the condensed consolidated statements of cash flows.
Non-cash activity for the Program in the reporting period is represented by the difference between gross receivables sold and cash collections from customers on receivables previously sold.
6.5. INVENTORIES
Inventories by segment are presented below. Readily marketable inventories ("RMI") are agricultural commodity inventories, such as soybeans, soybean meal, soybean oil, palm oil, corn, and wheat carried at fair value because of their commodity characteristics, widely available markets, and international pricing mechanisms. The Company engages in trading and distribution, or merchandising activities, and part of RMI can be attributable to such activities and is not held for processing. All other inventories are carried at lower of cost or net realizable value.
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(US$ in millions) | September 30, 2022 | December 31, 2021 |
Agribusiness (1) | $ | 6,552 | | $ | 6,800 | |
Refined and Specialty Oils (2) | 1,318 | | 1,310 | |
Milling (3) | 238 | | 319 | |
Corporate and Other | 4 | | 2 | |
Total | $ | 8,112 | | $ | 8,431 | |
| | | | | | | | |
(US$ in millions) | September 30, 2023 | December 31, 2022 |
Agribusiness (1) | $ | 6,325 | | $ | 6,756 | |
Refined and Specialty Oils (2) | 1,047 | | 1,316 | |
Milling (3) | 172 | | 332 | |
Corporate and Other | 4 | | 4 | |
Total | $ | 7,548 | | $ | 8,408 | |
(1) Includes RMI of $6,144$5,928 million and $6,490$6,286 million at September 30, 2022,2023, and December 31, 2021,2022, respectively. Assets held for sale includes RMI of zero and $26 million at September 30, 2023, and December 31, 2022, respectively. Of these amounts, $4,834$4,794 million and $4,857$4,789 million can be attributable to merchandising activities at September 30, 2022,2023, and December 31, 2021,2022, respectively.
(2) Includes RMI of $296$241 million and $257$271 million at September 30, 2022,2023, and December 31, 2021,2022, respectively.
(3)Includes RMI of $3 million and $122$97 million at September 30, 2022,2023, and December 31, 2021,2022, respectively.
7.
6. OTHER CURRENT ASSETS
Other current assets consist of the following:
| (US$ in millions) | (US$ in millions) | September 30, 2022 | December 31, 2021 | (US$ in millions) | September 30, 2023 | December 31, 2022 |
Unrealized gains on derivative contracts, at fair value | Unrealized gains on derivative contracts, at fair value | $ | 2,484 | | $ | 1,630 | | Unrealized gains on derivative contracts, at fair value | $ | 1,506 | | $ | 1,597 | |
Prepaid commodity purchase contracts (1) | Prepaid commodity purchase contracts (1) | 254 | | 186 | | Prepaid commodity purchase contracts (1) | 544 | | 254 | |
Secured advances to suppliers, net (2) | Secured advances to suppliers, net (2) | 305 | | 375 | | Secured advances to suppliers, net (2) | 318 | | 365 | |
Recoverable taxes, net | Recoverable taxes, net | 394 | | 347 | | Recoverable taxes, net | 362 | | 365 | |
Margin deposits | Margin deposits | 596 | | 569 | | Margin deposits | 898 | | 791 | |
Deferred purchase price receivable(3) | 607 | | 496 | | |
| Marketable securities and other short-term investments(4)(3) | Marketable securities and other short-term investments(4)(3) | 90 | | 520 | | Marketable securities and other short-term investments(4)(3) | 122 | | 119 | |
Income taxes receivable | Income taxes receivable | 122 | | 47 | | Income taxes receivable | 39 | | 102 | |
Prepaid expenses | Prepaid expenses | 548 | | 380 | | Prepaid expenses | 254 | | 376 | |
Restricted cash | Restricted cash | 5 | | 3 | | Restricted cash | 20 | | 26 | |
Other | Other | 328 | | 198 | | Other | 330 | | 386 | |
Total | Total | $ | 5,733 | | $ | 4,751 | | Total | $ | 4,393 | | $ | 4,381 | |
(1) Prepaid commodity purchase contracts represent advance payments against contracts for future deliveries of specified quantities of agricultural commodities.
(2) The Company provides cash advances to suppliers, primarily Brazilian soybean farmers, to finance a portion of the suppliers’ production costs. The Company does not bear any of the costs or operational risks associated with the related growing activities. The advances are largely collateralized by future crops and physical assets of the suppliers, carry a local market interest rate, and settle when the farmers' crops are harvested and sold. The secured advances to farmerssuppliers are reported net of allowances of $6$7 million at both September 30, 2022,2023 and $3 million at December 31, 2021.2022.
(-) Interest earned on secured advances to suppliers of $4$6 million and $5$4 million for the three months ended September 30, 2022,2023, and 2021,2022, respectively, and $16$17 million and $18$16 million for the nine months ended September 30, 2022,2023 and 2021,2022, respectively, is included in Net sales in the condensed consolidated statements of income.
(3)Deferred purchase price receivable represents additional credit support for the investment conduits in the Company’s trade receivables securitization program (see Note 5 - Trade Accounts Receivable and Trade Receivable Securitization Program).
(4) Marketable securities and other short-term investments - The Company invests in foreign government securities, corporate debt securities, deposits, equity securities, and other securities. The following is a summary of amounts recorded in the Company's condensed consolidated balance sheets as marketable securities and other short-term investments.
| | | | | | | | |
(US$ in millions) | September 30, 2022 | December 31, 2021 |
Foreign government securities | $ | 39 | | $ | 261 | |
Corporate debt securities | 10 | | 158 | |
| | |
Equity securities | 26 | | 60 | |
Other | 15 | | 41 | |
Total | $ | 90 | | $ | 520 | |
| | | | | | | | |
(US$ in millions) | September 30, 2023 | December 31, 2022 |
Foreign government securities | $ | 81 | | $ | 68 | |
| | |
| | |
Equity securities | 6 | | 23 | |
Other | 35 | | 28 | |
Total | $ | 122 | | $ | 119 | |
As of September 30, 2022,2023, and December 31, 2021, $732022, $86 million and $479$89 million, respectively, of marketable securities and other short-term investments were recorded at fair value. All other investments were recorded at cost, and due to the short-term nature of these investments, their carrying values approximated their fair values. For the three months ended September 30, 2022,2023, and 2021,2022, unrealized losses of $9$4 million and unrealized gains of $42$9 million, respectively, have been recognized in Other income (expense) - net for investments held at September 30, 2022,2023, and 2021.2022. For the nine months ended September 30, 20222023 and 2021,2022, unrealized losses of $123$10 million and
unrealized gains of $60 $123 million, respectively, have been recognized in Other income (expense) - net for investments held at September 30, 2022,2023 and 2021.
2022.
8.7. OTHER NON-CURRENT ASSETS
Other non-current assets consist of the following:
| (US$ in millions) | (US$ in millions) | September 30, 2022 | December 31, 2021 | (US$ in millions) | September 30, 2023 | December 31, 2022 |
Recoverable taxes, net (1) | Recoverable taxes, net (1) | $ | 50 | | $ | 66 | | Recoverable taxes, net (1) | $ | 27 | | $ | 59 | |
Judicial deposits (1) | Judicial deposits (1) | 109 | | 89 | | Judicial deposits (1) | 120 | | 110 | |
Other long-term receivables, net(2) | Other long-term receivables, net(2) | 6 | | 11 | | Other long-term receivables, net(2) | 14 | | 16 | |
Income taxes receivable(1) | Income taxes receivable(1) | 143 | | 139 | | Income taxes receivable(1) | 170 | | 143 | |
Long-term investments (2)(3) | Long-term investments (2)(3) | 218 | | 196 | | Long-term investments (2)(3) | 143 | | 163 | |
Affiliate loans receivable | Affiliate loans receivable | 10 | | 16 | | Affiliate loans receivable | 8 | | 8 | |
Long-term receivables from farmers in Brazil, net (1) | Long-term receivables from farmers in Brazil, net (1) | 30 | | 33 | | Long-term receivables from farmers in Brazil, net (1) | 41 | | 32 | |
Unrealized gains on derivative contracts, at fair value | Unrealized gains on derivative contracts, at fair value | 5 | | 49 | | Unrealized gains on derivative contracts, at fair value | 2 | | 1 | |
Other | Other | 113 | | 120 | | Other | 115 | | 95 | |
Total | Total | $ | 684 | | $ | 719 | | Total | $ | 640 | | $ | 627 | |
(1) A significant portion of these non-current assets arise from the Company’s Brazilian operations and their realization could take several years.
(2) Net of allowances as described in Note 4 - Trade Accounts Receivable and Trade Receivables Securitization Program.
(3) As of September 30, 2022,2023, and December 31, 2021, 2022, $11 million$9 million and $12$9 million, respectively, of long-term investments are recorded at fair value.
Recoverable taxes, net - Recoverable taxes include value-added taxes paid upon the acquisition of property, plant and equipment, raw materials and taxable services, and other transactional taxes which can be recovered in cash or as compensation against income taxes, or other taxes Bunge may owe, primarily in Brazil and Europe. Recoverable taxes are reported net of allowances of $1413 million and $18$14 million at September 30, 2022,2023, and December 31, 2021,2022, respectively.
Judicial deposits - Judicial deposits are funds the Company has placed on deposit with the courts in Brazil. These funds are held in judicial escrow relating to certain legal proceedings pending resolution and bear interest at the Selic rate, which is the benchmark rate of the Brazilian central bank.
Income taxes receivable - Income taxes receivable include overpayments of current income taxes plus accrued interest. These income tax prepayments are expected to be primarily used for the settlement of future income tax obligations. Income taxes receivable in Brazil bear interest at the Selic rate.
Long-term investments - Long-term investments primarily comprise Bunge's noncontrolling equity investments in growth stage agribusiness and food companies held by Bunge Ventures.
Affiliate loans receivable - Affiliate loans receivable are primarily interest-bearing receivables from unconsolidated affiliates with remaining maturities of greater than one year.
Long-term receivables from farmers in Brazil, net - The Company provides financing to farmers in Brazil, primarily through secured advances against farmer commitments to deliver agricultural commodities (primarily soybeans) upon harvest of the then-current year’s crop, and through credit sales of fertilizer to farmers. Certain such long-term receivables from farmers are originally recorded in Other current assets as prepaid commodity purchase contracts or secured advances to suppliers (see Note 76 - Other Current Assets) or Other non-current assets according to their maturity. Advances initially recorded in Other current assets are reclassified to Other non-current assets if collection issues arise and amounts become past due with resolution of such matters expected to take more than one year.
The average recorded investment in long-term receivables from farmers in Brazil for the nine months ended September 30, 2022,2023, and the year ended December 31, 2021,2022, was $98$93 million and $92$90 million, respectively. The table below summarizes the Company’s recorded investment in long-term receivables from farmers in Brazil and the related allowance amounts.
| | | September 30, 2022 | | December 31, 2021 | | September 30, 2023 | | December 31, 2022 |
(US$ in millions) | (US$ in millions) | Recorded Investment | Allowance | | Recorded Investment | Allowance | (US$ in millions) | Recorded Investment | Allowance | | Recorded Investment | Allowance |
For which an allowance has been provided: | For which an allowance has been provided: | | | | For which an allowance has been provided: | | | |
Legal collection process (1) | Legal collection process (1) | $ | 38 | | $ | 32 | | | $ | 42 | | $ | 35 | | Legal collection process (1) | $ | 31 | | $ | 29 | | | $ | 40 | | $ | 34 | |
Renegotiated amounts | Renegotiated amounts | 2 | | 2 | | | 3 | | 1 | | Renegotiated amounts | 2 | | 2 | | | 2 | | 2 | |
For which no allowance has been provided: | For which no allowance has been provided: | | | | For which no allowance has been provided: | | | |
Legal collection process (1) | Legal collection process (1) | 20 | | — | | | 20 | | — | | Legal collection process (1) | 17 | | — | | | 19 | | — | |
Renegotiated amounts (2) | Renegotiated amounts (2) | 4 | | — | | | 2 | | — | | Renegotiated amounts (2) | 5 | | — | | | 7 | | — | |
Other long-term receivables (3) | Other long-term receivables (3) | — | | — | | | 2 | | — | | Other long-term receivables (3) | 17 | | — | | | — | | — | |
Total | Total | $ | 64 | | $ | 34 | | | $ | 69 | | $ | 36 | | Total | $ | 72 | | $ | 31 | | | $ | 68 | | $ | 36 | |
(1) All amounts in legal collection processes are considered past due upon initiation of legal action.
(2) These renegotiated amounts are current on repayment terms.
(3) New advances expected to be realized through farmer commitments to deliver agricultural commodities in crop periods greater than twelve months from the balance sheet date. Such advances are reclassified from Other non-current assets to Other current assets in later periods depending on the expected date of their realization.
The table below summarizes the activity in the allowance for doubtful accounts related to long-term receivables from farmers in Brazil.
| | | Nine Months Ended September 30, | | | Nine Months Ended September 30, | |
(US$ in millions) | (US$ in millions) | 2022 | 2021 | | (US$ in millions) | 2023 | 2022 | |
Allowance as of January 1 | Allowance as of January 1 | $ | 36 | | $ | 63 | | | Allowance as of January 1 | $ | 36 | | $ | 36 | | |
Bad debt provisions | Bad debt provisions | 2 | | 2 | | | Bad debt provisions | 1 | | 2 | | |
Recoveries | Recoveries | (6) | | (4) | | | Recoveries | (3) | | (6) | | |
Write-offs | Write-offs | (1) | | (4) | | | Write-offs | (5) | | (1) | | |
Transfers | Transfers | 1 | | (1) | | | Transfers | — | | 1 | | |
Foreign exchange translation | Foreign exchange translation | 2 | | (2) | | | Foreign exchange translation | 2 | | 2 | | |
Allowance as of September 30 | Allowance as of September 30 | $ | 34 | | $ | 54 | | | Allowance as of September 30 | $ | 31 | | $ | 34 | | |
9.8. INVESTMENTS IN AFFILIATES AND VARIABLE INTEREST ENTITIES
Impairment of Equity Method Investment
During the nine months ended September 30, 2023, the Company recorded an impairment of $16 million associated with its equity method investment in Australia Plant Proteins ("APP"), a start-up manufacturer of novel protein ingredients. The impairment was determined through management's review of impairment indicators and consideration of the other-than temporary nature of such items. Impairment charges were recorded to Income (loss) from affiliates within Corporate and Other. As a result of the impairment, there is no carrying value associated with the equity method investment in APP at September 30, 2023.
Consolidated Variable Interest Entities
On September 19, 2023, Bunge entered into a fixed-priced call option agreement ("Option") to acquire the shares of Terminal de Granéis de Santa Catarina ("TGSC") with primary assets consisting of a grain port terminal currently under construction in South America strategically located near an existing Bunge facility. The agreement requires Bunge to make future installment payments for the Option which will be utilized, in part, to fund terminal construction. Required installment payments prior to the exercise of the Option are not material and are expected to be applied against the exercise price of the Option. TGSC is a variable interest entity ("VIE") as a result of having insufficient equity at risk. Bunge is the primary beneficiary due to a de facto agent relationship with the equity owner of TGSC and has consolidated the entity. As indicatedall of TGSC’s equity is held by a third-party, Bunge reflects all TGSC earnings and equity as attributable to noncontrolling interests in Note 1the condensed consolidated statements of income and condensed consolidated balance sheets, respectively.
TGSC is not a business as defined by U.S. GAAP. Therefore, the non-cash transaction resulting in initial consolidation of TGSC in the third quarter of 2023 represents an asset acquisition. Positions recognized in the condensed consolidated balance sheet upon initial consolidation consisted primarily of Other intangible assets, net - Basislicense ($87 million); Property, plant and equipment, net - construction-in-process ($36 million); Long-term debt ($35 million); and Noncontrolling interests ($91 million). Bunge did not recognize any gain or loss upon initial consolidation of Presentation, Principles of Consolidation, And Significant Accounting Policies, onTGSC. TGSC's assets can only be used to settle the entity’s own obligations and TGSC’s creditors have no recourse to Bunge’s assets beyond Bunge’s maximum exposure to loss associated with TGSC at any given time.
On May 1, 2022, Bunge completed a transaction with Chevron Corporation ("Chevron") to create a joint venture, Bunge Chevron Ag Renewables LLC (the "Joint Venture"), leveraging Bunge’s expertise in oilseed processing and farmer relationships, and Chevron’s expertise in fuels manufacturing and marketing, to help meet the demand for renewable fuels and to develop lower carbon intensity feedstocks.
The Joint Venture is a variable interest entity ("VIE")VIE in which Bunge is considered to be the primary beneficiary because it is responsible for the day-to-day operating decisions of the Joint Venture as well as the marketing of the principal products, primarily soybean meal and oil produced and sold by the Joint Venture, among other factors.
The Joint Venture's assets can only be used to settle the Joint Venture’s own obligations and the Joint Venture’s creditors have no recourse to Bunge’s assets beyond Bunge’s maximum exposure to loss associated with the Joint Venture at any given time.
The following table presents the values of the assets and liabilities associated with the Joint Venture,above listed VIEs in which are
Bunge is considered the primary beneficiary to the extent included in Bunge’s condensed consolidated balance sheetsheets as of September 30, 2023 and December 31, 2022. All amounts exclude intercompany balances, which have been eliminated upon consolidation.
For all other VIEs in which Bunge is considered the primary beneficiary, the entities meet the definition of a business, and the VIE's assets can be used other than for the settlement of the VIE’s obligations. As such these VIEs have been excluded from the below table:table.
| | | | | |
(US$ in millions) | September 30, 2022 |
Current assets: | |
Cash and cash equivalents | $ | 509 | |
Trade accounts receivable | 5 | |
Inventories | 74 | |
Other current assets | 131 | |
Total current assets | 719 | |
Property, plant and equipment, net | 61 | |
| |
| |
| |
| |
Total assets | $ | 780 | |
| |
Current liabilities: | |
Trade accounts payable and accrued liabilities | $ | 49 | |
| |
| |
Other current liabilities | 129 | |
Total current liabilities | 178 | |
| |
| |
| |
| |
Total liabilities | $ | 178 | |
Non-Consolidated Variable Interest Entities
On June 10, 2022, Bunge completed its acquisition of a 33% interest in Sinagro Produtos Agropecuários S.A. ("Sinagro"), a Brazilian distributor of agricultural inputs and originator of grains, in exchange for Brazilian real (R$) 280 million (approximately $53 million). As of September 30, 2022, the Company's maximum exposure to loss related to this unconsolidated VIE is limited to the investment balance of approximately $49 million. However, as part of the acquisition cost, Bunge has committed to provide certain future guarantees of Sinagro’s approximately R$329 million (approximately $61 million) third-party indebtedness in proportion to Bunge’s 33% equity holding, representing a maximum expected future guarantee of approximately R$110 million (approximately $20 million).
| | | | | | | | | | | |
(US$ in millions) | September 30, 2023 | | December 31, 2022 |
Current assets: | | | |
Cash and cash equivalents | $ | 586 | | | $ | 528 | |
Trade accounts receivable | 2 | | | — | |
Inventories | 55 | | | 85 | |
Other current assets | 116 | | | 98 | |
Total current assets | 759 | | | 711 | |
Property, plant and equipment, net | 151 | | | 65 | |
| | | |
Other intangible assets, net | 87 | | | — | |
| | | |
| | | |
Total assets | $ | 997 | | | $ | 776 | |
| | | |
Current liabilities: | | | |
Trade accounts payable and accrued liabilities | $ | 65 | | | $ | 81 | |
| | | |
| | | |
Other current liabilities | 118 | | | 85 | |
Total current liabilities | 183 | | | 166 | |
Long-term debt | 35 | | | — | |
| | | |
| | | |
| | | |
Total liabilities | $ | 218 | | | $ | 166 | |
For additional information on VIEs for which Bunge has determined it is not the primary beneficiary, along with the Company's related maximum exposure to losses associated with such investments, please refer to Note 1112 - Investments in Affiliates and Variable Interest Entities, included in the Company's 20212022 Annual Report on Form 10-K.
10.9. INCOME TAXES
Income tax expense is provided on an interim basis based on management’s estimate of the annual effective income tax rate and includes the tax effects of certain discrete items, such as changes in tax laws or tax rates or other unusual or non-recurring tax adjustments in the interim period in which they occur. In addition, results from jurisdictions projecting a loss for the year where no tax benefit can be recognized are treated discretely in the interim period in which they occur. The effective tax rate is highly dependent on the geographic distribution of the Company’s worldwide earnings or losses and tax regulations in each jurisdiction. Management regularly monitors the assumptions used in estimating its annual effective tax rate, including the realizability of deferred tax assets, and adjusts estimates accordingly. Volatility in earnings within a taxing jurisdiction could result in a determination that additional valuation allowance adjustments may be warranted.
Income tax expense for the three and nine months ended September 30, 2022,2023 was $113$114 million and $257$495 million, respectively. Income tax expense for the three and nine months ended September 30, 2021,2022 was $92$113 million and $334$257 million, respectively. The effective tax rate for the three and nine months ended September 30, 2023, was higher than the U.S. statutory rate of 21% primarily due to jurisdictional mix of earnings. The effective tax rate for the three months ended September 30, 2022, was higher than the U.S. statutory rate of 21% primarily due to unfavorable tax impact on North American and expected European dispositions and the effective tax rate for the nine months ended September 30, 2022, was lower than the U.S. statutory rate of 21%, primarily due to favorablejurisdictional mix of earnings, mix, incentives in South America, and the release of valuation allowances in Europe and Asia. The effective tax rate for the three and nine months ended September 30, 2021, was lower than the U.S. statutory rate of 21% primarily due to favorable earnings mix and incentives in South and North America.
As a global enterprise, the Company files income tax returns that are subject to periodic examination and challenge by federal, state, and foreign tax authorities. In many jurisdictions, income tax examinations, including settlement negotiations or litigation, may take several years to finalize. The Company is currently under examination or litigation in various locations throughout the world. While it is difficult to predict the outcome or timing of resolution of any particular matter, management believes that the condensed consolidated financial statements reflect the largest amount of tax benefit that is more likely than not to be realized.
10. OTHER CURRENT LIABILITIES
Other current liabilities consist of the following:
| (US$ in millions) | (US$ in millions) | September 30, 2022 | December 31, 2021 | (US$ in millions) | September 30, 2023 | December 31, 2022 |
Unrealized losses on derivative contracts, at fair value | Unrealized losses on derivative contracts, at fair value | $ | 2,041 | | $ | 1,713 | | Unrealized losses on derivative contracts, at fair value | $ | 1,222 | | $ | 1,570 | |
Accrued liabilities | Accrued liabilities | 686 | | 689 | | Accrued liabilities | 746 | | 755 | |
Advances on sales (1) | Advances on sales (1) | 339 | | 437 | | Advances on sales (1) | 372 | | 601 | |
| Income tax payable | Income tax payable | 54 | | 168 | | Income tax payable | 44 | | 156 | |
Other | Other | 443 | | 418 | | Other | 354 | | 297 | |
Total | Total | $ | 3,563 | | $ | 3,425 | | Total | $ | 2,738 | | $ | 3,379 | |
(1) The Company records advances on sales when cash payments are received in advance of the Company’s performance and recognizes revenue once the related performance obligation is completed. Advances on sales are impacted by the seasonality of Bunge's business, including the timing of harvests in the northern and southern hemispheres, and amounts at each balance sheet date will generally be recognized in earnings within twelve months or less.
12.11. FAIR VALUE MEASUREMENTS
Bunge's various financial instruments include certain components of working capital such as tradeTrade accounts receivable and tradeTrade accounts payable. Additionally, Bunge uses short- and long-term debt to fund operating requirements. Trade accounts receivable, tradeTrade accounts payable, and short-termShort-term debt are generally stated at their carrying value, which is a reasonable estimate of fair value. See Note 43 - Trade Structured Finance Program for trade structured finance program, Note 8-7 - Other Non-Current Assets for long-term receivables from farmers in Brazil, net and other long-term investments, and Note 14-13 - Debt for long-termLong-term debt. Bunge's financial instruments also include derivative instruments and marketable securities, which are stated at fair value.
The fair value standard describes three levels within its hierarchy that may be used to measure fair value.
| | | | | | | | |
Level | Description | Financial Instrument (Assets / Liabilities) |
Level 1 | Quoted prices (unadjusted) in active markets for identical assets or liabilities. | Exchange traded derivative contracts.
Marketable securities in active markets. |
Level 2 | Observable inputs, including adjusted Level 1 quotes, quoted prices for similar assets or liabilities, quoted prices in markets that are less active than traded exchanges and other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | Exchange traded derivative contracts (less liquid markets).
Readily marketable inventories.
Over-the-counter ("OTC") commodity purchase and sales contracts.
OTC derivatives whose value is determined using pricing models with inputs that are generally based on exchange traded prices, adjusted for location specific inputs that are primarily observable in the market or can be derived principally from or corroborated by observable market data.
Marketable securities in less active markets. |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. | Assets and liabilities whose value is determined using proprietary pricing models, discounted cash flow methodologies or similar techniques.
Assets and liabilities for which the determination of fair value requires significant management judgment or estimation. |
In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of input that is a significant component of the fair value measurement determines the placement of the entire fair value measurement in the hierarchy. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels.
For a further definition of fair value and the associated fair value levels, refer to Note 1516 - Fair Value Measurements, included in the Company's 20212022 Annual Report on Form 10-K.
The following table sets forth, by level, the Company’s assets and liabilities that were accounted for at fair value on a recurring basis.
| | | | Fair Value Measurements at Reporting Date | | | Fair Value Measurements at Reporting Date |
| | | September 30, 2022 | | December 31, 2021 | | | September 30, 2023 | | December 31, 2022 |
(US$ in millions) | (US$ in millions) | | Level 1 | Level 2 | Level 3 | Total | | Level 1 | Level 2 | Level 3 | Total | (US$ in millions) | | Level 1 | Level 2 | Level 3 | Total | | Level 1 | Level 2 | Level 3 | Total |
Assets: | Assets: | | | | | Assets: | | | | |
Readily marketable inventories (Note 6) | | $ | — | | $ | 5,583 | | $ | 860 | | $ | 6,443 | | | $ | — | | $ | 6,664 | | $ | 205 | | $ | 6,869 | | |
Cash equivalents | | Cash equivalents | | $ | 115 | | $ | 133 | | $ | — | | $ | 248 | | | $ | — | | $ | 81 | | $ | — | | $ | 81 | |
Readily marketable inventories (Note 5) | | Readily marketable inventories (Note 5) | | — | | 5,078 | | 1,094 | | 6,172 | | | — | | 6,268 | | 412 | | 6,680 | |
Trade accounts receivable (1) | Trade accounts receivable (1) | | — | | 5 | | — | | 5 | | | — | | 1 | | — | | 1 | | Trade accounts receivable (1) | | — | | 1 | | — | | 1 | | | — | | 7 | | — | | 7 | |
Unrealized gain on derivative contracts (2): | Unrealized gain on derivative contracts (2): | | | | | | Unrealized gain on derivative contracts (2): | | | | | |
Interest rate | Interest rate | | — | | 2 | | — | | 2 | | | — | | 49 | | — | | 49 | | Interest rate | | 1 | | 10 | | — | | 11 | | | — | | 3 | | — | | 3 | |
Foreign exchange | Foreign exchange | | 1 | | 843 | | — | | 844 | | | — | | 340 | | — | | 340 | | Foreign exchange | | — | | 314 | | — | | 314 | | | 1 | | 378 | | — | | 379 | |
Commodities | Commodities | | 212 | | 1,106 | | 103 | | 1,421 | | | 63 | | 1,055 | | 34 | | 1,152 | | Commodities | | 170 | | 792 | | 80 | | 1,042 | | | 136 | | 763 | | 101 | | 1,000 | |
Freight | Freight | | 121 | | — | | — | | 121 | | | 79 | | 5 | | — | | 84 | | Freight | | 76 | | — | | — | | 76 | | | 80 | | — | | — | | 80 | |
Energy | Energy | | 86 | | 10 | | — | | 96 | | | 44 | | 4 | | — | | 48 | | Energy | | 64 | | 1 | | — | | 65 | | | 128 | | 2 | | — | | 130 | |
Credit | Credit | | — | | 5 | | — | | 5 | | | — | | 6 | | — | | 6 | | Credit | | — | | — | | — | | — | | | — | | 5 | | — | | 5 | |
Equity | | — | | — | | — | | — | | | 1 | | — | | — | | 1 | | |
| | Other (3) | Other (3) | | 37 | | 179 | | 36 | | 252 | | | 91 | | 406 | | — | | 497 | | Other (3) | | 17 | | 68 | | 12 | | 97 | | | 33 | | 40 | | 27 | | 100 | |
Total assets | Total assets | | $ | 457 | | $ | 7,733 | | $ | 999 | | $ | 9,189 | | | $ | 278 | | $ | 8,530 | | $ | 239 | | $ | 9,047 | | Total assets | | $ | 443 | | $ | 6,397 | | $ | 1,186 | | $ | 8,026 | | | $ | 378 | | $ | 7,547 | | $ | 540 | | $ | 8,465 | |
Liabilities: | Liabilities: | | | | | Liabilities: | | | | |
Trade accounts payable (1) | Trade accounts payable (1) | | $ | — | | $ | 564 | | $ | 342 | | $ | 906 | | | $ | — | | $ | 545 | | $ | 23 | | $ | 568 | | Trade accounts payable (1) | | $ | — | | $ | 615 | | $ | 311 | | $ | 926 | | | $ | — | | $ | 513 | | $ | 130 | | $ | 643 | |
Unrealized loss on derivative contracts (4): | Unrealized loss on derivative contracts (4): | | | | | Unrealized loss on derivative contracts (4): | | | | |
Interest rate | Interest rate | | — | | 362 | | — | | 362 | | | — | | 47 | | — | | 47 | | Interest rate | | — | | 375 | | — | | 375 | | | — | | 344 | | — | | 344 | |
Foreign exchange | Foreign exchange | | 1 | | 837 | | — | | 838 | | | — | | 309 | | — | | 309 | | Foreign exchange | | — | | 345 | | — | | 345 | | | 1 | | 461 | | — | | 462 | |
Commodities | Commodities | | 190 | | 770 | | 43 | | 1,003 | | | 98 | | 1,051 | | 65 | | 1,214 | | Commodities | | 181 | | 554 | | 41 | | 776 | | | 127 | | 731 | | 50 | | 908 | |
Freight | Freight | | 74 | | — | | — | | 74 | | | 162 | | — | | — | | 162 | | Freight | | 32 | | — | | — | | 32 | | | 28 | | — | | — | | 28 | |
Energy | Energy | | 111 | | 2 | | — | | 113 | | | 29 | | 1 | | — | | 30 | | Energy | | 56 | | 2 | | — | | 58 | | | 153 | | 6 | | — | | 159 | |
Credit | Credit | | — | | 2 | | — | | 2 | | | — | | 1 | | — | | 1 | | Credit | | — | | — | | — | | — | | | — | | 1 | | — | | 1 | |
| Total liabilities | Total liabilities | | $ | 376 | | $ | 2,537 | | $ | 385 | | $ | 3,298 | | | $ | 289 | | $ | 1,954 | | $ | 88 | | $ | 2,331 | | Total liabilities | | $ | 269 | | $ | 1,891 | | $ | 352 | | $ | 2,512 | | | $ | 309 | | $ | 2,056 | | $ | 180 | | $ | 2,545 | |
(1) These receivables and payables are hybrid financial instruments for which Bunge has elected the fair value option as they are derived from purchases and sales of agricultural commodity products in the normal course of business.
(2) Unrealized gains on derivative contracts are generally included in Other current assets. There were $5$2 million and $49$1 million included in Other non-current assets at September 30, 2022,2023, and December 31, 2021,2022, respectively. There were no unrealized gains on derivative contracts included in Assets held for sale at September 30, 2022, and $2 million included in Assets held for sale at December 31, 2021.
(3) Other includes the fair values of marketable securities and investments in Other current assets and Other non-current assets.
(4) Unrealized losses on derivative contracts are generally included in Other current liabilities. There were $351$364 million and $49$332 million included in Other non-current liabilities at September 30, 2022,2023, and December 31, 2021,2022, respectively. There were no unrealized losses on derivative contracts included in Liabilities held for sale at September 30, 2022,
Cash equivalents —Cash equivalents primarily includes money market funds and $1 million was included in Liabilities held for sale at December 31, 2021.commercial paper investments. Bunge analyzes how the prices are derived and determines whether the prices are liquid or less liquid tradable prices. Cash equivalents with liquid prices are valued using prices from publicly available sources and classified as Level 1. Cash equivalents with less liquid prices are valued using third-party quotes or pricing models and classified as Level 2.
Readily marketable inventories—RMI reported at fair value are valued based on commodity futures exchange quotations, broker or dealer quotations, or market transactions in either listed or OTC markets with appropriate adjustments for
differences in local markets where the Company's inventories are located. In such cases, the inventory is classified within Level 2. Certain inventories may utilize significant unobservable data related to local market adjustments to determine fair value. In such cases, the inventory is classified as Level 3.
If the Company used different methods or factors to determine fair values, amounts reported as unrealized gains and losses on derivative contracts and RMI at fair value in the condensed consolidated balance sheets and condensed consolidated statements of income could differ. Additionally, if market conditions change subsequent to the reporting date, amounts reported
in future periods as unrealized gains and losses on derivative contracts and RMI at fair value in the condensed consolidated balance sheets and condensed consolidated statements of income could differ.
Derivatives—The majority of exchange traded futures and options contracts and exchange cleared contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. The majority of the Company’s exchange traded agricultural commodity futures are cash-settled on a daily basis and, therefore, are not included in these tables. The Company's forward commodity purchase and sales contracts are classified as derivatives along with other OTC derivative instruments, primarily relating to freight, energy, foreign exchange and interest rates, and are classified within Level 2 or Level 3 as described below. The Company estimates fair values based on exchange quoted prices, adjusted as appropriate for differences in local markets. These differences are generally valued using inputs from broker or dealer quotations, or market transactions in either the listed or OTC markets. In such cases, these derivative contracts are classified within Level 2.
OTC derivative contracts include swaps, options, and structured transactions that are generally fair valued using quantitative models that require the use of multiple market inputs including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets which are not highly active, other observable inputs relevant to the asset or liability, and market inputs corroborated by correlation or other means. These valuation models include inputs such as interest rates, prices, and indices, to generate continuous yield or pricing curves and volatility factors. Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. Certain OTC derivatives trade in less active markets with less availability of pricing information and certain structured transactions can require internally developed model inputs that might not be observable in or corroborated by the market.
Marketable securities and investments—compriseComprise foreign government treasury securities, corporate debt securities, deposits, equity securities, and other investments. Bunge analyzes how the prices are derived and determines whether the prices are liquid or less liquid tradable prices. Marketable securities and investments with liquid prices are valued using prices from publicly available sources and classified as Level 1. Marketable securities and investments with less-liquidless liquid prices are valued using third-party quotes or pricing models and classified as Level 2 or Level 3 as described below.
Level 3 Measurements
The following relates to Level 3 measurements. An instrument may transfer into or out of Level 3 due to inputs becoming either observable or unobservable.
Level 3 Measurements—Transfers in and/or out of Level 3 represent existing assets or liabilities that were either previously categorized as a higher level for which the inputs to the model became unobservable or assets and liabilities that were previously classified as Level 3 for which the lowest significant input became observable during the period. Bunge's policy regarding the timing of transfers between levels is to record the transfers at the beginningend of the reporting period.
Level 3 Readily marketable inventories and tradeTrade accounts payable—The significant unobservable inputs resulting in Level 3 classification for RMI, physically settled forward purchase and sales contracts, and tradeTrade accounts payable, relate to certain management estimations regarding costs of transportation and other local market or location-related adjustments, primarily freight related adjustments in the interior of Brazil and the lack of market corroborated information in Canada. In both situations, the Company uses proprietary information such as purchase and sales contracts and contracted prices to value freight, premiums and discounts in its contracts. Movements in the prices of these unobservable inputs alone would not be expected to have a material effect on the Company's financial statements as these contracts do not typically exceed one future crop cycle.
Level 3 Derivatives—Level 3 derivative instruments utilize both market observable and unobservable inputs within the fair value measurements. These inputs include commodity prices, price volatility, interest rates, volumes, and locations.
Level 3 Others—primarilyPrimarily relates to marketable securities and investments valued using third-party quotes or pricing models with inputs based on similar securities adjusted to reflect management’s best estimate of the specific characteristics of the securities held by the Company. Such inputs represent a significant component of the fair value of the securities held by the Company, resulting in the securities being classified as Level 3.
The tables below present reconciliations for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2022,2023, and 2021.2022. These
instruments were valued using pricing models that management believes reflect the assumptions that would be used by a marketplace participant.
| | | | | | | | | | | | | | | | | |
| |
| Three Months Ended September 30, 2022 |
(US$ in millions) | Readily Marketable Inventories | Derivatives, Net | Trade Accounts Payable | Other(2) | Total |
Balance, July 1, 2022 | $ | 941 | | $ | 10 | | $ | (271) | | $ | 66 | | $ | 746 | |
Total gains and losses (realized/unrealized) included in cost of goods sold (1) | 251 | | 60 | | 3 | | — | | 314 | |
Total gains and losses (realized/unrealized) included in Foreign exchange (losses) gains | — | | — | | — | | (7) | | (7) | |
Total gains and losses (realized/unrealized) included in Other income (expense) - net | — | | — | | — | | (7) | | (7) | |
Purchases | 732 | | — | | (63) | | — | | 669 | |
Sales | (1,584) | | — | | — | | — | | (1,584) | |
Issuances | — | | — | | — | | — | | — | |
Settlements | — | | — | | 69 | | (16) | | 53 | |
Transfers into Level 3 | 727 | | (3) | | (88) | | — | | 636 | |
Transfers out of Level 3 | (182) | | (7) | | — | | — | | (189) | |
Translation adjustment | (25) | | — | | 8 | | — | | (17) | |
Balance, September 30, 2022 | $ | 860 | | $ | 60 | | $ | (342) | | $ | 36 | | $ | 614 | |
| | | | | | | | | | | | | | | | | |
| |
| Three Months Ended September 30, 2023 |
(US$ in millions) | Readily Marketable Inventories | Derivatives, Net | Trade Accounts Payable | Other(2) | Total |
Balance, July 1, 2023 | $ | 1,384 | | $ | 9 | | $ | (437) | | $ | 11 | | $ | 967 | |
Total gains and losses (realized/unrealized) included in Cost of goods sold (1) | 300 | | 39 | | 3 | | — | | 342 | |
| | | | | |
Total gains and losses (realized/unrealized) included in Other income (expense) - net | — | | — | | — | | 1 | | 1 | |
Purchases | 1,001 | | — | | (21) | | — | | 980 | |
Sales | (1,694) | | — | | — | | — | | (1,694) | |
| | | | | |
Settlements | — | | — | | 158 | | — | | 158 | |
Transfers into Level 3 | 415 | | 22 | | (32) | | — | | 405 | |
Transfers out of Level 3 | (271) | | (31) | | 2 | | — | | (300) | |
Translation adjustment | (41) | | — | | 16 | | — | | (25) | |
Balance, September 30, 2023 | $ | 1,094 | | $ | 39 | | $ | (311) | | $ | 12 | | $ | 834 | |
(1) Readily marketable inventories, derivatives, net, and Trade accounts payable, include gains/(losses) of $207 million, $24 million and $3 million, respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2023.
(2) Comprises the fair values of marketable securities and investments in Other current assets. Included within Other income (expense) - net of the condensed consolidated statements of income are $1 million mark-to-market losses related to securities still held at September 30, 2023.
| | | | | | | | | | | | | | | | | |
| |
| Three Months Ended September 30, 2022 |
(US$ in millions) | Readily Marketable Inventories | Derivatives, Net | Trade Accounts Payable | Other (2) | Total |
Balance, July 1, 2022 | $ | 941 | | $ | 10 | | $ | (271) | | $ | 66 | | $ | 746 | |
Total gains and losses (realized/unrealized) included in Cost of goods sold (1) | 251 | | 60 | | 3 | | — | | 314 | |
Total gains and losses (realized/unrealized) included in Foreign exchange (losses) gains | — | | — | | — | | (7) | | (7) | |
Total gains and losses (realized/unrealized) included in Other income (expense) - net | — | | — | | — | | (7) | | (7) | |
Purchases | 732 | | — | | (63) | | — | | 669 | |
Sales | (1,584) | | — | | — | | — | | (1,584) | |
| | | | | |
Settlements | — | | — | | 69 | | (16) | | 53 | |
Transfers into Level 3 | 727 | | (3) | | (88) | | — | | 636 | |
Transfers out of Level 3 | (182) | | (7) | | — | | — | | (189) | |
Translation adjustment | (25) | | — | | 8 | | — | | (17) | |
Balance, September 30, 2022 | $ | 860 | | $ | 60 | | $ | (342) | | $ | 36 | | $ | 614 | |
(1) Readily marketable inventories, derivatives, net, and tradeTrade accounts payable, includeincludes gains/(losses) of $313 million, $62 million and $3 million, respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2022.
(2) Comprises the fair values of marketable securities and investments in Other current assets. Included within Other income (expense) - net of the condensed consolidated statements of income are $7 million in mark-to-market losses related to securities still held at September 30, 2022.
| | | | | | | | | | | | | | |
| |
| Three Months Ended September 30, 2021 |
(US$ in millions) | Readily Marketable Inventories | Derivatives, Net | Trade Accounts Payable | Total |
Balance, July 1, 2021 | $ | 492 | | $ | (20) | | $ | (92) | | $ | 380 | |
Total gains and losses (realized/unrealized) included in cost of goods sold (1) | 87 | | 10 | | 7 | | 104 | |
Purchases | 596 | | — | | (13) | | 583 | |
Sales | (1,011) | | — | | — | | (1,011) | |
Issuances | — | | — | | — | | — | |
Settlements | — | | — | | 36 | | 36 | |
Transfers into Level 3 | 349 | | 8 | | (24) | | 333 | |
Transfers out of Level 3 | (211) | | (2) | | 35 | | (178) | |
| | | | |
Balance, September 30, 2021 | $ | 302 | | $ | (4) | | $ | (51) | | $ | 247 | |
| | | | | | | | | | | | | | | | | |
| |
| | | | | |
| Nine Months Ended September 30, 2023 |
(US$ in millions) | Readily Marketable Inventories | Derivatives, Net | Trade Accounts Payable | Other(2) | Total |
Balance, January 1, 2023 | $ | 412 | | $ | 51 | | $ | (130) | | $ | 27 | | $ | 360 | |
Total gains and losses (realized/unrealized) included in Cost of goods sold (1) | 665 | | (32) | | 21 | | — | | 654 | |
| | | | | |
Total gains and losses (realized/unrealized) included in Other income (expense) - net | — | | — | | — | | (1) | | (1) | |
Purchases | 4,022 | | — | | (450) | | — | | 3,572 | |
Sales | (5,283) | | — | | — | | (14) | | (5,297) | |
| | | | | |
Settlements | — | | — | | 329 | | — | | 329 | |
Transfers into Level 3 | 1,565 | | 51 | | (113) | | — | | 1,503 | |
Transfers out of Level 3 | (310) | | (31) | | 44 | | — | | (297) | |
Translation adjustment | 23 | | — | | (12) | | — | | 11 | |
Balance, September 30, 2023 | $ | 1,094 | | $ | 39 | | $ | (311) | | $ | 12 | | $ | 834 | |
(1) Readily marketable inventories, derivatives, net, and tradeTrade accounts payable, includesinclude gains/(losses) of $84$648 million, $15$(20) million and $7$22 million, respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2021.2023.
(2) Comprises the fair values of marketable securities and investments in Other current assets. Included within Other income (expense) - net of the condensed consolidated statements of income are $15 million mark-to-market losses related to securities still held at September 30, 2023.
| | | | | | | | | | | | | | | | | |
| | | | | |
| Nine Months Ended September 30, 2022 |
(US$ in millions) | Readily Marketable Inventories | Derivatives, Net | Trade Accounts Payable | Other(2) | Total |
Balance, January 1, 2022 | $ | 205 | | $ | (31) | | $ | (23) | | $ | — | | $ | 151 | |
Total gains and losses (realized/unrealized) included in Cost of goods sold (1) | 421 | | 87 | | 36 | | — | | 544 | |
Total gains and losses (realized/unrealized) included in Foreign exchange (losses) gains | — | | — | | — | | (7) | | (7) | |
Total gains and losses (realized/unrealized) included in Other income (expense) - net | — | | — | | — | | (76) | | (76) | |
Purchases | 2,834 | | — | | (509) | | — | | 2,325 | |
Sales | (4,271) | | — | | — | | — | | (4,271) | |
| | | | | |
Settlements | — | | — | | 394 | | (101) | | 293 | |
Transfers into Level 3 | 2,142 | | 25 | | (434) | | 218 | | 1,951 | |
Transfers out of Level 3 | (360) | | (21) | | 146 | | — | | (235) | |
Translation adjustment | (111) | | — | | 48 | | 2 | | (61) | |
Balance, September 30, 2022 | $ | 860 | | $ | 60 | | $ | (342) | | $ | 36 | | $ | 614 | |
| | | | | | | | | | | | | | | | | |
| |
| Nine Months Ended September 30, 2022 |
(US$ in millions) | Readily Marketable Inventories | Derivatives, Net | Trade Accounts Payable | Other(2) | Total |
Balance, January 1, 2022 | $ | 205 | | $ | (31) | | $ | (23) | | $ | — | | $ | 151 | |
Total gains and losses (realized/unrealized) included in cost of goods sold (1) | 421 | | 87 | | 36 | | — | | 544 | |
Total gains and losses (realized/unrealized) included in Foreign exchange (losses) gains | — | | — | | — | | (7) | | (7) | |
Total gains and losses (realized/unrealized) included in Other income (expense) - net | — | | — | | — | | (76) | | (76) | |
Purchases | 2,834 | | — | | (509) | | — | | 2,325 | |
Sales | (4,271) | | — | | — | | — | | (4,271) | |
Issuances | — | | — | | — | | — | | — | |
Settlements | — | | — | | 394 | | (101) | | 293 | |
Transfers into Level 3 | 2,142 | | 25 | | (434) | | 218 | | 1,951 | |
Transfers out of Level 3 | (360) | | (21) | | 146 | | — | | (235) | |
Translation adjustment | (111) | | — | | 48 | | 2 | | (61) | |
Balance, September 30, 2022 | $ | 860 | | $ | 60 | | $ | (342) | | $ | 36 | | $ | 614 | |
(1) Readily marketable inventories, derivatives, net, and tradeTrade accounts payable, includes gains/(losses) of $480 million, $89 million and $30 million, respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2022.
(2) Comprises the fair values of marketable securities and investments in Other current assets. Included within Other income (expense) - net of the condensed consolidated statements of income are $45 million in mark-to-market losses related to securities still held at September 30, 2022.
24
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2021 |
(US$ in millions) | Readily Marketable Inventories | Derivatives, Net | Trade Accounts Payable | Total |
Balance, January 1, 2021 | $ | 208 | | $ | (8) | | $ | (9) | | $ | 191 | |
Total gains and losses (realized/unrealized) included in cost of goods sold (1) | 356 | | 30 | | 15 | | 401 | |
Purchases | 1,670 | | 3 | | (238) | | 1,435 | |
Sales | (2,866) | | — | | — | | (2,866) | |
Issuances | — | | (2) | | — | | (2) | |
Settlements | — | | (49) | | 209 | | 160 | |
Transfers into Level 3 | 1,248 | | (17) | | (212) | | 1,019 | |
Transfers out of Level 3 | (314) | | 39 | | 184 | | (91) | |
| | | | |
Balance, September 30, 2021 | $ | 302 | | $ | (4) | | $ | (51) | | $ | 247 | |
(1) Readily marketable inventories, derivatives, net and trade accounts payable, includes gains/(losses) of $347 million, $(19) million and $15 million, respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2021.
12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company uses derivative instruments to manage several market risks, such as interest rate, foreign currency, and commodity risk. Some of those hedges the Company enters into qualify for hedge accounting in the financial statements (Hedge
Accounting Derivatives) and some, while intended as economic hedges, do not qualify or are not designated for hedge accounting (Economic Hedge Derivatives). As these derivatives impact the financial statements in different ways, they are discussed separately below.
Hedge Accounting Derivatives - The Company uses derivatives in qualifying hedge accounting relationships to manage certain of its interest rate, foreign currency, and commodity risks. In executing these hedge strategies, the Company primarily relies on the shortcut and critical terms match methods in designing its hedge accounting strategy, which results in little to no net earnings impact for these hedge relationships. The Company monitors these relationships on a quarterly basis and performs a quantitative analysis to validate the assertion that the hedges are highly effective if there are changes to the hedged item or hedging derivative.
Fair value hedges - These derivatives are used to hedge the effect of interest rate and currency exchange rate changes on certain long-term debt. Under fair value hedge accounting, the derivative is measured at fair value and the carrying value of hedged debt is adjusted for the change in value related to the exposure being hedged, with both adjustments offset to earnings. In other words, the earnings effect of a change in the fair value of the derivative will be substantially offset by the earnings effect of the change in the carrying value of the hedged debt. The net impact of fair value hedge accounting for interest rate swaps is recognized in Interest expense. For cross currency swaps the changes in currency risk on the derivative are recognized in Foreign exchange gains (losses), and the changes in interest rate risk are recognized in Interest expense. Changes in basis risk are held in Accumulated other comprehensive income (loss) until realized through the coupon.
Cash flow hedges of currency risk - The Company manages currency risk on certain forecasted sales, purchases, and selling, general and administrative expenses, and recognized assets and liabilities with currency forwards. The change in the value of the forward is held in Accumulated other comprehensive income (loss) until the transaction affects earnings, at which time the change in value of the currency forward is reclassified to Net sales, Cost of goods sold, or Selling, general and administrative expenses. These hedges mature at various times through July 2023.December 2024. Of the amount currently in Accumulated other comprehensive income (loss), $4$2 million of deferred losses is expected to be reclassified to earnings in the next twelve months.
Net investment hedges - The Company hedges the currency risk of certain of its foreign subsidiaries with currency forwards for which the currency risk is remeasured through Accumulated other comprehensive income (loss). For currency forwards, the forward method is used. The change in the value of the forward is classified in Accumulated other comprehensive income (loss) until the transaction affects earnings by way of either sale or substantial liquidation of the foreign subsidiary.
The table below provides information about the balance sheet values of hedged items and the notional amount of derivatives used in hedging strategies. The notional amount of the derivative is the number of units of the underlying (for example, the notional principal amount of the debt in an interest rate swap). The notional amount is used to compute interest or other payment streams to be made under the contract and is a measure of the Company’s level of activity. The Company discloses derivative notional amounts on a gross basis.
| | | | | | | | | | | | | | |
(US$ in millions) | September 30, 2022 | December 31, 2021 | Unit of Measure |
Hedging instrument type: | | | |
Fair value hedges of interest rate risk | | | |
| Interest rate swap | $ | 3,680 | | $ | 4,006 | | $ Notional |
| Cumulative adjustment to long-term debt from application of hedge accounting | $ | (359) | | $ | — | | $ Notional |
| Carrying value of hedged debt | $ | 3,303 | | $ | 3,990 | | $ Notional |
| | | | |
Fair value hedges of currency risk | | | |
| Cross currency swap | $ | 213 | | $ | 267 | | $ Notional |
| | | | |
| Carrying value of hedged debt | $ | 213 | | $ | 267 | | $ Notional |
| | | | |
| | | |
| | | | |
| | | | |
Cash flow hedges of currency risk | | | |
| Foreign currency forward | $ | 318 | | $ | 148 | | $ Notional |
| Foreign currency option | $ | 60 | | $ | 60 | | $ Notional |
| | | | |
| | | |
| | | | |
| | | | |
Net investment hedges | | | |
| Foreign currency forward | $ | 932 | | $ | 1,020 | | $ Notional |
| | | | |
| | | | | | | | | | | | | | |
(US$ in millions) | September 30, 2023 | December 31, 2022 | Unit of Measure |
Hedging instrument type: | | | |
Fair value hedges of interest rate risk | | | |
| Interest rate swap - notional amount | $ | 2,900 | | $ | 3,753 | | $ Notional |
| Cumulative adjustment to long-term debt from application of hedge accounting | $ | (363) | | $ | (341) | | $ Notional |
| Carrying value of hedged debt | $ | 2,522 | | $ | 3,394 | | $ Notional |
| | | | |
Fair value hedges of currency risk | | | |
| Cross currency swap | $ | 206 | | $ | 232 | | $ Notional |
| | | | |
| Carrying value of hedged debt | $ | 206 | | $ | 232 | | $ Notional |
| | | | |
| | | |
| | | | |
| | | | |
Cash flow hedges of currency risk | | | |
| Foreign currency forward - notional amount | $ | 57 | | $ | 310 | | $ Notional |
| Foreign currency option - notional amount | $ | 117 | | $ | 108 | | $ Notional |
| | | | |
| | | |
| | | | |
| | | | |
Net investment hedges | | | |
| Foreign currency forward - notional amount | $ | 1,023 | | $ | 495 | | $ Notional |
| | | | |
Economic Hedge Derivatives - In addition to using derivatives in qualifying hedge relationships, the Company enters into derivatives to economically hedge its exposure to a variety of market risks it incurs in the normal course of operations.
Interest rate derivatives are used to hedge exposures to the Company's financial instrument portfolios and debt issuances. The impact of changes in fair value of these instruments is primarily presented in Interest expense.
Currency derivatives are used to hedge the balance sheet and commercial exposures that arise from the Company's global operations. The impact of changes in fair value of these instruments is presented in Cost of goods sold when hedging commercial exposures and Foreign exchange (losses) gains (losses) when hedging monetary exposures.
Agricultural commodity derivatives are used primarily to manage the Company's inventory and forward purchase and sales contracts. Contracts to purchase agricultural commodities generally relate to current or future crop years for delivery periods quoted by regulated commodity exchanges. Contracts for the sale of agricultural commodities generally do not extend beyond one future crop cycle. The impact of changes in fair value of these instruments is presented in Cost of goods sold.
The Company uses derivative instruments referred to as forward freight agreements ("FFAs") and FFA options to hedge portions of its current and anticipated ocean freight costs. The impact of changes in fair value of these instruments is presented in Cost of goods sold.
The Company uses energy derivative instruments to manage its exposure to volatility in energy costs. Hedges may be entered into for natural gas, electricity, coal and fuel oil, including bunker fuel. The impact of changes in fair value of these instruments is presented in Cost of goods sold.
The Company may also enter into other derivatives, including credit default swaps, carbon emission derivatives and equity derivatives to manage its exposure to credit risk and broader macroeconomic risks, respectively.risks. The impact of changes in fair value of these instruments is presented in Cost of goods sold.
The table below summarizes the volume of economic derivatives as of September 30, 20222023 and December 31, 2021.2022. For those contracts traded bilaterally through the OTCover-the-counter markets (e.g., forwards, forward rate agreements ("FRAs"FRA"), swaps, and variable interests rate obligations)swaps), the gross position is provided. For exchange traded (e.g., futures, FFAs, and options) and cleared positions (e.g., energy swaps), the net position is provided.
| | | | | | | | | | | | | | | | | |
| September 30, | December 31, | |
| 2023 | 2022 | Unit of Measure |
(US$ in millions) | Long | (Short) | Long | (Short) |
Interest rate | | | | | |
Swaps | $ | 115 | | $ | (1,630) | | $ | 387 | | $ | (1,267) | | $ Notional |
Futures | $ | — | | $ | (313) | | $ | — | | $ | (97) | | $ Notional |
Forwards | $ | 631 | | $ | (860) | | $ | — | | $ | — | | $ Notional |
Currency | | | | | |
Forwards | $ | 9,714 | | $ | (12,459) | | $ | 9,819 | | $ | (9,682) | | $ Notional |
Swaps | $ | 2,292 | | $ | (1,019) | | $ | 2,441 | | $ | (2,876) | | $ Notional |
Futures | $ | — | | $ | (4) | | $ | 11 | | $ | — | | $ Notional |
Options | $ | 58 | | $ | (35) | | $ | — | | $ | (102) | | Delta |
Agricultural commodities | | | | | |
Forwards | 29,271,422 | | (36,196,274) | | 20,493,679 | | (27,766,763) | | Metric Tons |
Swaps | — | | — | | — | | (1,864,262) | | Metric Tons |
Futures | — | | (5,099,604) | | — | | (4,092,772) | | Metric Tons |
Options | 221,203 | | (288,927) | | 1,025 | | (216,647) | | Metric Tons |
Ocean freight | | | | | |
FFA | — | | (4,965) | | — | | (11,197) | | Hire Days |
| | | | | |
Natural gas | | | | | |
Forwards | 6,336 | | (6,336) | | — | | — | | MMBtus |
Swaps | 927,014 | | — | | 1,460,190 | | — | | MMBtus |
Futures | 4,289,892 | | — | | 5,250,393 | | — | | MMBtus |
Options | 2,622,078 | | — | | — | | — | | MMBtus |
Electricity | | | | | |
| | | | | |
Futures | 40,267 | | — | | — | | — | | Mwh |
| | | | | |
Swaps | — | | — | | 22,987 | | (8,619) | | Mwh |
Energy - other | | | | | |
Swaps | 189,731 | | — | | 175,784 | | — | | Metric Tons |
Futures | 16,360 | | — | | 1,320,881 | | — | | Metric Tons |
Options | — | | (27,280) | | — | | — | | Metric Tons |
Energy - CO2 | | | | | |
Futures | 826,000 | | — | | — | | (38,000) | | Metric Tons |
Other | | | | | |
Swaps and futures | $ | 10 | | $ | (15) | | $ | 20 | | $ | (50) | | $ Notional |
| | | | | | | | | | | | | | | | | |
| September 30, | December 31, | |
| 2022 | 2021 | Unit of Measure |
(US$ in millions) | Long | (Short) | Long | (Short) |
Interest rate | | | | | |
Swaps | $ | 75 | | $ | (788) | | $ | 2,924 | | $ | (2,506) | | $ Notional |
Futures | $ | — | | $ | (16) | | $ | — | | $ | — | | $ Notional |
Currency | | | | | |
Forwards | $ | 10,794 | | $ | (11,145) | | $ | 12,961 | | $ | (14,065) | | $ Notional |
Swaps | $ | 3,294 | | $ | (3,557) | | $ | 1,362 | | $ | (1,422) | | $ Notional |
Futures | $ | 11 | | $ | — | | $ | — | | $ | (8) | | $ Notional |
Options | $ | 81 | | $ | (80) | | $ | 88 | | $ | (106) | | Delta |
Agricultural commodities | | | | | |
Forwards | 31,678,168 | | (30,332,548) | | 29,329,244 | | (34,810,969) | | Metric Tons |
Swaps | — | | (2,272,494) | | 33,250 | | (502,652) | | Metric Tons |
Futures | — | | (1,747,421) | | — | | (7,221,848) | | Metric Tons |
Options | 11,547 | | (350,333) | | 218,106 | | (116,370) | | Metric Tons |
Ocean freight | | | | | |
FFA | — | | (11,512) | | — | | (6,713) | | Hire Days |
FFA options | 77 | | — | | 548 | | — | | Hire Days |
Natural gas | | | | | |
Swaps | 895,261 | | — | | 1,764,455 | | — | | MMBtus |
Futures | — | | (4,163,882) | | 5,147,500 | | — | | MMBtus |
Energy - other | | | | | |
| | | | | |
| | | | | |
| | | | | |
Swaps | 350,257 | | (122,226) | | 741,307 | | (426,476) | | Metric Tons |
Electricity | | | | | |
Swaps | 536,325 | | (169,356) | | 670,973 | | (256,949) | | Mwh |
Energy - CO2 | | | | | |
Futures | 349,000 | | — | | — | | — | | Metric Tons |
Other | | | | | |
Swaps and futures | $ | 23 | | $ | (45) | | $ | 20 | | $ | (585) | | $ Notional |
The Effect of Derivative Instruments and Hedge Accounting on the Condensed Consolidated Statements of Income
The tables below summarize the net effect of derivative instruments and hedge accounting on the condensed consolidated statements of income for the three and nine months ended September 30, 20222023 and 2021.2022.
| | | | Gain (Loss) Recognized in Income on Derivative Instruments | | | Gain (Loss) Recognized in Income on Derivative Instruments |
| | | Three Months Ended September 30, | | | Three Months Ended September 30, |
(US$ in millions) | (US$ in millions) | | 2022 | 2021 | (US$ in millions) | | 2023 | 2022 |
Income statement classification | Income statement classification | Type of derivative | | Income statement classification | Type of derivative | |
Net sales | Net sales | | Net sales | |
Hedge accounting | Hedge accounting | Foreign currency | $ | — | | $ | 1 | | Hedge accounting | Foreign currency | $ | 2 | | $ | — | |
| Cost of goods sold | Cost of goods sold | | Cost of goods sold | |
| Hedge accounting | Hedge accounting | Foreign currency | $ | 3 | | $ | — | | Hedge accounting | Foreign currency | $ | 1 | | $ | 3 | |
Economic hedges | Economic hedges | Foreign currency | $ | 59 | | $ | (207) | | Economic hedges | Foreign currency | (41) | | 59 | |
| | Commodities | $ | 303 | | 242 | | | Commodities | 30 | | 303 | |
| | Other (1) | $ | (3) | | (84) | | | Other (1) | 79 | | (3) | |
Total Cost of goods sold | Total Cost of goods sold | | $ | 362 | | $ | (49) | | Total Cost of goods sold | | $ | 69 | | $ | 362 | |
| | Selling, general & administrative | Selling, general & administrative | | Selling, general & administrative | |
Hedge Accounting | Hedge Accounting | Foreign exchange | $ | (1) | | $ | — | | Hedge Accounting | Foreign exchange | $ | — | | $ | (1) | |
| Interest expense | Interest expense | | Interest expense | |
Hedge accounting | Hedge accounting | Interest rate | $ | (8) | | $ | 8 | | Hedge accounting | Interest rate | $ | (35) | | $ | (8) | |
| Total Interest expense | | Total Interest expense | | $ | (35) | | $ | (8) | |
| | Foreign exchange gains (losses) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | |
Hedge accounting | Hedge accounting | Foreign currency | $ | 2 | | $ | (3) | | Hedge accounting | Foreign currency | $ | (5) | | $ | 2 | |
Economic hedges | Economic hedges | Foreign currency | 14 | | 68 | | Economic hedges | Foreign currency | 10 | | 14 | |
Total Foreign exchange gains (losses) | | $ | 16 | | $ | 65 | | |
Total Foreign exchange (losses) gains | | Total Foreign exchange (losses) gains | | $ | 5 | | $ | 16 | |
| Other income (expense) | | Other income (expense) | |
Economic hedges | | Economic hedges | Interest rate | $ | (1) | | $ | 1 | |
| | Other income (expense) | | |
Economic hedges | Interest Rate | $ | 1 | | $ | — | | |
Other comprehensive income (loss) | | Other comprehensive income (loss) | |
Gains and losses on derivatives used as fair value hedges of foreign currency risk included in Other comprehensive income (loss) during the period | | Gains and losses on derivatives used as fair value hedges of foreign currency risk included in Other comprehensive income (loss) during the period | $ | 1 | | $ | (2) | |
Gains and losses on derivatives used as cash flow hedges of foreign currency risk included in Other comprehensive income (loss) during the period | | Gains and losses on derivatives used as cash flow hedges of foreign currency risk included in Other comprehensive income (loss) during the period | $ | 10 | | $ | 38 | |
| Other comprehensive income (loss) | | |
Gains and losses on derivatives used as fair value hedges of foreign currency risk included in other comprehensive income (loss) during the period | $ | (2) | | $ | 1 | | |
Gains and losses on derivatives used as cash flow hedges of foreign currency risk included in other comprehensive income (loss) during the period | $ | 38 | | $ | (5) | | |
| Gains and losses on derivatives used as net investment hedges included in other comprehensive income (loss) during the period | $ | (4) | | $ | 52 | | |
Gains and losses on derivatives used as net investment hedges included in Other comprehensive income (loss) during the period | | Gains and losses on derivatives used as net investment hedges included in Other comprehensive income (loss) during the period | $ | 20 | | $ | (4) | |
| | Amounts released from accumulated other comprehensive income (loss) during the period | | |
Amounts released from Accumulated other comprehensive income (loss) during the period | | Amounts released from Accumulated other comprehensive income (loss) during the period | |
| Cash flow hedge of foreign currency risk | Cash flow hedge of foreign currency risk | $ | (18) | | $ | (1) | | Cash flow hedge of foreign currency risk | $ | (1) | | $ | (18) | |
|
(1)Other includes results from freight, energy, and other derivatives.
| | | | | Gain (Loss) Recognized in Income on Derivative Instruments | | Gain (Loss) Recognized in Income on Derivative Instruments |
| | | Nine months ended September 30, | | Nine months ended September 30, |
(US$ in millions) | (US$ in millions) | | 2022 | 2021 | (US$ in millions) | | 2023 | 2022 |
Income statement classification | Income statement classification | Type of derivative | | Income statement classification | Type of derivative | |
Net sales | Net sales | | Net sales | |
Hedge accounting | Hedge accounting | Foreign currency | $ | 7 | | $ | 2 | | Hedge accounting | Foreign currency | $ | 6 | | $ | 7 | |
| Cost of goods sold | Cost of goods sold | | Cost of goods sold | |
Hedge accounting | | Hedge accounting | Foreign currency | $ | 1 | | $ | 3 | |
| Hedge accounting | Foreign currency | $ | 3 | | $ | — | | |
Economic hedges | Economic hedges | Foreign currency | $ | 482 | | $ | (23) | | Economic hedges | Foreign currency | 367 | | 482 | |
| | Commodities | (318) | | (1,494) | | | Commodities | 394 | | (318) | |
| | Other (1) | 90 | | 175 | | | Other (1) | 86 | | 90 | |
Total Cost of goods sold | Total Cost of goods sold | | $ | 257 | | $ | (1,342) | | Total Cost of goods sold | | $ | 848 | | $ | 257 | |
| | Selling, general & administrative | | |
Hedge accounting | Foreign exchange | $ | (1) | | — | | |
Selling, general & administrative expenses | | Selling, general & administrative expenses | |
Hedge Accounting | | Hedge Accounting | Foreign exchange | $ | 1 | | $ | (1) | |
| Interest expense | Interest expense | | Interest expense | |
Hedge accounting | Hedge accounting | Interest rate | $ | (12) | | $ | 21 | | Hedge accounting | Interest rate | $ | (103) | | $ | (12) | |
Economic hedges | Economic hedges | Interest rate | 1 | | — | | Economic hedges | Interest rate | 6 | | 1 | |
Total Interest expense | Total Interest expense | | $ | (11) | | $ | 21 | | Total Interest expense | | $ | (97) | | $ | (11) | |
| Foreign exchange gains (losses) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | |
Hedge accounting | Hedge accounting | Foreign currency | $ | (35) | | $ | (20) | | Hedge accounting | Foreign currency | $ | (26) | | $ | (35) | |
Economic hedges | Economic hedges | Foreign currency | 130 | | 1 | | Economic hedges | Foreign currency | 4 | | 130 | |
Total Foreign exchange gains (losses) | | $ | 95 | | $ | (19) | | |
Total Foreign exchange (losses) gains | | Total Foreign exchange (losses) gains | | $ | (22) | | $ | 95 | |
| Other income (expense) | Other income (expense) | | Other income (expense) | |
Economic hedges | Economic hedges | Interest rate | $ | 2 | | $ | 1 | | Economic hedges | Interest rate | $ | 1 | | $ | 2 | |
| | Other comprehensive income (loss) | Other comprehensive income (loss) | | Other comprehensive income (loss) | |
Gains and losses on derivatives used as fair value hedges of foreign currency risk included in other comprehensive income (loss) during the period | $ | — | | $ | (1) | | |
Gains and losses on derivatives used as cash flow hedges of foreign currency risk included in other comprehensive income (loss) during the period | $ | 72 | | $ | (2) | | |
Gains and losses on derivatives used as fair value hedges of foreign currency risk included in Other comprehensive income (loss) during the period | | Gains and losses on derivatives used as fair value hedges of foreign currency risk included in Other comprehensive income (loss) during the period | $ | 1 | | $ | — | |
Gains and losses on derivatives used as cash flow hedges of foreign currency risk included in Other comprehensive income (loss) during the period | | Gains and losses on derivatives used as cash flow hedges of foreign currency risk included in Other comprehensive income (loss) during the period | $ | (21) | | $ | 72 | |
| Gains and losses on derivatives used as net investment hedges included in other comprehensive income (loss) during the period | $ | (110) | | $ | (6) | | |
Gains and losses on derivatives used as net investment hedges included in Other comprehensive income (loss) during the period | | Gains and losses on derivatives used as net investment hedges included in Other comprehensive income (loss) during the period | $ | (41) | | $ | (110) | |
| | | Amounts released from accumulated other comprehensive income (loss) during the period | | |
Amounts released from Accumulated other comprehensive income (loss) during the period | | Amounts released from Accumulated other comprehensive income (loss) during the period | |
| Cash flow hedge of foreign currency risk | Cash flow hedge of foreign currency risk | $ | (25) | | $ | (3) | | Cash flow hedge of foreign currency risk | $ | (1) | | $ | (25) | |
|
(1)Other includes results from freight, energy, and other derivatives.
14.13. DEBT
Bunge’s $600 million commercial paper program is supported byPrior to June 21, 2023, Bunge conducted most of its third party financing activities through a centralized financing structure that included a master trust (the “Bunge Master Trust”). On June 21, 2023, Bunge terminated the Bunge Master Trust in accordance with a termination and lien release agreement in order to simplify the legal framework around its capital structure. Post termination of the Bunge Master Trust, Bunge will continue to conduct most of its third party financing activities centrally through 100% owned finance subsidiaries which carry full, unconditional guarantees of the parent company. In connection with the termination of the Bunge Master Trust, Bunge amended its existing credit agreements and related guarantees to remove all references and provisions related to the Bunge Master Trust, as well as made amendments to certain credit facilities as discussed further below.
Also on June 21, 2023, Bunge entered into an identical amount of committed back-up bank credit lines (the "Liquidity Facility") provided by banks that are rated at least A-1 by Standard & Poor’s Financial Services and P-1 by Moody’s Investors Service. The cost of borrowing under the Liquidity Facility would typically be higher than the cost of issuing under Bunge’s commercial paper program. At September 30, 2022, and December 31, 2021, there were $215 million and no borrowings outstanding under the commercial paper program and no borrowings under the Liquidity Facility, respectively. The Liquidity Facility is Bunge's only revolving credit facility that requires lenders to maintain minimum credit ratings. The Liquidity Facility is set to expire on July 16, 2026.
Bunge had no borrowings outstanding at September 30, 2022, under the unsecured $1.1 billion 364-day Revolving Credit Agreementrevolving credit agreement (the "$“$1.1 Billion 2024 Credit Agreement"), with a group of lenders, entered into on July 15, 2022, and maturing on July 14, 2023. Bunge may from time-to-time request one or more of the existing or new lenders to increase the total participations under the $1.1 Billion Credit Agreement by an aggregate amount up to $250 million pursuant to an accordion provision. Borrowings will bear interest at the SOFR plus a credit spread adjustment and applicable margin, as defined in the $1.1 Billion Credit Agreement. The $1.1 Billion Credit Agreement replaces the previous unsecured $1 billion 364-day Revolving Credit Agreement (the "$1 Billion Credit Agreement") that matured on July 15, 2022.
Bunge had no borrowings outstanding at September 30, 2022, and December 31, 2021, under the unsecured committed $1.35 billion 5-year Revolving Credit Agreement (the "$1.35 Billion Credit Agreement"Agreement”) with a group of lenders, maturing July 16, 2026.on June 19, 2024. Bunge may from time to time request one or more of the existing or new lenders to increase the total commitmentsparticipations under the $1.35$1.1 Billion 2024 Credit Agreement by an aggregate amount up to $200$250 million, subject to lender approval, pursuant to an accordion provision. Borrowings will bear interest at LIBORSecured Overnight Financing Rate (“SOFR”) plus ana SOFR adjustment and applicable margin as defined in the $1.1 Billion 2024 Credit Agreement. The $1.1 Billion 2024 Credit Agreement replaced an existing $1.1 billion 364-day revolving credit agreement scheduled to mature July 14, 2023. Bunge had no borrowings outstanding at September 30, 2023, and December 31, 2022, under the $1.1 Billion 2024 Credit Agreement and the predecessor agreement, respectively.
Further, on June 21, 2023, Bunge amended its $1.35 billion 5-year revolving credit agreement to increase total commitments under the facility to $1.95 billion (the “$1.95 Billion Credit Agreement"). Bunge may from time to time request one or more of the existing or new lenders to increase the total participations under the $1.95 Billion Credit Agreement by an aggregate amount up to $1.5 billion pursuant to an accordion provision. Borrowings will bear interest at SOFR plus a SOFR adjustment and applicable margin as defined in the $1.95 Billion Credit Agreement. Bunge had no borrowings outstanding at September 30, 2023, and December 31, 2022, under the $1.95 Billion Credit Agreement.
Bunge had no borrowings outstanding at September 30, 2022,2023, and December 31, 2021,2022, under the unsecured $865 million Revolving Credit Agreement (the "$865 Million 2026 Facility") with a group of lenders, set to mature on October 29, 2026. Borrowings will bear interest at SOFR plus a credit spreadSOFR adjustment and applicable margin, as defined in the $865 Million 2026 Facility.
Bunge had no borrowings outstanding at September 30, 2022,2023, and December 31, 2021,2022, under the unsecured $1.75 billion revolving credit facility, set to mature on December 16, 2024 and terminated on October 6, 2023 ("Terminated $1.75 Billion Revolving Credit Facility"). On October 6, 2023, Bunge replaced the capacity of the Terminated $1.75 Billion Revolving Credit Facility by entering into an unsecured $1.75 billion revolving credit facility ("$1.75 Billion Revolving Credit Facility"), set to maturewith a group of lenders, maturing on December 16, 2024. The interest rate under the $1.75 Billion Revolving Credit Facility is tied to certain sustainability criteria, including, but not limited to, recently established science-based targets that define Bunge's climate goals within its operations and a commitment to a deforestation-free supply chain in 2025.October 6, 2026. Bunge may from time to time, with the consent of the agent, request one or more of the existing lenders or new lenders to increase the total commitments byin an amount not to exceed $250 million$1.75 billion pursuant to an accordion provision. Bunge has the option to request an extension of the maturity date of the $1.75 Billion Revolving Credit Facility for two additional one-year periods. Borrowings under the $1.75 Billion Revolving Credit Facility will bear interest at LIBORSOFR plus a SOFR adjustment, which will vary from 0.05% to 0.25% based on the tenor of the interest period selected, plus a margin, which will vary from 0.30%0.25% to 1.30%0.90%, based on the senior long-term unsecured debt ratingsrating provided by Moody’s Investors Services Inc. (“Moody’s”) and S&P Global Ratings. Bunge willRatings ("S&P"). The applicable margin is also paysubject to certain premiums or discounts tied to certain sustainability criteria, including, but not limited to, science based targets (SBTs) that define Bunge’s climate goals within its operations and a fee that will vary from 0.10%commitment to 0.40% based oneliminate deforestation in its utilizationsupply chains in 2025.
Borrowings under the committed revolving credit facilities described above typically have an original maturity of three months or less, resulting in net presentation of proceeds and repayments of short-term debt in the Revolving Credit Facility.condensed consolidated statements of cash flows.
At September 30, 2022,2023, Bunge had $6,700$5,665 million unused and available committed borrowing capacity undercomprised of committed revolving credit facilities with a number of financial institutions. At December 31, 2022, Bunge had $6,665 million unused and available committed borrowing capacity comprised of committed revolving credit facilities and the commercial paper program with a number of financial institutions, totaling $5,665 million, in addition to $1,250 million in committed unsecured delayed draw term loans, as discussed below. At December 31, 2021, Bunge had $5,815 million unused and available committed borrowing capacity under committed revolving credit facilities and the commercial paper program, totaling $5,565 million, in addition to $250$1,000 million in committed unsecured delayed draw term loans, as discussed below.
On June 21, 2023, Bunge terminated its existing $600 million asset-backed commercial paper program and its related liquidity and letter of credit facilities. To continue access to the commercial paper market, Bunge established a new $1 billion unsecured corporate commercial paper program (the “$1 Billion Commercial Paper Program”). S&P and Moody's assigned short-term ratings of A-2 and P-2, respectively. The short-term credit ratings of the $1 Billion Commercial Paper Program require Bunge to keep same day unused committed borrowing capacity under its long-term committed credit facilities in an amount greater or equal to the amount of commercial paper issued and outstanding. The $1 Billion Commercial Paper Program has no maturity date. At September 30, 2023, there were no borrowings outstanding under the $1 Billion Commercial Paper Program. At December 31, 2022, there were no borrowings outstanding under Bunge’s prior commercial paper program and its related liquidity and letter of credit facilities. Borrowings under the $1 Billion Commercial Paper Program typically have an original maturity of three months or less, resulting in net presentation of proceeds and repayments of short-term debt in the condensed consolidated statements of cash flows.
In addition to committed facilities, from time to time, Bunge Limited and/or its financing subsidiaries enter into uncommitted bilateral short-term credit lines as necessary based on financing requirements. At September 30, 2022,2023, and December 31, 2021,2022, there were $125 million inwere no borrowings,and no borrowings, respectively, outstanding under these bilateral short-term credit lines. Loans under such credit lines are non-callable by the respective lenders. In addition, Bunge's operating companiescompanies had $987$914 million and $673and $546 million in short-term borrowings outstanding under local bank lines of credit at September 30, 2022,2023, and December 31, 2021,2022, respectively, to support working capital requirements.
borrowings under uncommitted bilateral credit lines and local bank lines of credit varies based upon the Company's financing objectives. As a result, proceeds and repayments of such credit lines may be presented on a net basis, or separately, in the condensed consolidated statements of cash flows as dictated by the borrowing's original maturity. The fair value of Bunge’s long-term debt, including current portion, is calculated based on interest rates currently available on comparable maturities to companies with credit standing similar to that of Bunge. The carrying amounts and fair valuevalues of long-term debt are as follows:
| | | September 30, 2022 | | December 31, 2021 | | September 30, 2023 | | December 31, 2022 |
(US$ in millions) | (US$ in millions) | Carrying Value | Fair Value (Level 2) | | | Carrying Value | Fair Value (Level 2) | | (US$ in millions) | Carrying Value | Fair Value (Level 2) | | | Carrying Value | Fair Value (Level 2) | |
Long-term debt, including current portion | Long-term debt, including current portion | $ | 3,770 | | $ | 3,800 | | | | $ | 5,291 | | $ | 5,489 | | | Long-term debt, including current portion | $ | 4,268 | | $ | 4,294 | | | | $ | 4,105 | | $ | 4,148 | | |
On February 23, 2022,Upon maturity in June 2023, Bunge issued a notice of redemption for all ofrepaid the principal and accrued interest due on its issued and outstanding 4.35% unsecured senior notes (the "4.35%800 million Euro 1.85% Senior Notes") due March 15, 2024. The redemption for the 4.35% Senior Notes occurred on March 10, 2022. In connection with the redemption, during the nine months ended September 30, 2022, the Company recorded a $47 million charge within Interest expense, of which $31 million related to a "make-whole" provision based on the sum of the present values of the remaining scheduled payments of principal and interest on the 4.35% Senior Notes, plus accrued and unpaid interest as of the March 10, 2022, redemption date, and $16 million related to the reclassification of unrealized mark-to-market losses on terminated and de-designated interest rate hedges.Notes.
On August 23,5, 2022, Bunge issuedentered into an unsecured $250 million delayed draw term loan (the "$250 Million February 2023 Delayed Draw Term Loan") with a noticegroup of redemption for all oflenders that was required to be drawn by February 2, 2023. The $250 million February 2023 Delayed Draw Term Loan bears interest at SOFR plus a SOFR adjustment and applicable margin, as defined in the issued$250 million February 2023 Delayed Draw Term Loan agreement. The $250 million February 2023 Delayed Draw Term Loan was drawn on February 2, 2023 and outstanding 3.00% senior notes (the "3.00% Senior Notes") due September 25, 2022. The redemption for the 3.00% Senior Notes occurredmatures on September 7, 2022. In connection with the redemption, during the three and nine months ended September 30, 2022, the Company recorded a $405 million payment for redemption of the notes, at par, plus accrued and unpaid interest.August 5, 2027.
On July 26, 2022, and later amended on October 7, 2022, Bunge entered into an unsecured $750 million delayed draw term loan (the "$750 Million Delayed Draw Term Loan") with a group of lenders giving Bunge the option to draw the loan by January 25, 2023. The $750 Million Delayed Draw Term Loan will bearbears interest at SOFR plus a credit spreadSOFR adjustment and applicable margin, as defined in the $750 Million Delayed Draw Term Loan agreement. The $750 Million Delayed Draw Term Loan was drawn on January 25, 2023 and matures on October 24, 2025.
On August 5, 2022,October 6, 2023, Bunge entered into an unsecured $250prepaid and terminated its 5-year term loan agreement due 2024, dated as of July 1, 2019, as amended as of December 15, 2021, as further amended as of June 21, 2023, with Sumitomo Mitsui Banking Corporation, as administrative agent, and certain lenders party thereto. On September 30, 2023, term loans in the amount of ¥30.7 billion and $90 million, for a total of $296 million, were recorded in Current portion of long-term debt on the condensed consolidated balance sheet. The Company does not expect to pay any prepayment penalties in connection with the termination.
As described in Note 2 - Acquisitions and Dispositions, Bunge has secured a total of $8.0 billion in Acquisition Financing in the form of a $7.7 billion financing commitment from a consortium of lenders, arranged by Sumitomo Mitsui Banking Corporation and a $300 million 5-year delayed draw term loan (the "$250 Million Februaryfrom CoBank and the U.S. farm credit system executed July 7, 2023 Delayed Draw Term Loan") with a group of lenders that is required tomay be drawn by February 2, 2023.upon the closing of the acquisition. The $250 Million February 2023 Delayed Draw Term Loan will bear interest at SOFR plus a credit spread adjustment and applicable margin, as defined$7.7 billion financing commitment is in the $250 Million February 2023 Delayed Draw Term Loan agreement. The $250 Million February 2023 Delayed Draw Term Loan matures on August 5, 2027.
On October 29, 2021, Bunge entered into an unsecured $250 million delayed drawform of a three tranche term loan (the "$250 Million October 2022 Delayed Draw Term Loan") with a groupmaturing 364-days, 2-years and 3-years from closing of lenders that is required to be drawn by October 27, 2022. The $250 Million October 2022 Delayed Draw Term Loan will bear interest at SOFR plus a credit spread adjustment and applicable margin, as defined in the $250 Million October 2022 Delayed Draw Term Loan agreement. The $250 Million October 2022 Delayed Draw Term Loan matures on October 29, 2028, and was drawn on October 21, 2022.acquisition.
14. RELATED PARTY TRANSACTIONS
Bunge purchases agricultural commodity products from certain of its unconsolidated investees and other related parties. Such related party purchases comprised approximately 6%8% or less of total Cost of goods sold for the three and nine months ended September 30, 2022,2023, and 2021.2022. Bunge also sells agricultural commodity products to certain of its unconsolidated investees and other related parties. Such related party sales comprised approximately 2% or less of total Net sales for the three and nine months ended September 30, 2022,2023, and 2021.2022.
In addition, Bunge receives services from and provides services to its unconsolidated investees and other related parties, including tolling, port handling, administrative support, and other services. For the three and nine months ended September 30, 2022,2023, and 2021,2022, such services were not material to the Company's consolidated results.
At September 30, 2022,2023, and December 31, 2021,2022, receivables related to the above related party transactions comprised approximately 1% or less of total Trade accounts receivable. At September 30, 2022,2023, and December 31, 2021,2022, payables related to the above related party transactions comprised approximately 5%4% or less of total Trade accounts payable.
Bunge believes all transaction values to be similar to those that would be conducted with third parties.parties at arm's-length.
16.15. COMMITMENTS AND CONTINGENCIES
Bunge is party to claims and lawsuits, primarily non-income tax and labor claims in South America, arising in the normal course of business. Bunge is also involved from time to time in various contract, antitrust, environmental litigation and remediation, and other litigation, claims, government investigations, and legal proceedings. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. Bunge records liabilities related to legal matters when the exposure item becomes probable and can be reasonably estimated. Bunge management does not expect these matters to have a material adverse effect on Bunge’s financial condition, results of operations, or liquidity. However, these matters are subject to inherent uncertainties and there exists the remote possibility that a liability arising from these matters could have a material adverse impact in the period in which the uncertainties are resolved should the liability substantially exceed the amount of provisions included in the condensed consolidated balance sheets. Information regarding the claims appears in Bunge’s Report on Form 10-K for the year ended December 31, 2021.2022. Included in Other non-current liabilities as of September 30, 2022,2023, and December 31, 2021,2022, are the following amounts related to these matters:
| | | | | | | | |
(US$ in millions) | September 30, 2022 | December 31, 2021 |
Non-income tax claims | $ | 18 | | $ | 15 | |
Labor claims | 73 | | 72 | |
Civil and other claims | 99 | | 95 | |
Total | $ | 190 | | $ | 182 | |
Non-income tax claims | | | | | | | | |
(US$ in millions) | September 30, 2023 | December 31, 2022 |
Non-income tax claims | $ | 19 | | $ | 20 | |
Labor claims | 69 | | 76 | |
Civil and other claims | 109 | | 105 | |
Total | $ | 197 | | $ | 201 | |
Brazil Indirect Taxes - non-income tax claims - These tax claims relate to ongoing claims against Bunge’s Brazilian subsidiaries, primarily value-added tax claims (ICMS, ISS, IPI and PIS/COFINS).
As of September 30, 2022, the Brazilian federal and state authorities have concluded examinations of the ICMS and PIS/COFINS tax returns and have issued outstanding claims. The Company continues to evaluate the merits of eachoutstanding claims from examinations of these claimsICMS and PIS/COFINS tax returns concluded by Brazilian federal and state tax authorities and will recognize them if and when loss is considered probable. The outstanding claims comprise the following:
| (US$ in millions) | (US$ in millions) | Years Examined | September 30, 2022 | December 31, 2021 | (US$ in millions) | Years Examined | September 30, 2023 | December 31, 2022 |
ICMS | ICMS | 1990 to Present | $ | 198 | | $ | 222 | | ICMS | 1990 to Present | $ | 224 | | $ | 215 | |
PIS/COFINS | PIS/COFINS | 2002 to Present | $ | 335 | | $ | 228 | | PIS/COFINS | 2002 to Present | $ | 423 | | $ | 347 | |
Labor claims
— The labor claims are principally against Bunge’s Brazilian subsidiaries. The labor claims primarily relate to dismissals, severance, health and safety, salary adjustments, and supplementary retirement benefits.
Civil and other claims
— The civil and other claims relate to various disputes with third parties, including suppliers and customers.
During the first quarter of 2017, Bunge received a notice from the Brazilian Administrative Council for Economic Defense ("CADE") initiating an administrative proceeding against its Brazilian subsidiary and two of its employees, certain of its former employees, and several other companies in the Brazilian wheat milling industry, and others for alleged anticompetitive activities in the north and northeast of Brazil. While a co-defendant obtained an injunction to stay the proceeding in 2019, on October 24, 2022, a Brazilian appellate court reversed that injunction and the proceeding has resumed before the Brazilian CADE.
Guarantees
— Bunge has issued or was a party to the following guarantees at September 30, 2022:2023:
| | | | | |
(US$ in millions) | Maximum Potential Future Payments |
Unconsolidated affiliates guarantee (1)
| $ | 241 | |
Residual value guarantee (2)
| 301 | |
Other guarantees | 5 | |
Total | $ | 547 | |
| | | | | | | | |
(US$ in millions) | Recorded Liability | Maximum Potential Future Payments |
Unconsolidated affiliates guarantee (1) | $ | — | | $ | 93 | |
Residual value guarantee (2) | — | | 388 | |
Russia disposition indemnity (3) | 9 | | 235 | |
Other guarantees | — | | 10 | |
Total | $ | 9 | | $ | 726 | |
(1) Bunge has issued guarantees to certain financial institutions related to debt of certain of its unconsolidated affiliates. The terms of the guarantees are equal to the terms of the related financings, which have maturity dates through 2034. There are no recourse provisions or collateral that would enable Bunge to recover any amounts paid under these guarantees. In addition, certain Bunge subsidiaries have guaranteed the obligations of certain of their unconsolidated affiliates and in connection therewith have secured their guarantee obligations through a pledge to the financial institutions of certain of their unconsolidated affiliates' shares plus loans receivable from the unconsolidated affiliates in the event that the guaranteed obligations are enforced. Based on amounts drawn under such debt facilities at September 30, 2022,2023, Bunge's potential liability was $228$58 million, and it has recorded a $3less than $1 million obligation related to these guarantees within Other non-current liabilities.
(2) Bunge has issued guarantees to certain financial institutions that are party to certain operating lease arrangements for railcars, barges, and buildings. These guarantees provide for a minimum residual value to be received by the lessor at the conclusion of the lease term. These leases expire at various dates from 20222024 through 2029. At September 30, 2022,2023, no obligation has been recorded related to these guarantees. Any obligation recorded would be recognized in Current operating lease obligations or Non-current operating lease obligations.
(3) On February 3, 2023, Bunge agreed to indemnify the buyer of its Russian operations against certain existing legal claims involving Bunge's Russian subsidiary. The indemnity expires on February 2, 2030. As of September 30, 2023, Bunge recorded a $9 million obligation related to this indemnity within Other non-current liabilities.
Bunge Limited has provided a guarantee to the Director of the Illinois Department of Agriculture as Trustee for Bunge North America, Inc. ("BNA"), an indirect wholly-owned subsidiary, which guarantees all amounts due and owing by BNA to grain producers and/or depositors in the State of Illinois who have delivered commodities to BNA’s Illinois facilities.
16. OTHER NON-CURRENT LIABILITIES
Other non-current liabilities consist of the following:
| | | | | | | | |
(US$ in millions) | September 30, 2023 | December 31, 2022 |
Labor, legal, and other provisions | $ | 215 | | $ | 205 | |
Pension and post-retirement obligations | 146 | | 152 | |
Uncertain income tax positions (1) | 64 | | 59 | |
Unrealized losses on derivative contracts, at fair value (2) | 364 | | 332 | |
Other | 111 | | 101 | |
Total | $ | 900 | | $ | 849 | |
(1)See Note 9 - Income Taxes.
(2)See Note 11- Fair Value Measurements.
17. OTHER NON-CURRENT LIABILITIES | | | | | | | | |
(US$ in millions) | September 30, 2022 | December 31, 2021 |
Labor, legal, and other provisions | $ | 196 | | $ | 187 | |
Pension and post-retirement obligations (1) | 207 | | 227 | |
Uncertain income tax positions (2) | 65 | | 73 | |
Unrealized losses on derivative contracts, at fair value (3) | 351 | | 49 | |
Other | 99 | | 122 | |
Total | $ | 918 | | $ | 658 | |
(1)On February 28, 2022, the Company, together with plan participants and related employee unions, agreed to the transition of one of the Company's international defined benefit pension plans to a multi-employer pension plan.
Following the transition, the Company accounts for the multi-employer plan similar to a defined contribution plan, resulting in full settlement of the related defined benefit plan obligations.
In connection with the settlement, during the nine months ended September 30, 2022, the Company recorded a $41 million pretax gain within Other income (expense) - net in its condensed consolidated statements of income, comprising a $4 million settlement of the related defined benefit plan obligations as well as the reclassification of $37 million in unamortized actuarial gains from Accumulated other comprehensive income (loss). Of this pretax gain, $12 million was attributable to Redeemable non-controlling interests.
(2)See Note 10- Income Taxes.
(3)See Note 12 - Fair Value Measurements.
18. REDEEMABLE NONCONTROLLING INTEREST
In connection with the acquisition of a 70% ownership interest in Bunge Loders Croklaan Group B.V. ("Loders"), the Company entered into a put/call arrangement with the Loders minority shareholder through which it may be required or elect to purchase the additional 30% ownership interest in Loders within a specified time frame.
Since the acquisition of the 70% ownership in Loders, the Company classified these redeemable equity securities outside of permanent stockholders’ equity as the equity securities are redeemable at the option of the holder. The carrying amount of Redeemable noncontrolling interest was the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interest's share of net income or loss, equity capital contributions and distributions or (ii) the redemption value. Any resulting increases in the redemption amount, in excess of the initial carrying amount, increased or decreased for the noncontrolling interest's share of net income or loss, equity capital contributions and distributions, were affected via a charge against Retained earnings. Additionally, any such charges to Retained earnings would affect Net income (loss) available to Bunge common shareholders as part of Bunge's calculation of earnings per common share.
On August 5, 2022, Bunge and the Loders minority shareholder completed a transaction in which Bunge acquired an additional 10% interest in Loders in exchange for approximately $102 million in cash, and the existing put/call arrangement over Loders' noncontrolling equity interest was terminated. Bunge's ownership interest in Loders following the transaction increased from 70% to 80%. As Loders' remaining $235 million noncontrolling interest is no longer redeemable at the option of the holder, it was reclassified from Redeemable noncontrolling interest to Noncontrolling interests within Bunge's condensed consolidated balance sheet and condensed consolidated statement of changes in equity at a value representing the noncontrolling interest's proportionate share in the carrying value of Loders' net assets at the transaction date.
19.17. EQUITY
Cumulative Convertible Perpetual Preference Shares — On March 18, 2022, Bunge announced all issued and outstanding shares of its 4.875% Cumulative Convertible Perpetual Preference Shares ("convertible preference shares") would automatically convert into common shares of the Company, par value $0.01 per share, effective March 23, 2022 (the "Conversion Date"). On March 18, 2022, the closing price of the common shares of the Company on the New York Stock Exchange ("NYSE") was $104.91, marking the 20th trading day in the previous 30 trading days that the closing price of the common shares of the Company exceeded 130% of the conversion price, triggering the Company's right under the certificate of designation for the convertible preference shares, at its option, to mandatorily convert the convertible preference shares. The conversion price adjusted from $78.1322, per Note 24 - Equity included in the Company's 2021 Annual Report on Form 10-K, to $77.8482 on February 16, 2022.
Each convertible preference share automatically converted into 1.2846 common shares of the Company on the Conversion Date and cash was paid in lieu of fractional common shares of the Company. There were 6,898,268 convertible preference shares issued and outstanding prior to the conversion, which resulted in the issuance of 8,861,515 new common shares of the Company. Additionally, in the first quarter of 2022, prior to the conversion, 1,415 convertible preference shares were voluntarily converted by preference shareholders into 1,816 common shares. As a result of the conversions, no convertible preference shares were issued or outstanding as of September 30, 2022, and all rights of the former holders of the convertible preference shares terminated, as of March 23, 2022.
Dividends on the convertible preference shares ceased to accrue on the Conversion Date. Accordingly, holders of the convertible preference shares were not entitled to receive the $1.21875 per share dividend declared by the Company in respect of the convertible preference shares on February 23, 2022, and payable to holders of record on May 15, 2022. Following the conversion, holders of the convertible preference shares as of the Conversion Date were entitled to receive the $0.525 per share dividend declared by the Company with respect to the common shares on February 23, 2022, but only to the extent such holder remained a holder of record of common shares of the Company on May 19, 2022.
Share repurchase program — During October 2021,As noted in Note 2 - Acquisitions and Dispositions, on June 12, 2023, Bunge's Board of Directors approved a newthe expansion of an existing $500 million program for the repurchase of up to $500 million of Bunge'sBunge’s issued and outstanding common shares. At the time, approximately $300 million of capacity for the repurchase of Bunge common shares remained available under the existing program and Bunge's Board of Directors approved the expansion of the program by an additional $1.7 billion, for an aggregate unutilized capacity of $2.0 billion at June 12, 2023. The program has no expiration date. Under this program, 2,109,115continues to have an indefinite term. During the three and nine months ended September 30, 2023, Bunge repurchased 4,327,536 common shares for $488 million. As of September 30, 2023, 6,436,651 common shares were repurchased for $200$688 million during the three and nine month periods ended September 30, 2022. As of September 30, 2022, $300 million remains$1.5 billion remained outstanding for repurchases under the program.
During the three and nine month periods ended September 30, 2021,In October 2023, Bunge repurchased 1,298,384an additional 1,080,325 common shares for $100$112 million. Therefore, as of October 26, 2023, 7,516,976 common shares were repurchased for $800 million thereby completing a previous $500 million share repurchase program, established May 2015.and $1.4 billion remains outstanding for repurchases under the program.
Dividends on common shares — On August 11, 2022,17, 2023, Bunge announced that the Company's Board of Directors had declared a dividend of $0.625$0.6625 per common share, payable on December 2, 2022,1, 2023, to shareholders of record on November 18, 2022.17, 2023. During the nine months ended September 30, 2022,2023, the Company's Board of Directors declared total dividends on common shares of $1.775$1.95 per common share.
Accumulated other comprehensive income (loss) attributable to Bunge — The following table summarizes the balances of related after-tax components of Accumulated other comprehensive income (loss) attributable to Bunge:
| | | | | | | | | | | | | | | |
| | | | | |
(US$ in millions) | Foreign Exchange Translation Adjustment | Deferred Gains (Losses) on Hedging Activities | Pension and Other Postretirement Liability Adjustments | | Accumulated Other Comprehensive Income (Loss) |
Balance, July 1, 2023 | $ | (5,554) | | $ | (435) | | $ | (102) | | | $ | (6,091) | |
Other comprehensive income (loss) before reclassifications | (162) | | 31 | | — | | | (131) | |
| | | | | |
Amount reclassified from accumulated other comprehensive income (loss) | (1) | | (1) | | — | | | (2) | |
Balance, September 30, 2023 | $ | (5,717) | | $ | (405) | | $ | (102) | | | $ | (6,224) | |
| | | | | | | | | | | | | | | | |
| | | | | | |
(US$ in millions) | Foreign Exchange Translation Adjustment | Deferred Gains (Losses) on Hedging Activities | Pension and Other Postretirement Liability Adjustments | | | Accumulated Other Comprehensive Income (Loss) |
Balance, July 1, 2022 | $ | (5,962) | | $ | (331) | | $ | (143) | | | | $ | (6,436) | |
Other comprehensive income (loss) before reclassifications | (333) | | 32 | | — | | | | (301) | |
Acquisition of redeemable noncontrolling interest | (15) | | — | | — | | | | (15) | |
Amount reclassified from accumulated other comprehensive income (loss) | 158 | | (18) | | 1 | | | | 141 | |
Balance, September 30, 2022 | $ | (6,152) | | $ | (317) | | $ | (142) | | | | $ | (6,611) | |
| | | | | | | | | | | | | | | | |
| | | | | | |
(US$ in millions) | Foreign Exchange Translation Adjustment | Deferred Gains (Losses) on Hedging Activities | Pension and Other Postretirement Liability Adjustments | | | Accumulated Other Comprehensive Income (Loss) |
Balance, July 1, 2021 | $ | (5,771) | | $ | (311) | | $ | (176) | | | | $ | (6,258) | |
Other comprehensive income (loss) before reclassifications | (222) | | 43 | | 2 | | | | (177) | |
Amount reclassified from accumulated other comprehensive income (loss) | — | | (1) | | — | | | | (1) | |
Balance, September 30, 2021 | $ | (5,993) | | $ | (269) | | $ | (174) | | | | $ | (6,436) | |
| | | | | | | | | | | | | | | | |
(US$ in millions) | Foreign Exchange Translation Adjustment | Deferred Gains (Losses) on Hedging Activities | Pension and Other Postretirement Liability Adjustments | | | Accumulated Other Comprehensive Income (Loss) |
Balance, January 1, 2022 | $ | (6,093) | | $ | (254) | | $ | (124) | | | | $ | (6,471) | |
Other comprehensive income (loss) before reclassifications | (202) | | (38) | | — | | | | (240) | |
Acquisition of redeemable noncontrolling interest | (15) | | — | | — | | | | (15) | |
Amount reclassified from accumulated other comprehensive income (loss)(1) | 158 | | (25) | | (18) | | | | 115 | |
Balance, September 30, 2022 | $ | (6,152) | | $ | (317) | | $ | (142) | | | | $ | (6,611) | |
| | | | | | | | | | | | | | | | |
| | | | | | |
(US$ in millions) | Foreign Exchange Translation Adjustment | Deferred Gains (Losses) on Hedging Activities | Pension and Other Postretirement Liability Adjustments | | | Accumulated Other Comprehensive Income (Loss) |
Balance, January 1, 2023 | $ | (5,926) | | $ | (343) | | $ | (102) | | | | $ | (6,371) | |
Other comprehensive income (loss) before reclassifications | 107 | | (61) | | — | | | | 46 | |
| | | | | | |
Amount reclassified from accumulated other comprehensive income (loss) | 102 | | (1) | | — | | | | 101 | |
Balance, September 30, 2023 | $ | (5,717) | | $ | (405) | | $ | (102) | | | | $ | (6,224) | |
| | | | | | | | | | | | | | | | |
| | | | | | |
(US$ in millions) | Foreign Exchange Translation Adjustment | Deferred Gains (Losses) on Hedging Activities | Pension and Other Postretirement Liability Adjustments (1) | | | Accumulated Other Comprehensive Income (Loss) |
Balance, January 1, 2022 | $ | (6,093) | | $ | (254) | | $ | (124) | | | | $ | (6,471) | |
Other comprehensive income (loss) before reclassifications | (202) | | (38) | | — | | | | (240) | |
Acquisition of redeemable noncontrolling interest | (15) | | — | | — | | | | (15) | |
Amount reclassified from accumulated other comprehensive income (loss) (1) | 158 | | (25) | | (18) | | | | 115 | |
Balance, September 30, 2022 | $ | (6,152) | | $ | (317) | | $ | (142) | | | | $ | (6,611) | |
(1)On February 28, 2022, the Company, together with plan participants and related employee unions, agreed to the transition of one of the Company's international defined benefit pension plans to a multi-employer pension plan. Following the transition, the Company accounts for the multi-employer plan similar to a defined contribution plan, resulting in full settlement of the related defined benefit plan obligations.
In connection with the settlement, during the nine months ended September 30, 2022, the Company reclassified $27 million (net of $10 million tax expense) in unamortized actuarial gains from Accumulated other comprehensive income (loss), of which $19 million was attributable to Bunge (net of $7 million in tax expense), and $8 million was attributable to redeemable non-controlling interest (net of $3 million in tax expense).
| | | | | | | | | | | | | | | | |
(US$ in millions) | Foreign Exchange Translation Adjustment | Deferred Gains (Losses) on Hedging Activities | Pension and Other Postretirement Liability Adjustments | | | Accumulated Other Comprehensive Income (Loss) |
Balance, January 1, 2021 | $ | (5,857) | | $ | (215) | | $ | (174) | | | | $ | (6,246) | |
Other comprehensive income (loss) before reclassifications | (136) | | (51) | | — | | | | (187) | |
Amount reclassified from accumulated other comprehensive income (loss) | — | | (3) | | — | | | | (3) | |
Balance, September 30, 2021 | $ | (5,993) | | $ | (269) | | $ | (174) | | | | $ | (6,436) | |
20.18. EARNINGS PER COMMON SHARE
The following table sets forth the computation of basic and diluted earnings per common share.
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions, except for share data) | (US$ in millions, except for share data) | 2022 | 2021 | | 2022 | 2021 | (US$ in millions, except for share data) | 2023 | 2022 | | 2023 | 2022 |
Net income (loss) | $ | 383 | | $ | 649 | | | $ | 1,304 | | $ | 1,935 | | |
Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | (3) | | 4 | | | (30) | | (88) | | |
Net income (loss) attributable to Bunge | $ | 380 | | $ | 653 | | | $ | 1,274 | | $ | 1,847 | | |
| Convertible preference share dividends (1) | — | | (8) | | | — | | (25) | | |
| Net income (loss) available to Bunge common shareholders - Basic | $ | 380 | | $ | 645 | | | $ | 1,274 | | $ | 1,822 | | |
Add back convertible preference share dividends | — | | 8 | | | — | | 25 | | |
Net income (loss) available to Bunge common shareholders - Diluted | $ | 380 | | $ | 653 | | | $ | 1,274 | | $ | 1,847 | | |
| Net income (loss) attributable to Bunge common shareholders | | Net income (loss) attributable to Bunge common shareholders | $ | 373 | | $ | 380 | | | $ | 1,627 | | $ | 1,274 | |
| | Weighted-average number of common shares outstanding: | Weighted-average number of common shares outstanding: | | | | Weighted-average number of common shares outstanding: | | | |
Basic | Basic | 150,560,803 | | 141,433,651 | | | 148,321,921 | | 141,108,272 | | Basic | 149,195,908 | | 150,560,803 | | | 149,958,262 | | 148,321,921 | |
Effect of dilutive shares: | Effect of dilutive shares: | | | | Effect of dilutive shares: | | | |
—stock options and awards (2) | —stock options and awards (2) | 1,859,490 | | 2,308,535 | | | 2,562,862 | | 2,422,293 | | —stock options and awards (2) | 2,020,948 | | 1,859,490 | | | 1,933,552 | | 2,562,862 | |
—convertible preference shares (1) | —convertible preference shares (1) | — | | 8,796,406 | | | 2,629,703 | | 8,796,406 | | —convertible preference shares (1) | — | | — | | | — | | 2,629,703 | |
Diluted | Diluted | 152,420,293 | | 152,538,592 | | | 153,514,486 | | 152,326,971 | | Diluted | 151,216,856 | | 152,420,293 | | | 151,891,814 | | 153,514,486 | |
| Earnings per common share: | Earnings per common share: | | Earnings per common share: | |
| Net income (loss) attributable to Bunge common shareholders—basic | Net income (loss) attributable to Bunge common shareholders—basic | $ | 2.52 | | $ | 4.56 | | | $ | 8.59 | | $ | 12.91 | | Net income (loss) attributable to Bunge common shareholders—basic | $ | 2.50 | | $ | 2.52 | | | $ | 10.85 | | $ | 8.59 | |
| Net income (loss) attributable to Bunge common shareholders—diluted | Net income (loss) attributable to Bunge common shareholders—diluted | $ | 2.49 | | $ | 4.28 | | | $ | 8.30 | | $ | 12.12 | | Net income (loss) attributable to Bunge common shareholders—diluted | $ | 2.47 | | $ | 2.49 | | | $ | 10.71 | | $ | 8.30 | |
(1) Effective March 23, 2022, (the "Conversion Date"), in accordance with the terms of the certificate of designation governing the convertible preference shares, all of the Company's issued and outstanding convertible preference shares were automatically converted into 1.2846 common shares of the Company, par value $0.01 per share. As a result of
this conversion, dividends on the convertible preference shares ceased to accrue on the Conversion Date. Accordingly, holders of the convertible preference shares were not entitled to receive the $1.21875 per share dividend declared by the Company in respect of the convertible preference shares on February 23, 2022, and payable to holders of record on May 15, 2022, and no convertible preference shares were issued or outstanding as of September 30, 2022. Refer to Note 19 - Equity for further information.
(2) The weighted-average common shares outstanding-diluted exclude approximately zero and 2less than one million stock options and contingently issuable restricted stock units, which were not dilutive and not included in the computation of earnings per share for each of the three months ended September 30, 2022, and 2021, respectively.
The weighted-average common shares outstanding-diluted exclude approximately zero and 2 million stock options and contingently issuable restricted stock units, which were not dilutive and not included in the computation of earnings per share for the nine months ended September 30, 2022,2023, and 2021, respectively.
2022.
21.19. SEGMENT INFORMATION
The Company's operations are organized, managed, and classified into four reportable segments - Agribusiness, Refined and Specialty Oils, Milling, and Sugar and Bioenergy, based upon their similar economic characteristics, products and services offered, production processes, types and classes of customer, and distribution methods. The Company’s remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified as Corporate and Other.
The Agribusiness reportable segment is characterized by both inputs and outputs being agricultural commodities and thus high volume and low margin. The Refined and Specialty Oils reportable segment involves the processing, production, and marketing of products derived from vegetable oils. The Milling reportable segment involves the processing, production, and marketing of products derived primarily from wheat and corn. The Sugar and Bioenergy reportable segment primarily comprises the net earnings in the Company’s 50% interest in BP Bunge Bioenergia, a joint venture with BP p.l.c. ("BP").
Corporate and Other includes salaries and overhead for corporate functions that are not allocated to the Company’s individual reporting segments because the operating performance of each reporting segment is evaluated by the Company's chief operating decision maker exclusive of these items, as well as certain other activities including Bunge Ventures, as well as the Company's captive insurance activities, securitization program, and certain income tax assets and liabilities.
Transfers between segments are generally valued at market. Segment revenues generated from these transfers are shown in the following table as “Inter-segment revenues.”
| | | Three Months Ended September 30, 2022 | | Three Months Ended September 30, 2023 |
(US$ in millions) | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Eliminations | Total | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Eliminations | Total |
Net sales to external customers | Net sales to external customers | $ | 11,741 | | $ | 4,302 | | $ | 631 | | $ | 74 | | $ | 11 | | $ | — | | $ | 16,759 | | Net sales to external customers | $ | 10,082 | | $ | 3,601 | | $ | 479 | | $ | 56 | | $ | 9 | | $ | — | | $ | 14,227 | |
Inter–segment revenues | Inter–segment revenues | 2,520 | | 54 | | 13 | | — | | — | | (2,587) | | — | | Inter–segment revenues | 2,139 | | 45 | | — | | — | | — | | (2,184) | | — | |
Cost of goods sold | Cost of goods sold | (11,109) | | (4,070) | | (586) | | (72) | | (34) | | — | | (15,871) | | Cost of goods sold | (9,437) | | (3,249) | | (429) | | (54) | | (13) | | — | | (13,182) | |
Gross profit | Gross profit | 632 | | 232 | | 45 | | 2 | | (23) | | — | | 888 | | Gross profit | 645 | | 352 | | 50 | | 2 | | (4) | | — | | 1,045 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | (135) | | (86) | | (26) | | — | | (90) | | — | | (337) | | Selling, general and administrative expenses | (145) | | (98) | | (25) | | (1) | | (178) | | — | | (447) | |
Foreign exchange gains (losses) | (35) | | (6) | | — | | — | | (11) | | — | | (52) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | (52) | | (2) | | — | | 1 | | 6 | | — | | (47) | |
EBIT attributable to noncontrolling interests (1) | EBIT attributable to noncontrolling interests (1) | 3 | | (3) | | (1) | | — | | — | | — | | (1) | | EBIT attributable to noncontrolling interests (1) | (9) | | (6) | | — | | — | | 1 | | — | | (14) | |
Other income (expense) - net | Other income (expense) - net | 6 | | (9) | | 1 | | 2 | | 40 | | — | | 40 | | Other income (expense) - net | 36 | | (19) | | (2) | | — | | (7) | | — | | 8 | |
Income (loss) from affiliates | Income (loss) from affiliates | 10 | | — | | — | | 20 | | — | | — | | 30 | | Income (loss) from affiliates | (14) | | — | | — | | 53 | | — | | — | | 39 | |
Total Segment EBIT (2) | Total Segment EBIT (2) | 481 | | 128 | | 19 | | 24 | | (84) | | — | | 568 | | Total Segment EBIT (2) | 461 | | 227 | | 23 | | 55 | | (182) | | — | | 584 | |
| Total assets | Total assets | 17,193 | | 4,190 | | 1,058 | | 360 | | 1,991 | | — | | 24,792 | | Total assets | 16,660 | | 3,849 | | 972 | | 469 | | 3,183 | | — | | 25,133 | |
| | | Three Months Ended September 30, 2021 | | Three Months Ended September 30, 2022 |
(US$ in millions) | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Eliminations | Total | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Eliminations | Total |
Net sales to external customers | Net sales to external customers | $ | 9,868 | | $ | 3,648 | | $ | 530 | | $ | 69 | | $ | 2 | | $ | — | | $ | 14,117 | | Net sales to external customers | $ | 11,741 | | $ | 4,302 | | $ | 631 | | $ | 74 | | $ | 11 | | $ | — | | $ | 16,759 | |
Inter–segment revenues | Inter–segment revenues | 2,200 | | 86 | | 6 | | — | | — | | (2,292) | | — | | Inter–segment revenues | 2,520 | | 54 | | 13 | | — | | — | | (2,587) | | — | |
Cost of goods sold | Cost of goods sold | (9,277) | | (3,430) | | (460) | | (67) | | (21) | | — | | (13,255) | | Cost of goods sold | (11,109) | | (4,070) | | (586) | | (72) | | (34) | | — | | (15,871) | |
Gross profit | Gross profit | 591 | | 218 | | 70 | | 2 | | (19) | | — | | 862 | | Gross profit | 632 | | 232 | | 45 | | 2 | | (23) | | — | | 888 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | (118) | | (83) | | (25) | | — | | (101) | | — | | (327) | | Selling, general and administrative expenses | (135) | | (86) | | (26) | | — | | (90) | | — | | (337) | |
Foreign exchange gains (losses) | (30) | | (1) | | (2) | | — | | (3) | | — | | (36) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | (35) | | (6) | | — | | — | | (11) | | — | | (52) | |
EBIT attributable to noncontrolling interests (1) | EBIT attributable to noncontrolling interests (1) | 5 | | (2) | | — | | — | | 2 | | — | | 5 | | EBIT attributable to noncontrolling interests (1) | 3 | | (3) | | (1) | | — | | — | | — | | (1) | |
Other income (expense) - net | Other income (expense) - net | 181 | | (2) | | — | | — | | 41 | | — | | 220 | | Other income (expense) - net | 6 | | (9) | | 1 | | 2 | | 40 | | — | | 40 | |
Income (loss) from affiliates | Income (loss) from affiliates | 10 | | — | | — | | 51 | | (1) | | — | | 60 | | Income (loss) from affiliates | 10 | | — | | — | | 20 | | — | | — | | 30 | |
Total Segment EBIT (2) | Total Segment EBIT (2) | 639 | | 130 | | 43 | | 53 | | (81) | | — | | 784 | | Total Segment EBIT (2) | 481 | | 128 | | 19 | | 24 | | (84) | | — | | 568 | |
| Total assets | Total assets | 16,177 | | 4,091 | | 1,352 | | 207 | | 2,282 | | — | | 24,109 | | Total assets | 17,193 | | 4,190 | | 1,058 | | 360 | | 1,991 | | — | | 24,792 | |
| | | | Nine Months Ended September 30, 2022 | | Nine Months Ended September 30, 2023 |
(US$ in millions) | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Eliminations | Total | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Eliminations | Total |
Net sales to external customers | Net sales to external customers | $ | 35,719 | | $ | 12,723 | | $ | 1,911 | | $ | 195 | | $ | 24 | | $ | — | | $ | 50,572 | | Net sales to external customers | $ | 31,809 | | $ | 11,090 | | $ | 1,484 | | $ | 192 | | $ | 29 | | $ | — | | $ | 44,604 | |
Inter–segment revenues | Inter–segment revenues | 7,899 | | 252 | | 480 | | — | | — | | (8,631) | | — | | Inter–segment revenues | 6,294 | | 138 | | 164 | | — | | — | | (6,596) | | — | |
Cost of goods sold | Cost of goods sold | (33,907) | | (11,904) | | (1,669) | | (189) | | (39) | | — | | (47,708) | | Cost of goods sold | (29,359) | | (10,063) | | (1,363) | | (188) | | (40) | | — | | (41,013) | |
Gross profit | Gross profit | 1,812 | | 819 | | 242 | | 6 | | (15) | | — | | 2,864 | | Gross profit | 2,450 | | 1,027 | | 121 | | 4 | | (11) | | — | | 3,591 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | (375) | | (262) | | (78) | | (1) | | (263) | | — | | (979) | | Selling, general and administrative expenses | (428) | | (291) | | (70) | | (1) | | (430) | | — | | (1,220) | |
Foreign exchange gains (losses) | (119) | | (14) | | 2 | | — | | (19) | | — | | (150) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | (77) | | 8 | | (1) | | 1 | | 5 | | — | | (64) | |
EBIT attributable to noncontrolling interests (1) | EBIT attributable to noncontrolling interests (1) | (14) | | (7) | | (1) | | — | | (11) | | — | | (33) | | EBIT attributable to noncontrolling interests (1) | (29) | | (17) | | 1 | | — | | 2 | | — | | (43) | |
Other income (expense) - net | Other income (expense) - net | (71) | | (17) | | 2 | | 2 | | 71 | | — | | (13) | | Other income (expense) - net | 54 | | (50) | | (5) | | 2 | | 34 | | — | | 35 | |
Income (loss) from affiliates | Income (loss) from affiliates | 41 | | — | | (1) | | 56 | | (1) | | — | | 95 | | Income (loss) from affiliates | (19) | | — | | — | | 119 | | (17) | | — | | 83 | |
Total Segment EBIT (2) | Total Segment EBIT (2) | 1,274 | | 519 | | 166 | | 63 | | (238) | | — | | 1,784 | | Total Segment EBIT (2) | 1,951 | | 677 | | 46 | | 125 | | (417) | | — | | 2,382 | |
| Total assets | Total assets | 17,193 | | 4,190 | | 1,058 | | 360 | | 1,991 | | — | | 24,792 | | Total assets | 16,660 | | 3,849 | | 972 | | 469 | | 3,183 | | — | | 25,133 | |
| | | | Nine Months Ended September 30, 2021 | | Nine Months Ended September 30, 2022 |
(US$ in millions) | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Eliminations | Total | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Eliminations | Total |
Net sales to external customers | Net sales to external customers | $ | 31,312 | | $ | 9,572 | | $ | 1,392 | | $ | 190 | | $ | 3 | | $ | — | | $ | 42,469 | | Net sales to external customers | $ | 35,719 | | $ | 12,723 | | $ | 1,911 | | $ | 195 | | $ | 24 | | $ | — | | $ | 50,572 | |
Inter–segment revenues | Inter–segment revenues | 5,711 | | 313 | | 114 | | — | | — | | (6,138) | | — | | Inter–segment revenues | 7,899 | | 252 | | 480 | | — | | — | | (8,631) | | — | |
Cost of goods sold | Cost of goods sold | (29,425) | | (8,924) | | (1,231) | | (187) | | (28) | | — | | (39,795) | | Cost of goods sold | (33,907) | | (11,904) | | (1,669) | | (189) | | (39) | | — | | (47,708) | |
Gross profit | Gross profit | 1,887 | | 648 | | 161 | | 3 | | (25) | | — | | 2,674 | | Gross profit | 1,812 | | 819 | | 242 | | 6 | | (15) | | — | | 2,864 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | (313) | | (259) | | (73) | | (1) | | (250) | | — | | (896) | | Selling, general and administrative expenses | (375) | | (262) | | (78) | | (1) | | (263) | | — | | (979) | |
Foreign exchange gains (losses) | (1) | | 1 | | (2) | | — | | (9) | | — | | (11) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | (119) | | (14) | | 2 | | — | | (19) | | — | | (150) | |
EBIT attributable to noncontrolling interests (1) | EBIT attributable to noncontrolling interests (1) | (6) | | (85) | | (1) | | — | | 2 | | — | | (90) | | EBIT attributable to noncontrolling interests (1) | (14) | | (7) | | (1) | | — | | (11) | | — | | (33) | |
Other income (expense) - net | Other income (expense) - net | 227 | | 236 | | — | | 1 | | 55 | | — | | 519 | | Other income (expense) - net | (71) | | (17) | | 2 | | 2 | | 71 | | — | | (13) | |
Income (loss) from affiliates | Income (loss) from affiliates | 44 | | — | | — | | 89 | | — | | — | | 133 | | Income (loss) from affiliates | 41 | | — | | (1) | | 56 | | (1) | | — | | 95 | |
Total Segment EBIT (2) | Total Segment EBIT (2) | 1,838 | | 541 | | 85 | | 92 | | (227) | | — | | 2,329 | | Total Segment EBIT (2) | 1,274 | | 519 | | 166 | | 63 | | (238) | | — | | 1,784 | |
| Total assets | Total assets | 16,177 | | 4,091 | | 1,352 | | 207 | | 2,282 | | — | | 24,109 | | Total assets | 17,193 | | 4,190 | | 1,058 | | 360 | | 1,991 | | — | | 24,792 | |
(1) Include noncontrolling interests' share of interest and tax with EBIT attributable to noncontrolling interests in order to reconcile to consolidated Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests.
(2) Total segmentSegment earnings before interest and taxes ("EBIT") is an operating performance measure used by Bunge’s management to evaluate segment operating activities. Bunge’s management believes Total Segment EBIT is a useful measure of operating profitability, since the measure allows for an evaluation of the performance of its segments without regard to its financing methods or capital structure. In addition, Total Segment EBIT is a financial measure that is widely used by analysts and investors in Bunge’s industry. Total Segment EBIT is a non-GAAP financial measure and is not intended to replace Net income (loss) attributable to Bunge, the most directly comparable U.S. GAAP financial measure. Further, Total Segment EBIT is not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to Net income (loss) or any other measure of consolidated operating results under U.S. GAAP. See the reconciliation of Total Segment EBIT to Net income (loss) attributable to Bunge in the table below.
A reconciliation of Net income (loss) attributable to Bunge to Total Segment EBIT follows:
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions) | (US$ in millions) | 2022 | | 2021 | | 2022 | | 2021 | (US$ in millions) | 2023 | | 2022 | | 2023 | | 2022 |
Net income (loss) attributable to Bunge | Net income (loss) attributable to Bunge | $ | 380 | | | $ | 653 | | | $ | 1,274 | | | $ | 1,847 | | Net income (loss) attributable to Bunge | $ | 373 | | | $ | 380 | | | $ | 1,627 | | | $ | 1,274 | |
Interest income | Interest income | (30) | | | (19) | | | (50) | | | (34) | | Interest income | (38) | | | (30) | | | (121) | | | (50) | |
Interest expense | Interest expense | 103 | | | 57 | | | 306 | | | 184 | | Interest expense | 133 | | | 103 | | | 374 | | | 306 | |
Income tax expense (benefit) | Income tax expense (benefit) | 113 | | | 92 | | | 257 | | | 334 | | Income tax expense (benefit) | 114 | | | 113 | | | 495 | | | 257 | |
| Noncontrolling interests' share of interest and tax | Noncontrolling interests' share of interest and tax | 2 | | | 1 | | | (3) | | | (2) | | Noncontrolling interests' share of interest and tax | 2 | | | 2 | | | 7 | | | (3) | |
Total Segment EBIT from continuing operations | $ | 568 | | | $ | 784 | | | $ | 1,784 | | | $ | 2,329 | | |
Total Segment EBIT | | Total Segment EBIT | $ | 584 | | | $ | 568 | | | $ | 2,382 | | | $ | 1,784 | |
The Company’s Net sales compriserevenue comprises sales from commodity contracts that are accounted for under ASC 815, Derivatives and Hedging (ASC 815) and sales of other products and services that are accounted for under ASC 606, Revenue from Contracts with Customers (ASC 606). The following tables provide a disaggregation of Net sales to external customers between sales from commodity contracts (ASC 815) and sales from contracts with customers and sales from other arrangements:(ASC 606):
| | | Three Months Ended September 30, 2022 | | Three Months Ended September 30, 2023 |
(US$ in millions) | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Total | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Total |
Sales from other arrangements | $ | 10,900 | | $ | 333 | | $ | 26 | | $ | 72 | | $ | — | | $ | 11,331 | | |
Sales from contracts with customers | 841 | | 3,969 | | 605 | | 2 | | 11 | | 5,428 | | |
Sales from commodity contracts (ASC 815) | | Sales from commodity contracts (ASC 815) | $ | 9,491 | | $ | 305 | | $ | 23 | | $ | 53 | | $ | — | | $ | 9,872 | |
Sales from contracts with customers (ASC 606) | | Sales from contracts with customers (ASC 606) | 591 | | 3,296 | | 456 | | 3 | | 9 | | 4,355 | |
Net sales to external customers | Net sales to external customers | $ | 11,741 | | $ | 4,302 | | $ | 631 | | $ | 74 | | $ | 11 | | $ | 16,759 | | Net sales to external customers | $ | 10,082 | | $ | 3,601 | | $ | 479 | | $ | 56 | | $ | 9 | | $ | 14,227 | |
| | | Three Months Ended September 30, 2021 | | Three Months Ended September 30, 2022 |
(US$ in millions) | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Total | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Total |
Sales from other arrangements | $ | 9,081 | | $ | 296 | | $ | — | | $ | 67 | | $ | — | | $ | 9,444 | | |
Sales from contracts with customers | 787 | | 3,352 | | 530 | | 2 | | 2 | | 4,673 | | |
Sales from commodity contracts (ASC 815) | | Sales from commodity contracts (ASC 815) | $ | 10,900 | | $ | 333 | | $ | 26 | | $ | 72 | | $ | — | | $ | 11,331 | |
Sales from contracts with customers (ASC 606) | | Sales from contracts with customers (ASC 606) | 841 | | 3,969 | | 605 | | 2 | | 11 | | 5,428 | |
Net sales to external customers | Net sales to external customers | $ | 9,868 | | $ | 3,648 | | $ | 530 | | $ | 69 | | $ | 2 | | $ | 14,117 | | Net sales to external customers | $ | 11,741 | | $ | 4,302 | | $ | 631 | | $ | 74 | | $ | 11 | | $ | 16,759 | |
| | | | Nine Months Ended September 30, 2022 | | Nine Months Ended September 30, 2023 |
(US$ in millions) | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Total | (US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Total |
Sales from other arrangements | $ | 33,396 | | $ | 963 | | $ | 135 | | $ | 191 | | $ | — | | $ | 34,685 | | |
Sales from contracts with customers | 2,323 | | 11,760 | | 1,776 | | 4 | | 24 | | 15,887 | | |
Sales from commodity contracts (ASC 815) | | Sales from commodity contracts (ASC 815) | $ | 30,073 | | $ | 745 | | $ | 138 | | $ | 187 | | $ | — | | $ | 31,143 | |
Sales from contracts with customers (ASC 606) | | Sales from contracts with customers (ASC 606) | 1,736 | | 10,345 | | 1,346 | | 5 | | 29 | | 13,461 | |
Net sales to external customers | Net sales to external customers | $ | 35,719 | | $ | 12,723 | | $ | 1,911 | | $ | 195 | | $ | 24 | | $ | 50,572 | | Net sales to external customers | $ | 31,809 | | $ | 11,090 | | $ | 1,484 | | $ | 192 | | $ | 29 | | $ | 44,604 | |
| | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2021 |
(US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Total |
Sales from other arrangements | $ | 29,568 | | $ | 725 | | $ | — | | $ | 186 | | $ | — | | $ | 30,479 | |
Sales from contracts with customers | 1,744 | | 8,847 | | 1,392 | | 4 | | 3 | | 11,990 | |
Net sales to external customers | $ | 31,312 | | $ | 9,572 | | $ | 1,392 | | $ | 190 | | $ | 3 | | $ | 42,469 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Nine Months Ended September 30, 2022 |
(US$ in millions) | Agribusiness | Refined and Specialty Oils | Milling | Sugar and Bioenergy | Corporate and Other | Total |
Sales from commodity contracts (ASC 815) | $ | 33,396 | | $ | 963 | | $ | 135 | | $ | 191 | | $ | — | | $ | 34,685 | |
Sales from contracts with customers (ASC 606) | 2,323 | | 11,760 | | 1,776 | | 4 | | 24 | | 15,887 | |
Net sales to external customers | $ | 35,719 | | $ | 12,723 | | $ | 1,911 | | $ | 195 | | $ | 24 | | $ | 50,572 | |
Cautionary Statement Regarding Forward Looking Statements
This report contains both historical and forward looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward looking statements are not based on historical facts, but rather reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward looking statements by using words including “may,” “will,” “should,” “could,” “expect,” “anticipate,” “believe,” “plan,” “intend,” “estimate,” “continue” and similar expressions. These forward looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward looking statements. These factors include the risks, uncertainties, trends and other factors described in our Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) and include: the impact on our employees, operations, and facilities from the war in Ukraine and the resulting economic and other sanctions imposed on Russia, including the impact on Bunge resulting from the continuation and/or escalation of the war and sanctions against Russia; the ongoing impacts of the COVID-19 pandemic and other pandemic outbreaks; the effect of weather conditions and the impact of crop and animal disease on our business; the impact of global and regional economic, agricultural, financial and commodities market, political, social and health conditions; changes in governmental policies and laws affecting our business, including agricultural and trade policies, financial markets regulation and environmental, tax and biofuels regulation; the impact of seasonality; the impact of government policies and regulations; the outcome of pending regulatory and legal proceedings; our ability to complete, integrate and benefit from acquisitions, divestitures, joint ventures and strategic alliances;alliances, including without limitation Bunge's proposed business combination with Viterra Limited, and the Company's ability to consummate the proposed redomestication that would change the Company's place of incorporation and residence from Bermuda to Switzerland; the impact of industry conditions, including fluctuations in supply, demand and prices for agricultural commodities and other raw materials and products that we sell and use in our business, fluctuations in energy and freight costs and competitive developments in our industries; the effectiveness of our capital allocation plans, funding needs and financing sources; the effectiveness of our risk management strategies; operational risks, including industrial accidents, natural disasters, pandemics or epidemics and cybersecurity incidents; changes in foreign exchange policy or rates; the impact of our dependence on third parties; our ability to attract and retain executive management and key personnel; and other factors affecting our business generally.
The forward looking statements included in this report are made only as of the date of this report, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward looking statements to reflect subsequent events or circumstances.
You should refer to “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed with the SEC on February 24, 2022,2023, “Risks Related to the Acquisition” and “Risks Related to the Redomestication” sections of the Company's definitive proxy statement filed with the SEC on August 7, 2023, and “Part II — Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for a more detailed discussion of these factors.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Third Quarter 20222023 Overview
You should refer to "Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting Operating Results" in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, for a discussion of key factors affecting operating results in each of our business segments. In addition, you should refer to "Item 9A, Controls and Procedures" in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, and to "Item 4, Controls and Procedures" in this Quarterly Report on Form 10-Q for the period ended September 30, 2022,2023, for a discussion of our internal controls over financial reporting.
Non-U.S. GAAP Financial Measures
Total segment earnings before interest and taxes ("EBIT") is an operating performance measure used by Bunge’s management to evaluate segment operating activities. Bunge also uses Core Segment EBIT, Non-core Segment EBIT, Corporate and Other EBIT, and Total Segment EBIT to evaluate the operating performance of Bunge’s Core reportable segments, Non-core reportable segments, and Total reportable segments together with our Corporate and Other activities.Other. Core Segment EBIT is the aggregate of the earnings before interest and taxesEBIT of each of Bunge’s Agribusiness, Refined and Specialty Oils, and Milling segments. Non-core Segment EBIT is the earnings before interest and taxesEBIT of Bunge’s Sugar & Bioenergy segment. Total Segment EBIT is the aggregate of the earnings before interest and taxesEBIT of Bunge’s Core and Non-core reportable segments, together with its corporateCorporate and other activities.Other. Bunge’s management believes Core Segment EBIT, Non-core Segment EBIT, and Total Segment EBIT are useful measures of operating profitability since the measures allow for an evaluation of the performance of its segments without regard to financing methods or capital structure. In addition, EBIT is a financial measure that is widely used by analysts and investors in Bunge’s industry. Total Segment EBIT is a non-U.S. GAAP financial measure and is not intended to replace Net income (loss) attributable to Bunge, the most directly comparable U.S. GAAP financial measure. Further, Total Segment EBIT excludes EBIT attributable to noncontrolling interests and is not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to Net income (loss) or any other measure of consolidated operating results under U.S. GAAP. See the reconciliation of Net income (loss) attributable to Bunge to Total Segment EBIT below.
Cash provided by (used for) operating activities, adjusted is calculated by including the Proceeds from beneficial interests in securitized trade receivables with Cash provided by (used for) operating activities. Cash provided by (used for) operating activities, adjusted is a non-GAAPnon-U.S. GAAP financial measure and is not intended to replace Cash provided by (used for) operating activities, the most directly comparable U.S. GAAP financial measure. Our management believes presentation of this measure allows investors to view our cash generating performance using the same measure that management uses in evaluating financial and business performance and trends.
Executive Summary
Net Income (Loss) Attributable to Bunge - For the three months ended September 30, 2022,2023, Net income attributable to Bunge was $380$373 million, a decrease of $273$7 million compared to $653$380 million for the three months ended September 30, 2021.2022. For the nine months ended September 30, 2022,2023, Net income attributable to Bunge was $1,274$1,627 million, a decreasean increase of $573$353 million, compared to $1,847$1,274 million for the nine months ended September 30, 2021.2022. The decreasesdecrease for the three months ended September 30, 2023, was due to lower results in Corporate and Other, as further discussed in the Segment Overview & Results of Operations section below, as well as higher interest expense, as discussed further in the Interest section below, partially offset by higher Segment EBIT in our Core and Non-core segments as discussed in the Segment Overview & Results of Operations section below. The increase for the nine months ended September 30, 2022, were2023 was due to lowerhigher Segment EBIT in our Core and Non-core segments, Non-core segment, andpartially offset by lower EBIT in our Corporate and Other activities, as further discussed in the Segment Overview & Results of Operations section below and higher income tax expense as discussed further below.
Earnings Per Common Share - Diluted - For the three months ended September 30, 2022,2023, Net income attributable to Bunge common shareholders, diluted, was $2.49$2.47 per share, a decrease of $1.79$0.02 per share, compared to income of $4.28$2.49 per share for the three months ended September 30, 2021.2022. For the nine months ended September 30, 2022,2023, Net income attributable to Bunge common shareholders, diluted, was $8.30$10.71 per share, a decreasean increase of $3.82$2.41 per share, compared to income of $12.12$8.30 per share for the nine months ended September 30, 2021.2022.
EBIT - For the three months ended September 30, 2022,2023, Total Segment EBIT was $568$584 million, a decreasean increase of $216$16 million compared to Total Segment EBIT of $784$568 million for the three months ended September 30, 2021.2022. For the nine months ended September 30, 2022,2023, Total Segment EBIT was $1,784$2,382 million, a decreasean increase of $545$598 million compared to Total Segment EBIT of $2,329$1,784 million for the nine months ended September 30, 2021.2022. The decreasesincrease in Total Segment EBIT for the three and nine months ended September 30, 2022, were due to lower Segment EBIT in our Core segments, Non-core
segment,the three and nine months ended September 30, 2023, was due to higher Segment EBIT in our Core and Non-core segments, partially offset by lower Segment EBIT in our Corporate and Other activities, as further discussed in the Segment Overview & Results of Operations section below.
Income Tax (Expense) Benefit - Income tax expense was $114 million for the three months ended September 30, 2023 compared to $113 million for the three months ended September 30, 2022 compared to income2022. Income tax expense of $92was $495 million for the threenine months ended September 30, 2021. The increase was primarily due2023 compared to unfavorable tax impacts on North American dispositions and expected European dispositions. Income tax expense was $257 million for the nine months ended September 30, 2022 compared to $334 million for the nine months ended September 30, 2021.2022. The decreaseincrease was primarily due to lower pretax income.higher pre-tax income in 2023, as well as an unfavorable earnings mix in 2023.
Liquidity and Capital Resources – At September 30, 2022,2023, working capital, which equals Total current assets less Total current liabilities, was $6,628$8,379 million, a decreasean increase of $147$1,751 million, compared to working capital of $6,775$6,628 million at September 30, 2021,2022, and a decreasean increase of $508$1,221 million, compared to working capital of $7,136$7,158 million at December 31, 2021.2022. The decreasesincreases in working capital at September 30, 2022,2023, compared to September 30, 2021,2022, and December 31, 2021,2022, were primarily due to lower net assets held for sale following the completion of the sale of our Mexican wheat milling business,a higher Cash and cash equivalents balances as well as an increase in the currentlower Short-term debt and Current portion of long-term debt due to the reclassification from long-term debt of the current portion of our 1.85% Senior Notes, due 2023.balances, driven by strong operating cash flows.
Segment Overview & Results of Operations
Our operations are organized, managed and classified into four reportable segments based upon their similar economic characteristics, nature of products and services offered, production processes, types and classes of customer, and distribution methods. We further organize these reportable segments into Core operations and Non-core operations. Core operations comprise our Agribusiness, Refined and Specialty Oils, and Milling segments. Non-core operations comprise our Sugar & Bioenergy segment, which itself primarily comprises the Company’s 50% interest in the net earnings of BP Bunge Bioenergia, a joint venture with BP p.l.c. ("BP").
Our remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified as Corporate and Other. Corporate and Other includes salaries and overhead for corporate functions that are not allocated to our individual reportable segments because the operating performance of each reportable segment is evaluated by the Company's chief operating decision maker exclusive of these items, as well as certain other activities including Bunge Ventures, the Company's captive insurance activities, and securitization program, as well asand certain income tax assets and liabilities.
Effective January 1, 2022, we changed our methodology for reporting volumetric data for our reportable segments to simplify and more closely align our volume reporting with our primary income-generating activities. The primary change comprises the elimination of grain and oilseed volumes originated from our suppliers. Volumes are now reported as follows:
•In our Agribusiness segment, reported Processing volumes comprise oilseed volumes crushed (processed) during a period, which approximate sales volumes to third parties during the same period. Reported Merchandising volumes represent sales volumes to third party customers.
•Refined and Specialty Oils segment volumes represent sales volumes to third party customers.
•Milling segment volumes represent feedstock ground (processed) during a period, again approximating sales volumes during the same period.
•No volumes are reported for our Sugar and Bioenergy segment, which primarily comprises the Company's net earnings from its 50% interest in BP Bunge Bioenergia, or our Corporate and Other activities, which have no material revenue-generating activities.
Certain reclassifications of prior period volumes have been made to conform to current presentation.
A reconciliation of Net income (loss) attributable to Bunge to Total Segment EBIT follows:
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions) | (US$ in millions) | 2022 | | 2021 | | 2022 | | 2021 | (US$ in millions) | 2023 | | 2022 | | 2023 | | 2022 |
Net income (loss) attributable to Bunge | Net income (loss) attributable to Bunge | $ | 380 | | | $ | 653 | | | $ | 1,274 | | | $ | 1,847 | | Net income (loss) attributable to Bunge | $ | 373 | | | $ | 380 | | | $ | 1,627 | | | $ | 1,274 | |
Interest income | Interest income | (30) | | | (19) | | | (50) | | | (34) | | Interest income | (38) | | | (30) | | | (121) | | | (50) | |
Interest expense | Interest expense | 103 | | | 57 | | | 306 | | | 184 | | Interest expense | 133 | | | 103 | | | 374 | | | 306 | |
Income tax expense (benefit) | Income tax expense (benefit) | 113 | | | 92 | | | 257 | | | 334 | | Income tax expense (benefit) | 114 | | | 113 | | | 495 | | | 257 | |
| Noncontrolling interests' share of interest and tax | Noncontrolling interests' share of interest and tax | 2 | | | 1 | | | (3) | | | (2) | | Noncontrolling interests' share of interest and tax | 2 | | | 2 | | | 7 | | | (3) | |
Total Segment EBIT | Total Segment EBIT | $ | 568 | | | $ | 784 | | | $ | 1,784 | | | $ | 2,329 | | Total Segment EBIT | $ | 584 | | | $ | 568 | | | $ | 2,382 | | | $ | 1,784 | |
| Agribusiness Segment EBIT | Agribusiness Segment EBIT | 481 | | | 639 | | | 1,274 | | | 1,838 | | Agribusiness Segment EBIT | 461 | | | 481 | | | 1,951 | | | 1,274 | |
Refined and Specialty Oils Segment EBIT | Refined and Specialty Oils Segment EBIT | 128 | | | 130 | | | 519 | | | 541 | | Refined and Specialty Oils Segment EBIT | 227 | | | 128 | | | 677 | | | 519 | |
Milling Segment EBIT | Milling Segment EBIT | 19 | | | 43 | | | 166 | | | 85 | | Milling Segment EBIT | 23 | | | 19 | | | 46 | | | 166 | |
Core Segment EBIT | Core Segment EBIT | 628 | | | 812 | | | 1,959 | | | 2,464 | | Core Segment EBIT | 711 | | | 628 | | | 2,674 | | | 1,959 | |
| Corporate and Other EBIT | Corporate and Other EBIT | (84) | | | (81) | | | (238) | | | (227) | | Corporate and Other EBIT | (182) | | | (84) | | | (417) | | | (238) | |
| Sugar and Bioenergy Segment EBIT | Sugar and Bioenergy Segment EBIT | 24 | | | 53 | | | 63 | | | 92 | | Sugar and Bioenergy Segment EBIT | 55 | | | 24 | | | 125 | | | 63 | |
Non Core Segment EBIT | 24 | | | 53 | | | 63 | | | 92 | | |
Non-core Segment EBIT | | Non-core Segment EBIT | 55 | | | 24 | | | 125 | | | 63 | |
| Total Segment EBIT | Total Segment EBIT | $ | 568 | | | $ | 784 | | | $ | 1,784 | | | $ | 2,329 | | Total Segment EBIT | $ | 584 | | | $ | 568 | | | $ | 2,382 | | | $ | 1,784 | |
Core Segments
Agribusiness Segment
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions, except volumes) | (US$ in millions, except volumes) | 2022 | | 2021 | | 2022 | | 2021 | (US$ in millions, except volumes) | 2023 | | 2022 | | % Change | | 2023 | | 2022 | | % Change |
Volumes (in thousand metric tons) | Volumes (in thousand metric tons) | 19,622 | | | 19,534 | | | 59,182 | | | 62,827 | | Volumes (in thousand metric tons) | 18,854 | | | 19,622 | | | (4) | % | | 55,497 | | | 59,182 | | | (6) | % |
Net sales | Net sales | $ | 11,741 | | | $ | 9,868 | | | $ | 35,719 | | | $ | 31,312 | | Net sales | $ | 10,082 | | | $ | 11,741 | | | (14) | % | | $ | 31,809 | | | $ | 35,719 | | | (11) | % |
Cost of goods sold | Cost of goods sold | (11,109) | | | (9,277) | | | (33,907) | | | (29,425) | | Cost of goods sold | (9,437) | | | (11,109) | | | (15) | % | | (29,359) | | | (33,907) | | | (13) | % |
Gross profit | Gross profit | 632 | | | 591 | | | 1,812 | | | 1,887 | | Gross profit | 645 | | | 632 | | | 2 | % | | 2,450 | | | 1,812 | | | 35 | % |
Selling, general and administrative expense | Selling, general and administrative expense | (135) | | | (118) | | | (375) | | | (313) | | Selling, general and administrative expense | (145) | | | (135) | | | 7 | % | | (428) | | | (375) | | | 14 | % |
Foreign exchange gains (losses) | (35) | | | (30) | | | (119) | | | (1) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | (52) | | | (35) | | | (49) | % | | (77) | | | (119) | | | 35 | % |
EBIT attributable to noncontrolling interests | EBIT attributable to noncontrolling interests | 3 | | | 5 | | | (14) | | | (6) | | EBIT attributable to noncontrolling interests | (9) | | | 3 | | | (400) | % | | (29) | | | (14) | | | (107) | % |
Other income (expense) – net | Other income (expense) – net | 6 | | | 181 | | | (71) | | | 227 | | Other income (expense) – net | 36 | | | 6 | | | 500 | % | | 54 | | | (71) | | | 176 | % |
Income (loss) from affiliates | Income (loss) from affiliates | 10 | | | 10 | | | 41 | | | 44 | Income (loss) from affiliates | (14) | | | 10 | | | (240) | % | | (19) | | | 41 | | (146) | % |
Total Agribusiness Segment EBIT | Total Agribusiness Segment EBIT | $ | 481 | | | $ | 639 | | | $ | 1,274 | | | $ | 1,838 | | Total Agribusiness Segment EBIT | $ | 461 | | | $ | 481 | | | (4) | % | | $ | 1,951 | | | $ | 1,274 | | | 53 | % |
Three Months Ended September 30, 20222023 Compared to Three Months Ended September 30, 20212022
Agribusiness segment Net sales increased $1,873 million, or 19%decreased 14%, to $11,741$10,082 million for the three months ended September 30, 2022, compared to $9,868 million for the three months ended September 30, 2021.2023. The net increasedecrease was primarily due to the following:
•In Processing, Net sales increased $1,371 million,decreased 7%, primarily due to higherlower average sales prices experienced in almost all regions for our global soybean oilseed processing businesses and our Europe softseed business. Lower average sales prices resulted from a reduction of sales prices in the current year relative to the higher volumesprice environment in our North American soybean and softseed processing, and South American soybean processing
businesses,prior year following the onset of the Ukraine-Russia war. Also contributing to the decrease in Net sales was lower volumes resulting primarily from decreased sales in Argentina due to the drought experienced in the region in the current year. The above decreases were partially offset by lowerhigher volumes in our Europeanglobal soybean oilseed processing business as a result of strong demand in China and in the Europe softseed business despite the sale of our Russian Oilseed Processing business in the first quarter of 2023, as well as increased prices in our South America oilseed processing businesses. The higherbusiness driven by pressures from the lower supply as a result of the drought in Argentina.
•In Merchandising, Net sales decreased 29%, primarily due to lower average sales prices resultin our global corn, wheat, and oils businesses, resulting from highera reduction of global commodity prices relative to the higher price environment in the prior year following the onset of the Ukraine-Russia war, which exacerbated an already tight commodity supply environment. The higher volumes in our North and South American stem from continued strong oil and meal demand. The lower volumes in our European softseed processing business stems from reduced activity at our Ukrainian facilities as a result of the Ukraine-Russia war.
•In Merchandising, Net sales increased $502 million, primarilyVolumes were also down slightly due to higher average sales pricesdecreased demand in our global corn wheat and oils businesses, resulting from higher global commodity prices following the onset of the Ukraine-Russia war, which exacerbated an already tight commodity supply environment. The above increasesbusinesses. Net sales were partially offset by lower overall sales volumes, againalso down in our ocean freight business due to the Ukraine-Russia war.lower prices and stabilizing demand.
Cost of goods sold increased $1,832 million, or 20%decreased 15%, to $11,109$9,437 million for the three months ended September 30, 2022, compared to $9,277 million for the three months ended September 30, 2021.2023. The net increasedecrease was primarily due to the following:
•In Processing, Cost of goods sold increased $1,186 million,decreased 8%, primarily due to higher average commodity prices,lower sales, as noted in Net sales above, increased industrial input costs,favorable mark-to-market results, a $4 million benefit in particular energy, duethe three months ended September 30, 2023 from the recognition of mark-to-market gains related to inflationary pressures,the recovery of inventories in Ukraine, as well as a non-recurringan impairment charge of $21 million in the prior period related to the classification of our Russian oilseed processing business as held-for-sale in the current period, partially offset by more favorable mark-to-market results.held-for-sale.
•In Merchandising, Cost of goods sold increased $646 million,decreased 29%, primarily due to the higher average commodity prices,lower sales, as noted in Net sales above, as well as less favorableand a $6 million benefit in the three months ended September 30, 2023 from the recognition of mark-to-market gains related to the recovery of inventories in Ukraine primarily from our Mykolaiv facility, partially offset by unfavorable mark-to-market results.
Gross profit increased $41 million, or 7%,Foreign exchange (losses) gains - net decreased 49% to $632a loss of $52 million for the three months ended September 30, 2022, compared to $5912023. The current year increase in losses is primarily in Merchandising from current year losses in our Bunge Financial Services business partially offset by a reduction in losses in our Processing business on U.S. dollar-denominated loans payable in non-U.S. functional currency operations.
Other income (expense) - net was income of $36 million for the three months ended September 30, 2021.2023, compared to income of $6 million for the three months ended September 30, 2022. The increase was primarily due to gains in Argentina related to foreign currency positioning.
Segment EBIT decreased 4%, to $461 million for the three months ended September 30, 2023. The net decrease was primarily due to the following:
•In Processing, an increase of 25% was primarily due to higher Gross profit, in part from improved margins in our Europe softseed business and global soybean oilseed processing business and higher Other income as described above.
•In Merchandising, a decrease of 77% was primarily due to lower Gross profit primarily driven by lower results in our ocean freight business and lower Foreign exchange results as described above.
Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022
Agribusiness segment Net sales decreased 11%, to $31,809 million for the nine months ended September 30, 2023. The net decrease was primarily due to the following:
•In Processing, Net sales decreased 3%, primarily due to lower average sales prices and lower volumes in the South America oilseed processing business. Lower volumes resulted primarily from reduced crush in Argentina due to the drought experienced in the region in the current year. Lower average sales prices and lower volumes in our European softseed processing business, resulted from a reduction of sales prices in the current year relative to the higher price environment in the prior year following the onset of the Ukraine-Russia war as well as lower volumes from the completion of the sale of our Russian Oilseed Processing business during the first quarter of 2023. The above decreases were partially offset by higher average sales prices and higher volumes in our global soybean oilseed processing businesses, and higher volumes in North America, as a result of strong protein and oil demand.
•In Merchandising, Net sales decreased 26%, primarily due to lower average sales prices in our global corn, oil, and wheat businesses, as a result of higher global commodity prices in the prior year following the onset of the
Ukraine-Russia war, which exacerbated an already tight commodity supply environment. Volumes were also down slightly due to decreased demand in our global corn and oils businesses. Net sales were down in our ocean freight business due to lower prices and stabilizing demand. The above decreases were partially offset by higher sales volumes in our global wheat business, as a result of the partial resumption of operations in Ukraine.
Cost of goods sold decreased 13% to $29,359 million for the nine months ended September 30, 2023. The net decrease was primarily due to the following:
•In Processing, Cost of goods sold decreased 7%, primarily due to lower Net sales, favorable mark-to-market results, lack of recurring prior year losses in relation to the Ukraine-Russia war and impairment of the Russian business upon classification as held-for-sale, and an $18 million benefit in the nine months ended September 30, 2023 from the recognition of mark-to-market gains on the recovery of inventories in Ukraine. The decrease is partially offset by increased industrial costs, in particular labor and maintenance, during the current year.
•In Merchandising, Cost of goods sold decreased 27%, primarily due to lower Net sales, more favorable mark-to-market results, lack of recurring losses in relation to the Ukraine-Russia war and a $11 million benefit in the nine months ended September 30, 2023 from the recognition of mark-to-market gains related to the recovery of inventories in Ukraine primarily from our Mykolaiv facility.
SG&A increased 14% to $428 million for the nine months ended September 30, 2023. The increase was primarily driven by increased personnel costs and higher costs as a result of inflationary pressures, partially offset by favorable currency movements, primarily from the weakening Argentine peso.
Foreign exchange (losses) gains - net increased 35% to a loss of $77 million for the nine months ended September 30, 2023. The current year reduction in losses is primarily the result of less losses in our Processing business from a weakening U.S. dollar on U.S. dollar-denominated loans payable in non-U.S. functional currency operations. The impact was partially offset in Merchandising by a current year reduction in our Bunge Financial Services business.
Other income (expense) - net was income of $54 million for the nine months ended September 30, 2023 compared to expense of $71 million for the nine months ended September 30, 2022. The increase was primarily due to gains in Argentina related to foreign currency positioning compared to prior year losses on marketable securities and other short-term investments with exposures to Ukraine, following the onset of the Ukraine-Russia war.
Income (loss) from affiliates was loss of $19 million for the nine months ended September 30, 2023 compared to income of $41 million for the nine months ended September 30, 2022. The decrease was primarily due to results from equity method investments in South American resellers.
Segment EBIT increased 53% to $1,951 million for the nine months ended September 30, 2023. The net increase was primarily due to the following:
•In Processing, an increase of $185 million82% was primarily due to higher Net sales in excess of higher Cost of goods sold,Gross profit primarily driven by more favorable mark-to-market results,improved margins in our Europe softseed business, North America oilseed processing business, and our global soybean oilseed processing businesses, lower foreign exchange losses, and higher Other income (expense) - net, partially offset by higher SG&A as described above.
•In Merchandising, a decrease of $144 million was due to higher Cost of goods sold in excess of higher Net sales, primarily driven by less favorable mark-to-market results, as described above.
Selling, general and administrative ("SG&A") expenses increased $17 million, or 14%, to $135 million for the three months ended September 30, 2022, compared to $118 million for the three months ended September 30, 2021. The increase was primarily driven by increased bad debt expense in the current period.
Other income (expense) - net decreased $175 million, to income of $6 million for the three months ended September 30, 2022, compared to income of $181 million for the three months ended September 30, 2021. The decrease19% was primarily due to a $7 million mark-to-market loss on marketable securities and other short-term investments with exposures to Ukraine, following the onset of the Ukraine-Russia war, a $158 million prior period gain on sale of a portfolio of interior grain elevatorslower Gross profit, driven by lower results in the United States.
Segment EBIT decreased $158 million, or 25%, to $481 million for the three months ended September 30, 2022, compared to $639 million for the three months ended September 30, 2021. The net decrease was primarily due to the following:
•In Processing, an increase of $46 million was primarily due toour ocean freight business, lower foreign exchange gains, higher Gross profit,SG&A, partially offset by higher SG&A, and lower Other income (expense) - net, as described above.
•In Merchandising, a decrease of $204 million was primarily due to lower Gross profit, higher SG&A, and lower Other income (expense) - net, as described above.
Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021
Agribusiness segment Net sales increased by $4,407 million, or 14%, to $35,719 million for the nine months ended September 30, 2022, compared to $31,312 million for the nine months ended September 30, 2021. The net increase was primarily due to the following:
•In Processing, Net sales increased $3,039 million, primarily due to higher average sales prices in our soybean processing businesses in all regions, and in our European softseed processing businesses. These price increases primarily resulted from higher global commodity prices following the onset of the Ukraine-Russia war, which exacerbated an already tight commodity supply environment. Additionally, higher sales volumes in North and South America were driven by strong oil and meal demand. The above increases were partially offset by lower sales volumes in our European softseed processing businesses, due to reduced activity at our Ukrainian facilities as a result of the Ukraine-Russia war.
•In Merchandising, Net sales increased $1,368 million, primarily due to higher average sales prices in our global wheat, corn, and oil businesses, as a result of higher global commodity prices following the onset of the Ukraine-Russia war, which exacerbated an already tight commodity supply environment. Additional sales increases were driven by strong execution and higher prices in our ocean freight business. The above increases were partially offset by lower sales volumes in our global corn, wheat, and oil businesses, as a result of the Ukraine-Russia war, and the completion of the sale of a portfolio of grain elevators in the interior of the United States during the third quarter of 2021.
Cost of goods sold increased by $4,482 million, or 15%, to $33,907 million for the nine months ended September 30, 2022, compared to $29,425 million for the nine months ended September 30, 2021. The net increase was primarily due to the following:
•In Processing, Cost of goods sold increased $3,188 million, primarily due to higher average commodity prices, as noted in Net sales above, increased industrial input costs, in particular energy, due to inflationary pressures, unfavorable mark-to-market results, as well as $52 million in charges for losses sustained in relation to the Ukraine-Russia war, and a $21 million non-recurring impairment charge related to the classification of our Russian business as held-for-sale in the current period.
•In Merchandising, Cost of goods sold increased $1,294 million, primarily due to the higher average commodity prices, as noted in Net sales above, as well as $28 million in charges for losses sustained in relation to the Ukraine-Russia war, partially offset by more favorable mark-to-market results, and lower volumes due to the completion of the sale of a portfolio of grain elevators in the interior of the United States during the third quarter of 2021.
Gross profit decreased by $75 million, or 4%, to $1,812 million for the nine months ended September 30, 2022, compared to $1,887 million for the nine months ended September 30, 2021. The net decrease was primarily due to the following:
•In Processing, a decrease of $149 million was due to higher Cost of goods sold in excess of higher Net sales, primarily driven by higher industrial input costs, in particular energy, due to inflationary pressures, unfavorable mark-to-market results, as well as certain non-recurring charges, as described above.
•In Merchandising, an increase of $74 million was due to higher Net sales in excess of higher Cost of goods sold, primarily driven by strong execution and higher prices in our ocean freight business and more favorable mark-to-market results.
SG&A increased by $62 million, or 20%, to $375 million for the nine months ended September 30, 2022, compared to $313 million for the nine months ended September 30, 2021. The increase was primarily driven by increased variable incentive costs and increased bad debt expense in the current period.
Foreign exchange results decreased $118 million to a loss of $119 million for the nine months ended September 30, 2022, compared to a loss of $1 million for the nine months ended September 30, 2021. Foreign exchange results were primarily driven by losses on U.S. dollar denominated loans payable in non-U.S. functional currency operations during the second and third quarter, due to a strengthening U.S. dollar.
Other income (expense) - net decreased by $298 million, or 131%, to expense of $71 million for the nine months ended September 30, 2022, compared to income of $227 million for the nine months ended September 30, 2021. The
decrease was primarily due to a $76 million mark-to-market loss on marketable securities and other short-term investments with exposures to Ukraine, following the onset of the Ukraine-Russia war, as well as a $158 million prior year gain on sale of a portfolio of interior grain elevators in the United States.
Segment EBIT decreased by $564 million, or 31%, to $1,274 million for the nine months ended September 30, 2022, compared to $1,838 million for the nine months ended September 30, 2021. The net decrease was primarily due to the following:
•In Processing, a decrease of $457 million was primarily due to lower Gross profit, higher SG&A, lower Foreign exchange results, and lower Other income (expense) - net, as described above.
•In Merchandising, a decrease of $107 million was primarily due to higher SG&A, lower Foreign exchange results, and lower Other income (expense) - net, which more than offset higher Gross profit, as described above.
Refined and Specialty Oils Segment
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions, except volumes) | (US$ in millions, except volumes) | 2022 | | 2021 | | 2022 | | 2021 | (US$ in millions, except volumes) | 2023 | | 2022 | | % Change | | 2023 | | 2022 | | % Change |
Volumes (in thousand metric tons) | Volumes (in thousand metric tons) | 2,316 | | | 2,383 | | | 6,941 | | | 6,802 | | Volumes (in thousand metric tons) | 2,278 | | | 2,316 | | | (2) | % | | 6,636 | | | 6,941 | | | (4) | % |
Net sales | Net sales | $ | 4,302 | | | $ | 3,648 | | | $ | 12,723 | | | $ | 9,572 | | Net sales | $ | 3,601 | | | $ | 4,302 | | | (16) | % | | $ | 11,090 | | | $ | 12,723 | | | (13) | % |
Cost of goods sold | Cost of goods sold | (4,070) | | | (3,430) | | | (11,904) | | | (8,924) | | Cost of goods sold | (3,249) | | | (4,070) | | | (20) | % | | (10,063) | | | (11,904) | | | (15) | % |
Gross profit | Gross profit | 232 | | | 218 | | | 819 | | | 648 | | Gross profit | 352 | | | 232 | | | 52 | % | | 1,027 | | | 819 | | | 25 | % |
Selling, general and administrative expense | Selling, general and administrative expense | (86) | | | (83) | | | (262) | | | (259) | | Selling, general and administrative expense | (98) | | | (86) | | | 14 | % | | (291) | | | (262) | | | 11 | % |
Foreign exchange gains (losses) | (6) | | | (1) | | | (14) | | | 1 | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | (2) | | | (6) | | | 67 | % | | 8 | | | (14) | | | 157 | % |
EBIT attributable to noncontrolling interests | EBIT attributable to noncontrolling interests | (3) | | | (2) | | | (7) | | | (85) | | EBIT attributable to noncontrolling interests | (6) | | | (3) | | | (100) | % | | (17) | | | (7) | | | (143) | % |
Other income (expense) – net | Other income (expense) – net | (9) | | | (2) | | | (17) | | | 236 | | Other income (expense) – net | (19) | | | (9) | | | (111) | % | | (50) | | | (17) | | | (194) | % |
Income (loss) from affiliates | Income (loss) from affiliates | — | | | — | | | — | | | — | | Income (loss) from affiliates | — | | | — | | | — | % | | — | | | — | | | — | % |
Total Refined and Specialty Oils Segment EBIT | Total Refined and Specialty Oils Segment EBIT | $ | 128 | | | $ | 130 | | | $ | 519 | | | $ | 541 | | Total Refined and Specialty Oils Segment EBIT | $ | 227 | | | $ | 128 | | | 77 | % | | $ | 677 | | | $ | 519 | | | 30 | % |
Three Months Ended September 30, 20222023 Compared to Three Months Ended September 30, 20212022
Refined and Specialty Oils segment Net sales increased $654 million, or 18%decreased 16%, to $4,302$3,601 million for the three months ended September 30, 2023. The decrease was primarily due to lower sales prices in all regions, driven by prices stabilizing and increased supply, including increased capacity in North America. Sales volumes were also lower in most regions, driven by the 2022 comparedpartial expiration of leased capacity at the Rotterdam facility as well as the sale of our Russian operations in the first quarter of 2023.
Cost of goods sold decreased 20%, to $3,648$3,249 million for the three months ended September 30, 2021.2023. The increasedecrease was primarily due to higher average sales prices in all regions, driven by strong food services demand as well as strong oil demand for use as renewable feedstock.
Cost of goods sold increased $640 million, or 19%, to $4,070 million for the three months ended September 30, 2022, compared to $3,430 million for the three months ended September 30, 2021. The increase was primarily due to higher average commoditylower prices in all regions, as described for Net sales above, a non-recurringas well as effective management of supply chains, more favorable mark-to-market results, and an impairment charge of $55 million in the prior period related to the classification of our Russian oilseed and processing business as held-for-sale.
Segment EBIT increased 77% to $227 million for the three months ended September 30, 2023. The increase was due to higher Gross profit as described above.
Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022
Refined and Specialty Oils segment Net sales decreased 13% to $11,090 million for the nine months ended September 30, 2023, primarily due to lower average sales prices in most regions, driven by prices stabilizing and increased supply. Sales volumes were also lower in most regions, driven by the 2022 partial expiration of leased capacity at the Rotterdam facility as well as the sale of our Russian operations in the first quarter of 2023.
Cost of goods sold decreased 15% to $10,063 million for the nine months ended September 30, 2023. The decrease in Cost of goods sold was primarily due to lower average commodity prices and volumes in most regions, as described for Net sales above, favorable mark-to-market results, an impairment charge of $55 million in the prior period related to the classification of our Russian oilseed and processing business as held-for-sale, in the current period, accelerated depreciation in relation to our Wormerveer facility located in the Netherlands, which we announced during the fourth quarteras well as effective management of 2021 would be closing in 2025, and increased industrial input costs, in particular energy, during the current year.
Gross profit for the three months ended September 30, 2022, increased $14 million, or 6%, to $232 million, compared to $218 million for the three months ended September 30, 2021. The increase was due to increased Net sales in excess of increased Cost of goods sold, primarily driven by strong food services demand and strong oil demand for use as renewable feedstock, partially offset by the non-recurring impairment charge, accelerated depreciation, and higher industrial input costs, described above.supply chains.
Segment EBIT decreased $2 million, or 2%,increased 30% to $128 million for the three months ended September 30, 2022, compared to $130 million for the three months ended September 30, 2021. The decrease was primarily due to higher SG&A expenses and lower Foreign exchange results, partially offset by higher gross profit, as described above.
Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021
Refined and Specialty Oils segment Net sales increased $3,151 million, or 33%, to $12,723$677 million for the nine months ended September 30, 2022, compared to $9,572 million for the nine months ended September 30, 2021, primarily due to higher average sales prices in all regions, driven by strong oil demand for use as renewable feedstock as well as strong food services demand.
Cost of goods sold increased by $2,980 million, or 33%, to $11,904 million for the nine months ended September 30, 2022, compared to $8,924 million for the nine months ended September 30, 2021. The increase in Cost of goods sold was primarily due to higher average commodity prices in all regions, as described for Net sales above, a non-recurring impairment charge of $55 million related to the classification of our Russian oilseed and processing business as held-for-sale in the current period, unfavorable mark-to-market results, accelerated depreciation in relation to our Wormerveer facility located in the Netherlands, which we announced during the fourth quarter of 2021 would be closing in 2025, and increased industrial input costs, in particular energy, during the current year.
Gross profit increased by $171 million, or 26%, to $819 million for the nine months ended September 30, 2022, compared to $648 million for the nine months ended September 30, 2021.2023. The increase was due to increased Net sales in excess of increased Cost of goods sold, primarily driven by strong oil demand for use as renewable feedstock, and in food services, as described above.
EBIT attributable to noncontrolling interests, an expense when subsidiaries with noncontrolling interests generate earnings before interest and tax, versus income when subsidiaries with noncontrolling interests generate loss before interest and tax, decreased by $78 million, to an expense of $7 million in the nine months ended September 30, 2022, compared to an expense of $85 million in the nine months ended September 30, 2021. The decrease was primarily due to the large noncontrolling interest share of a gain on the sale of our Rotterdam oils refinery in the prior year.
Other income (expense), net decreased $253 million to expense of $17 million for the nine months ended September 30, 2022, compared to income of $236 million for the nine months ended September 30, 2021. The prior year income primarily related to a $219 million gain on the sale of our Rotterdam oils refinery located in the Netherlands, as well as a $19 million gain on the sale of a Mexican oils packaging facility.
Segment EBIT decreased by $22 million, or 4%, to $519 million for the nine months ended September 30, 2022, compared to $541 million for the nine months ended September 30, 2021. The decrease was due to non-recurring prior year gains on sales of our oils facilities in the Netherlands and Mexico, as noted in Other income (expense) - net above, partially offset by higher Gross profit and lower EBIT attributable to noncontrolling interests, as described above.
Milling Segment
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions, except volumes) | (US$ in millions, except volumes) | 2022 | 2021 | | 2022 | 2021 | (US$ in millions, except volumes) | 2023 | | 2022 | | % Change | | 2023 | | 2022 | | % Change |
Volumes (in thousand metric tons) | Volumes (in thousand metric tons) | 1,234 | | 1,190 | | | 3,537 | | 3,351 | | Volumes (in thousand metric tons) | 890 | | | 1,234 | | | (28) | % | | 2,555 | | | 3,537 | | | (28) | % |
Net sales | Net sales | $ | 631 | | $ | 530 | | | $ | 1,911 | | $ | 1,392 | | Net sales | $ | 479 | | | $ | 631 | | | (24) | % | | $ | 1,484 | | | $ | 1,911 | | | (22) | % |
Cost of goods sold | Cost of goods sold | (586) | | (460) | | | (1,669) | | (1,231) | | Cost of goods sold | (429) | | | (586) | | | (27) | % | | (1,363) | | | (1,669) | | | (18) | % |
Gross profit | Gross profit | 45 | | 70 | | | 242 | | 161 | | Gross profit | 50 | | | 45 | | | 11 | % | | 121 | | | 242 | | | (50) | % |
Selling, general and administrative expense | Selling, general and administrative expense | (26) | | (25) | | | (78) | | (73) | | Selling, general and administrative expense | (25) | | | (26) | | | (4) | % | | (70) | | | (78) | | | (10) | % |
Foreign exchange gains (losses) | — | | (2) | | | 2 | | (2) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | — | | | — | | | — | % | | (1) | | | 2 | | | (150) | % |
EBIT attributable to noncontrolling interests | EBIT attributable to noncontrolling interests | (1) | | — | | | (1) | | (1) | | EBIT attributable to noncontrolling interests | — | | | (1) | | | 100 | % | | 1 | | | (1) | | | (200) | % |
Other income (expense) – net | Other income (expense) – net | 1 | | — | | | 2 | | — | | Other income (expense) – net | (2) | | | 1 | | | (300) | % | | (5) | | | 2 | | | (350) | % |
Income (loss) from affiliates | Income (loss) from affiliates | — | | — | | | (1) | | — | | Income (loss) from affiliates | — | | | — | | | — | % | | — | | | (1) | | | 100 | % |
Total Milling Segment EBIT | Total Milling Segment EBIT | $ | 19 | | $ | 43 | | | $ | 166 | | $ | 85 | | Total Milling Segment EBIT | $ | 23 | | | $ | 19 | | | 21 | % | | $ | 46 | | | $ | 166 | | | (72) | % |
Three Months Ended September 30, 20222023 Compared to Three Months Ended September 30, 2021
2022
Milling segment Net sales increased $101 million, or 19%decreased 24%, to $631$479 million for the three months ended September 30, 2022, compared2023. The decrease was primarily due to $530lower volumes in our North American wheat milling business, driven by the completion of the sale of our Mexican wheat milling business in the third quarter of 2022. Net sales in the South America wheat milling business were relatively flat as lower volumes were largely offset by higher prices.
Cost of goods sold decreased 27%, to $429 million for the three months ended September 30, 2021.2023. The increasedecrease was primarily due to higherlower volumes, as described for Net sales volumes and prices inabove, due to the sale of our South AmericanMexican wheat milling business and in our North American corn milling business,the third quarter of 2022 as well as in South America a reduction due to an increase in global commodity prices following the onset of the Ukraine-Russia war, which exacerbated an already tight commodity supply environment.lower raw material costs, partially offset by unfavorable mark-to-market results.
Cost of goods soldSegment EBIT increased $126 million, or 27%21%, to $586$23 million for the three months ended September 30, 2022, compared to $460 million for the three months ended September 30, 2021.2023. The increase was primarily due to increased average commodity prices, as described for Net sales above, as well as increased industrial input costs, in particular energy, and less favorable mark-to-market results.
Gross profit decreased $25 million, or 36%, to $45 million for the three months ended September 30, 2022, compared to $70 million for the three months ended September 30, 2021. The decrease was primarily due to higher raw material cost increases and less favorable mark-to-market results, which more than offset higher sales volumes and prices in our South American wheat milling and North American corn milling businesses, as described above.
Segment EBIT decreased $24 million, or 56%, to $19 million for the three months ended September 30, 2022, compared to $43 million for the three months ended September 30, 2021. The decrease was primarily due to lower grossGross profit as described above.
Nine Months Ended September 30, 20222023 Compared to Nine Months Ended September 30, 20212022
Milling segment Net sales increased by $519 million, or 37%,decreased 22% to $1,911$1,484 million for the nine months ended September 30, 2022, compared2023. The decrease was primarily due to $1,392lower volumes in our North American wheat milling business, driven by the completion of the sale of our Mexican wheat milling business in the third quarter of 2022. Net sales in the South America wheat milling business were relatively flat as higher prices were largely offset by lower volumes.
Cost of goods sold decreased 18% to $1,363 million for the nine months ended September 30, 2021.2023. The increasedecrease was primarily due to higherlower volumes, as described for Net sales volumes and prices inabove, due to the sale of our South AmericanMexican wheat milling and North American corn milling businesses, due to an increasebusiness in global commodity prices following the onsetthird quarter of the Ukraine-Russia war, which exacerbated an already tight commodity supply environment,2022, partially offset by lower volumesunfavorable mark-to-market results compared to a strong prior year in our North American wheat milling business.South America during a period of high market volatility.
Cost of goods sold increased by $438 million, or 36%,Segment EBIT decreased 72% to $1,669$46 million for the nine months ended September 30, 2022, compared to $1,231 million for the nine months ended September 30, 2021.2023. The increasedecrease was primarily due to increased average commodity prices,lower Gross profit resulting from unfavorable mark-to-market in South America, as described for Net sales above, as well as increased industrial input costs, in particular energy, and unfavorable mark-to-market results.
Gross profit increased by $81 million, or 50%, to $242 million for the nine months ended September 30, 2022, compared to $161 million for the nine months ended September 30, 2021. The increase was primarily due to higher salesabove.
volumes and prices, in excess of related raw material cost increases, especially in our South American wheat milling business, as described above.
SG&A expenses increased by $5 million, or 7%, to $78 million for the nine months ended September 30, 2022, compared to $73 million for the nine months ended September 30, 2021. The increase was due to higher variable incentive costs, as well as higher costs in South America as a result of appreciation in the Brazilian real versus the U.S. dollar during the first half of the year.
Segment EBIT increased by $81 million, or 95%, to $166 million for the nine months ended September 30, 2022, compared to $85 million for the nine months ended September 30, 2021. The increase was primarily due to higher gross profit, as described above.
Corporate and Other
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions, except volumes) | 2022 | | 2021 | | 2022 | | 2021 | |
(US$ in millions) | | (US$ in millions) | 2023 | | 2022 | | % Change | | 2023 | | 2022 | | % Change |
| Net sales | Net sales | $ | 11 | | | $ | 2 | | | $ | 24 | | | $ | 3 | | Net sales | $ | 9 | | | $ | 11 | | | (18) | % | | $ | 29 | | | $ | 24 | | | 21 | % |
Cost of goods sold | Cost of goods sold | (34) | | | (21) | | | (39) | | | (28) | | Cost of goods sold | (13) | | | (34) | | | (62) | % | | (40) | | | (39) | | | 3 | % |
Gross profit | Gross profit | (23) | | | (19) | | | (15) | | | (25) | | Gross profit | (4) | | | (23) | | | (83) | % | | (11) | | | (15) | | | (27) | % |
Selling, general and administrative expense | Selling, general and administrative expense | (90) | | | (101) | | | (263) | | | (250) | | Selling, general and administrative expense | (178) | | | (90) | | | 98 | % | | (430) | | | (263) | | | 63 | % |
Foreign exchange gains (losses) | (11) | | | (3) | | | (19) | | | (9) | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | 6 | | | (11) | | | 155 | % | | 5 | | | (19) | | | 126 | % |
EBIT attributable to noncontrolling interests | EBIT attributable to noncontrolling interests | — | | | 2 | | | (11) | | | 2 | | EBIT attributable to noncontrolling interests | 1 | | | — | | | 100 | % | | 2 | | | (11) | | | 118 | % |
Other income (expense) – net | Other income (expense) – net | 40 | | | 41 | | | 71 | | | 55 | | Other income (expense) – net | (7) | | | 40 | | | (118) | % | | 34 | | | 71 | | | (52) | % |
Income (loss) from affiliates | Income (loss) from affiliates | — | | | (1) | | | (1) | | | — | | Income (loss) from affiliates | — | | | — | | | — | % | | (17) | | | (1) | | | (1600) | % |
Total Corporate and Other EBIT | Total Corporate and Other EBIT | $ | (84) | | | $ | (81) | | | $ | (238) | | | $ | (227) | | Total Corporate and Other EBIT | $ | (182) | | | $ | (84) | | | (117) | % | | $ | (417) | | | $ | (238) | | | (75) | % |
Three Months Ended September 30, 20222023 Compared to Three Months Ended September 30, 20212022
Corporate and Other EBIT decreased by $3 million, or 4%117%, to a loss of $84$182 million for the three months ended September 30, 2022, compared to a loss of $81 million for the three months ended September 30, 2021.2023. The decrease was primarily driven by lower overall unrealized mark-to-market gains comparedincreased SG&A expense, including $48 million related to acquisition and integration costs associated with the announced acquisition agreement with Viterra as well as increased expenses associated with other growth and productivity-related initiatives. Also contributing to the decrease was a $20 million impairment charge on a long-term investment partially offset by an impairment charge in the prior year in two of Bunge Ventures' (our venture capital unit) investments, and a non-recurring impairment charge of $11 million related to the classification of our Russian business as held-for-sale, partially offset by lower variable incentive costs.
held-for-sale.
Nine Months Ended September 30, 20222023 Compared to Nine Months Ended September 30, 20212022
Segment EBIT decreased by $11 million, or 5%,75% to a loss of $238$417 million for the nine months ended September 30, 2022, compared to a loss of $227 million for the nine months ended September 30, 2021.2023. The decrease was primarily driven by increased SG&A expense, including $66 million related to acquisition and integration costs associated with the announced acquisition agreement with Viterra as well as increased expenses associated with other growth and productivity-related initiatives a non-recurringand higher personnel costs. Also contributing to the decrease were impairment chargecharges of $11$20 million, in Other income (expense) - net, related to the classification of our Russian business as held-for-sale,a long-term investment, and net unrealized mark-to-market losses$16 million, in Income (loss) from affiliates, related to onea minority investment in Australian Plant Proteins, a start-up manufacturer of our venture capital unit's investments. The decrease was partially offset bynovel protein ingredients. In addition, results in the prior year included a gain of $29 million, gain, at Bunge's 70%then-70% share, at the time, related to the settlement of one of the Company's international defined benefit pension plansplans. The decreases described above were partially offset by an impairment charge in the first quarterprior year of 2022.$11 million related to the classification of our Russian business as held-for-sale.
Non-core Segment
Sugar and Bioenergy Segment
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions, except volumes) | 2022 | | 2021 | | 2022 | | 2021 | |
(US$ in millions) | | (US$ in millions) | 2023 | | 2022 | | % Change | | 2023 | | 2022 | | % Change |
| Net sales | Net sales | $ | 74 | | | $ | 69 | | | $ | 195 | | | $ | 190 | | Net sales | $ | 56 | | | $ | 74 | | | (24) | % | | $ | 192 | | | $ | 195 | | | (2) | % |
Cost of goods sold | Cost of goods sold | (72) | | | (67) | | | (189) | | | (187) | | Cost of goods sold | (54) | | | (72) | | | (25) | % | | (188) | | | (189) | | | (1) | % |
Gross profit | Gross profit | 2 | | | 2 | | | 6 | | | 3 | | Gross profit | 2 | | | 2 | | | — | % | | 4 | | | 6 | | | (33) | % |
Selling, general and administrative expense | Selling, general and administrative expense | — | | | — | | | (1) | | | (1) | | Selling, general and administrative expense | (1) | | | — | | | (100) | % | | (1) | | | (1) | | | — | % |
Foreign exchange gains (losses) | — | | | — | | | — | | | — | | |
Foreign exchange (losses) gains | | Foreign exchange (losses) gains | 1 | | | — | | | 100 | % | | 1 | | | — | | | 100 | % |
EBIT attributable to noncontrolling interests | EBIT attributable to noncontrolling interests | — | | | — | | | — | | | — | | EBIT attributable to noncontrolling interests | — | | | — | | | — | % | | — | | | — | | | — | % |
Other income (expense) – net | Other income (expense) – net | 2 | | | — | | | 2 | | | 1 | | Other income (expense) – net | — | | | 2 | | | (100) | % | | 2 | | | 2 | | | — | % |
Income (loss) from affiliates | Income (loss) from affiliates | 20 | | | 51 | | | 56 | | | 89 | | Income (loss) from affiliates | 53 | | | 20 | | | 165 | % | | 119 | | | 56 | | | 113 | % |
Total Sugar and Bioenergy Segment EBIT | Total Sugar and Bioenergy Segment EBIT | $ | 24 | | | $ | 53 | | | $ | 63 | | | $ | 92 | | Total Sugar and Bioenergy Segment EBIT | $ | 55 | | | $ | 24 | | | 129 | % | | $ | 125 | | | $ | 63 | | | 98 | % |
Three Months Ended September 30, 20222023 Compared to Three Months Ended September 30, 20212022
Segment EBIT decreased $29 million, or 55%increased 129%, to $24$55 million for the three months ended September 30, 2022, compared to $53 million for the three months ended September 30, 2021.2023. The decreaseincrease was due to lessmore favorable results from our investment in BP Bunge Bioenergia, primarily resulting from the non-recurrence of prior period foreign exchange losses on U.S. dollar denominated debt of the joint venture due to depreciation in the Brazilian real during the current quarter, as well as higher sugar sales prices and volumes, partially offset by lower ethanol sales volumes.prices.
Nine Months Ended September 30, 20222023 Compared to Nine Months Ended September 30, 20212022
Segment EBIT decreased by $29 million, or 32%,increased 98% to $63$125 million for the nine months ended September 30, 2022, compared to $92 million for the nine months ended September 30, 2021.2023. The decreaseincrease was due to lessmore favorable results from our investment in BP Bunge Bioenergia, primarily resulting from the release of a tax valuation allowance in the current period as well as higher sugar sales prices and lower foreign exchange losses andon U.S. dollar denominated debt of the joint venture, partially offset by lower ethanol sales volumes.prices. The release of the tax valuation allowance is related to our investment in BP Bunge Bioenergia. Therefore, the tax valuation release is recorded within Income (loss) from affiliates and included in EBIT.
Interest - A summary of consolidated interest income and expense follows:
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(US$ in millions) | (US$ in millions) | 2022 | | 2021 | | 2022 | | 2021 | (US$ in millions) | 2023 | | 2022 | | % Change | | 2023 | | 2022 | | % Change |
Interest income | Interest income | $ | 30 | | | $ | 19 | | | $ | 50 | | | $ | 34 | | Interest income | $ | 38 | | | $ | 30 | | | 27 | % | | $ | 121 | | | $ | 50 | | | 142 | % |
Interest expense | Interest expense | (103) | | | (57) | | | (306) | | | (184) | | Interest expense | (133) | | | (103) | | | 29 | % | | (374) | | | (306) | | | 22 | % |
Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022
Interest income was $30increased 27%, to $38 million for the three months ended September 30, 2022, compared2023. Interest expense increased by 29%, to $19$133 million for the three months ended September 30, 2021. Interest expense increased by $46 million, to $103 million for the three months ended September 30, 2022, compared to $57 million for the three months ended September 30, 2021.2023. The increase in net interest expense was due to higher variable interest rates on debt as well as $1 million in financing related fees associated with the announced acquisition agreement with Viterra in the current period.period, partially offset by higher interest income as a result of significantly higher investments in cash equivalents in the current year.
Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022
Interest income was $50increased 142% to $121 million for the nine months ended September 30, 2022, compared2023. Interest expense increased 22% to $34$374 million for the nine months ended September 30, 2021. Interest expense increased by $122 million, to $306 million for2023. Higher interest income is the nine months ended September 30, 2022, compared to $184 million forresult of significantly higher investments in cash equivalents in the nine months ended September 30, 2021. The increase in netcurrent year. Higher interest expense was due tois the result of higher variable interest rates on debt, as well as, $12 million in financing related fees associated with the announced acquisition agreement with Viterra in the current period. Partially offsetting the current period as well asincrease in interest expense is a prior year charge of $47 million charge in connection withresulting from the early redemption of all our issued and outstanding 4.35% Senior Notes during the current period. The $47 million charge comprised a $31 million "make-whole" provision based on the sumdue March 2024.
Contents
Liquidity and Capital Resources
Our main financial objectives are to prudently manage financial risks, ensure consistent access to liquidity and minimize cost of capital in order to efficiently finance our business and maintain balance sheet strength. We generally finance our ongoing operations with cash flows generated from operations, issuances of commercial paper, borrowings under various bilateral and syndicated revolving credit facilities, term loans, and proceeds from the issuance of senior notes. Acquisitions and long-lived assets are generally financed with a combination of equity and long-term debt.
Working Capital
| | | As of | | As of |
US$ in millions, except current ratio | US$ in millions, except current ratio | September 30, 2022 | | September 30, 2021 | | December 31, 2021 | US$ in millions, except current ratio | September 30, 2023 | | September 30, 2022 | | December 31, 2022 |
Cash and cash equivalents | Cash and cash equivalents | $ | 956 | | | $ | 1,033 | | | $ | 902 | | Cash and cash equivalents | $ | 2,173 | | | $ | 956 | | | $ | 1,104 | |
Trade accounts receivable, net | Trade accounts receivable, net | 2,336 | | | 2,431 | | | 2,112 | | Trade accounts receivable, net | 2,509 | | | 2,336 | | | 2,829 | |
Inventories | Inventories | 8,112 | | | 8,014 | | | 8,431 | | Inventories | 7,548 | | | 8,112 | | | 8,408 | |
Other current assets(1) | Other current assets(1) | 5,791 | | | 5,056 | | | 5,015 | | Other current assets(1) | 4,394 | | | 5,791 | | | 4,417 | |
Total current assets | Total current assets | $ | 17,195 | | | $ | 16,534 | | | $ | 16,460 | | Total current assets | $ | 16,624 | | | $ | 17,195 | | | $ | 16,758 | |
Short-term debt | Short-term debt | $ | 1,327 | | | $ | 1,151 | | | $ | 673 | | Short-term debt | $ | 914 | | | $ | 1,327 | | | $ | 546 | |
Current portion of long-term debt | Current portion of long-term debt | 773 | | | 510 | | | 504 | | Current portion of long-term debt | 301 | | | 773 | | | 846 | |
Trade accounts payable | Trade accounts payable | 4,455 | | | 3,944 | | | 4,250 | | Trade accounts payable | 3,975 | | | 4,455 | | | 4,386 | |
Current operating lease obligations | Current operating lease obligations | 436 | | | 332 | | | 350 | | Current operating lease obligations | 317 | | | 436 | | | 425 | |
Other current liabilities(2) | Other current liabilities(2) | 3,576 | | | 3,822 | | | 3,547 | | Other current liabilities(2) | 2,738 | | | 3,576 | | | 3,397 | |
Total current liabilities | Total current liabilities | $ | 10,567 | | | $ | 9,759 | | | $ | 9,324 | | Total current liabilities | $ | 8,245 | | | $ | 10,567 | | | $ | 9,600 | |
Working capital(3) | Working capital(3) | $ | 6,628 | | | $ | 6,775 | | | $ | 7,136 | | Working capital(3) | $ | 8,379 | | | $ | 6,628 | | | $ | 7,158 | |
Current ratio(4) | Current ratio(4) | 1.63 | | | 1.69 | | | 1.77 | | Current ratio(4) | 2.02 | | | 1.63 | | | 1.75 | |
(1) Comprises Assets held for sale and Other current assets.
(2) Comprises Liabilities held for sale and Other current liabilities.
(3) Working capital is Total current assets less Total current liabilities.
(4) Current ratio represents Total current assets divided by Total current liabilities.
Working capital was $8,379 million at September 30, 2023, an increase of $1,221 million from working capital of $7,158 million at December 31, 2022, and an increase of $1,751 million from working capital of $6,628 million at September 30, 2022, a decrease of $508 million from working capital of $7,136 million at December 31, 2021, and a decrease of $147 million from working capital of $6,775 million at September 30, 2021.2022.
Cash and Cash Equivalents - Cash and cash equivalents were $2,173 million at September 30, 2023, an increase of $1,069 million from $1,104 million at December 31, 2022, and an increase of $1,217 million from $956 million at September 30, 2022, an increase of $54 million from $902 million at December 31, 2021, and a decrease of $77 million from $1,033 million at September 30, 2021.2022. Cash balances are managed in accordance with our investment policy, the objectives of which are to preserve the principal value of our cash assets, maintain a high degree of liquidity, and deliver competitive returns subject to prevailing market conditions. Cash balances are typically invested in short-term deposits, money market funds, and commercial paper programs with highly-rated financial institutions and in U.S. government securities. Please refer to the Cash Flows section of this report, below, for details regarding the primary factors giving rise to the change in Cash and cash equivalents during the nine months ended September 30, 2022.2023.
Trade accounts receivable, net - Trade accounts receivable, net were $2,509 million at September 30, 2023, a decrease of $320 million from $2,829 million at December 31, 2022, and an increase of $173 million from $2,336 million at September 30, 2022, an increase of $224 million from $2,112 million at December 31, 2021, and a2022. The decrease of $95 million from $2,431 million at September 30, 2021. The increase from December 31, 2021,2022, was primarily due to increaseddecreased Net sales in the current period driven by factors described in the Segment Overview & Results of Operations above, partially offset by anabove. The increase infrom September 30, 2022, was primarily due to the aggregate size ofchange in the Trade Receivables Securitization Program structure, as noteddescribed in Note 54 - Trade Accounts Receivable and Trade Receivable Securitization Program, that occurred during the first quarter of 2022. The decrease from September 30, 2021, was primarily due to the increase in the aggregate size of the Trade Receivables Securitization Program described aboveto our condensed consolidated financial statements, which results in inclusion of receivables pledged to the administrative agent in Trade accounts receivable.
Inventories - Inventories were $7,548 million at September 30, 2023, a decrease of $860 million from $8,408 million at December 31, 2022, and a decrease of $564 million from $8,112 million at September 30, 2022, a decrease of $319 million from $8,431 million at December 31, 2021, and an increase of $98 million from $8,014 million at September 30, 2021.2022. The decrease from December 31, 2021, is2022 and September 30, 2022, was due to slightly lower average commodity prices as of September 30, 2022, partially offset by higher volumes while the increase fromas of September 30, 2021, relates to higher average commodity prices than for the comparative period.2023.
RMI comprise agricultural commodity inventories, such as soybeans, soybean meal, soybean oil, palm oil, corn, and wheat that are readily convertible to cash because of their commodity characteristics, widely available markets and international
pricing mechanisms. Total RMI reported at fair value was $6,4436,172 million, $6,869$6,680 million, and $6,505$6,443 million at September 30, 2022,2023, December 31, 2021,2022, and September 30, 2021,2022, respectively (see Note 65 - Inventories to our condensed consolidated financial statements).
Other current assets - Other current assets were $4,394 million at September 30, 2023, a decrease of $23 million from $4,417 million at December 31, 2022, and a decrease of $1,397 million from $5,791 million at September 30, 2022, an increase of $776 million from $5,015 million at December 31, 2021, and an increase of $735 million from $5,056 million at September 30, 2021.2022. The increasedecrease from December 31, 2021,2022, was primarily due to significantly higher unrealized gains on derivative contracts, higher margin deposits, higher prepaid expenses as a result of an Argentinian Export Program offered temporarily in September 2022 (see Note 1 - Basis of Presentation, Principles of Consolidation, And Significant Accounting Policies to our condensed consolidated financial statements for details), and an increase in the deferred purchase price receivable due to increased trade accounts receivable transfers under our securitization program. These increases were partially offset by a decrease in marketable securities and other short-term investments, due to a decrease in investments with Ukrainian exposures following the onset of the Ukraine-Russia war, as well as a decrease in assetsAssets held for sale due to the completion of the sale of our Mexico wheat milling business.Russian operations in the first quarter of 2023. The increasedecrease from September 30, 2021,2022, was primarily due to highersignificantly lower unrealized gains on derivative contracts, higher prepaid expensesa decrease in deferred purchase price receivable as a result of the Argentinian Export Program offered temporarily in September 2022, an increase in the deferred purchase price receivable due to increasedrestructuring our trade accounts receivable transfers under ourreceivables securitization program during the fourth quarter of 2022 (see Note 4 - Trade Accounts Receivable and higher assetsTrade Receivables Securitization Program to our condensed consolidated financial statements), a reduction in prepaid expenses, and a decrease in Assets held for sale followingdue to the announcementcompletion of the sale of our Russian business duringoperations in the thirdfirst quarter of 2022. These increases were partially offset by lower marketable securities and other short-term investments due to a decrease in investments with Ukrainian exposures following the onset of the Ukraine-Russia war.2023.
Short-term debt - Short-term debt, including the currentCurrent portion of long-term debt, was $1,215 million at September 30, 2023, a decrease of $177 million from $1,392 million at December 31, 2022, and a decrease of $885 million from $2,100 million at September 30, 2022, an increase of $923 million from $1,177 million at December 31, 2021, and an increase of $439 million from $1,661 million at September 30, 2021.2022. The higher short-termlower Short-term debt levels at September 30, 2022,2023, compared to December 31, 2021,2022 and September 30, 2021, are2022, were due to higher working capital funding requirements, as well as an increase in the current portionrepayment of long-term debt associated with our 1.85% Senior Notes due- Euro in June 2023. and higher working capital funding requirements in the prior year partially offset by higher borrowings by Bunge operating companies on local bank lines of credit.
Trade accounts payable - Trade accounts payable were $3,975 million at September 30, 2023, a decrease of $411 million from $4,386 million at December 31, 2022, and a decrease of $480 million from $4,455 million at September 30, 2022, an increase of $205 million from $4,250 million at December 31, 2021, and an increase of $511 million from $3,944 million at September 30, 2021.2022. The increasesdecrease from December 31, 2021,2022 and September 30, 2021, were2022, was primarily due to higherlower average inventory prices during the current period.
Other current liabilities - Other current liabilities were $2,738 million at September 30, 2023, a decrease of $659 million from $3,397 million at December 31, 2022, and a decrease of $838 million from $3,576 million at September 30, 2022, an increase of $29 million from $3,547 million at December 31, 2021, and a2022. The decrease of $246 million from $3,822 million at September 30, 2021. The increase from December 31, 2021, was primarily due to higher unrealized losses on derivative contracts during the current period, partially offset by a decrease in liabilities held for sale due to the completion of the Mexico wheat milling disposition. The decrease from September 30, 2021,2022, was primarily due to lower unrealized losses on derivative contracts and lower income taxes payableadvances on sales during the current period. The decrease from September 30, 2022, was primarily due to significantly lower pretax income compared to the prior year.unrealized losses on derivative contracts.
Debt
Financing Arrangements and Outstanding Indebtedness - We conductPrior to June 21, 2023, we conducted most of our third party financing activities through a centralized financing structure that providesprovided the Company with efficient access to debt and capital markets. This structure includesincluded a master trust (the “Bunge Master Trust”), the primary assets of which comprisecomprised intercompany loans made to Bunge Limited and its subsidiaries. Certain of Bunge Limited’s 100% owned finance subsidiaries, including Bunge Limited Finance Corp., Bunge Finance Europe B.V., and Bunge Asset Funding Corp., fundfunded the master trustBunge Master Trust with short and long-term debt obtained from third parties, including through our commercial paper program and certain credit facilities, as well as the issuance of senior notes. Borrowings by these finance subsidiaries carry full, unconditional guarantees by Bunge Limited.
On June 21, 2023, Bunge and its finance subsidiaries terminated the Bunge Master Trust in accordance with a termination and lien release agreement in order to simplify the legal framework around its capital structure (see Note 13 - Debt). In connection with the termination of the Bunge Master Trust, Bunge amended its existing credit agreements and related guarantees to remove all references and provisions related to the Bunge Master Trust. The amendments also provide, or additional amendments are expected to be entered into that will provide, that Bunge’s obligations as the existing guarantor will be automatically assigned to Bunge Global SA, the new Swiss holding company (“Bunge Global”), as successor guarantor, effective at the completion of the previously announced redomestication from Bermuda to Switzerland, which was approved by Bunge’s shareholders at the Extraordinary General Meeting held on October 5, 2023.
Revolving Credit Facilities - At September 30, 2022,2023, we had $6,700$5,665 million unused and available committed borrowing capacity, comprisingcomprised of committed revolving credit facilities and a commercial paper program, totaling $5,665 million, as well as committed unsecured $1,250 million delayed draw term loans.facilities. The following table summarizes these facilities as of the periods presented:
| (US$ in millions) | (US$ in millions) | | | | Total Committed Capacity | | Borrowings Outstanding | (US$ in millions) | | | | Total Committed Capacity (2) | | Borrowings Outstanding |
Commercial Paper Program and Revolving Credit Facilities(1) | | Maturities | | September 30, 2022 | | September 30, 2022 | | December 31, 2021 | |
Commercial paper | | 2026 | | $ | 600 | | | $ | 215 | | | $ | — | | |
Revolving Credit Facilities(1) | | Revolving Credit Facilities(1) | | Maturities | | September 30, 2023 | | September 30, 2023 | | December 31, 2022 |
Revolving credit facilities | Revolving credit facilities | | Revolving credit facilities | | | | | | | | |
$1.1 Billion 364-day Revolving Credit Agreement(2) | | 2023 | | 1,100 | | | — | | | — | | |
$1.1 Billion 364-day Revolving Credit Agreement | | $1.1 Billion 364-day Revolving Credit Agreement | | 2024 | | $ | 1,100 | | | $ | — | | | $ | — | |
$1.75 Billion 2024 Revolving Credit Facility | $1.75 Billion 2024 Revolving Credit Facility | | 2024 | | 1,750 | | | — | | | — | | $1.75 Billion 2024 Revolving Credit Facility | | 2026(3) | | 1,750 | | | — | | | — | |
$1.35 Billion 5-year Revolving Credit Agreement | | 2026 | | 1,350 | | | — | | | — | | |
$1.95 Billion 5-year Revolving Credit Agreement | | $1.95 Billion 5-year Revolving Credit Agreement | | 2026 | | 1,950 | | | — | | | — | |
$865 Million 2026 Revolving Credit Facility | $865 Million 2026 Revolving Credit Facility | | 2026 | | 865 | | | — | | | — | | $865 Million 2026 Revolving Credit Facility | | 2026 | | 865 | | | — | | | — | |
Total revolving credit facilities | Total revolving credit facilities | | $ | 5,065 | | | $ | — | | | $ | — | | Total revolving credit facilities | | $ | 5,665 | | | $ | — | | | $ | — | |
Total(3) | | | | $ | 5,665 | | | $ | 215 | | | $ | — | | |
|
(1)See Note 14-13 - Debt for further information on these programs.
(2)The short-term credit ratings of the new $1 Billion Commercial Paper Program (see Note 13 - Debt for further details on program) require Bunge to keep same day unused committed borrowing capacity under its long-term committed credit facilities in an amount greater or equal to the amount of commercial paper issued and outstanding.
(3)On July 15, 2022, weOctober 6, 2023, Bunge entered into an unsecured $1.1$1.75 billion 364-dayrevolving credit facility ("$1.75 Billion Revolving Credit Agreement (the "$1.1 Billion Credit Agreement"Facility"), with a group of lenders, maturing on July 14, 2023 (seeOctober 6, 2026. The $1.75 Billion Revolving Credit Facility replaced the existing $1.75 billion facility, dated December 16, 2021, as amended on April 26, 2022, and as further amended and restated on June 21, 2023. See Note 14-13 - Debt). The $1.1 Billion Credit Agreement replaces the Company's previous $1 Billion 364-day Revolving Credit Agreement. for further details on program.
(3)Total committed capacity for our commercial paper program revolving credit facilities excludes the committed capacity of a $250 million delayed draw term loan entered into on October 29, 2021, and which is required to be drawn by October 27, 2022. This delayed draw term loan was drawn on October 21, 2022. Total committed capacity also excludes the committed capacity of an additional $250 million delayed draw term loan entered into on August 5, 2022, and which is required to be drawn by February 2, 2023. Finally, total committed capacity excludes a $750 million delayed draw term loan entered into on July 26, 2022, which gives us the option to draw under the loan by January 25, 2023. The delayed draw term loans will bear interest when drawn at SOFR plus a credit spread adjustment and applicable margin (see Note 14- Debt).
Short and long-term debt - Our short and long-term debt decreasedincreased by $867$531 million to $5,097$5,182 million at September 30, 2022,2023, from $5,964$4,651 million at December 31, 2021,2022, primarily due to lower working capital funding requirements, mostly comprising RMI.the draws on our $250 Million February 2023 Delayed Draw Term Loan and $750 Million Delayed Draw Term Loan offset by the repayment of the 1.85% Senior Notes - Euro in June 2023. For the nine months ended September 30, 2022,2023, our average short and long-term debt outstanding was approximately $6,240$5,323 million, compared to approximately $7,455$6,240 million for the nine months ended September 30, 2021.2022. Our long-termLong-term debt balance, including the currentCurrent portion of long-term debt, was $3,770$4,268 million at September 30, 2022, a decrease2023, an increase of $1,521$163 million, compared to $5,291$4,105 million at December 31, 2021.2022. The decreaseincrease was primarily due to the early redemption duringdraws on our $250 Million February 2023 Delayed Draw Term Loan and $750 Million Delayed Draw Term Loan offset by the current periodrepayment of all of our issued and outstanding 4.35%the 1.85% Senior Notes due 2024, and the redemption during the current period of all of our issued and outstanding 3.00% Senior Notes due 2022.- Euro in June 2023.
The following table summarizes our short-term debt at September 30, 2022.2023.
| (US$ in millions) | (US$ in millions) | | Outstanding Balance at September 30, 2022 | | Weighted Average Interest Rate at September 30, 2022 | | Highest Balance Outstanding During Quarter Ended September 30, 2022 | | Average Balance During Quarter Ended September 30, 2022 | | Weighted Average Interest Rate During Quarter Ended September 30, 2022 | (US$ in millions) | | Outstanding Balance at September 30, 2023 | | Weighted Average Interest Rate at September 30, 2023 | | Highest Balance Outstanding During Quarter Ended September 30, 2023 | | Average Balance During Quarter Ended September 30, 2023 | | Weighted Average Interest Rate During Quarter Ended September 30, 2023 |
Bank borrowings (1) | Bank borrowings (1) | | $ | 1,112 | | | 10.15 | % | | $ | 2,154 | | | $ | 1,477 | | | 12.63 | % | Bank borrowings (1) | | $ | 914 | | | 28.02 | % | | $ | 914 | | | $ | 785 | | | 19.80 | % |
Commercial paper | Commercial paper | | 215 | | | 3.20 | % | | 215 | | | 69 | | | 3.04 | % | Commercial paper | | — | | | — | % | | 80 | | | 20 | | | 5.50 | % |
Total | Total | | $ | 1,327 | | | $ | 2,369 | | | $ | 1,546 | | | Total | | $ | 914 | | | $ | 994 | | | $ | 805 | | |
(1) Includes $334$321 million of local currency bank borrowings in certain Central and Eastern European, South American, and Asia-Pacific countries at a weighted average interest rate of 25.33%68.32% as of September 30, 2022.2023.
From time to time, through our financing subsidiaries, we enter into bilateral short-term credit lines as necessary based on our financing requirements. At September 30, 2022,2023, there were $125 millionno borrowings outstanding under these bilateral short-term credit lines. In addition, Bunge's operating companies had $987$914 million and $673$546 million in short-term borrowings outstanding from local bank lines of credit at September 30, 2022,2023, and December 31, 2021,2022, respectively, to support working capital requirements.
On August 5, 2022, Bunge entered into an unsecured $250 million delayed draw term loan (the "$250 Million February 2023 Delayed Draw Term Loan") with a group of lenders that is required to be drawn by February 2, 2023. The $250 Million February 2023 Delayed Draw Term Loan will bear interest at SOFR plus a SOFR adjustment and applicable margin, as defined in the $250 Million February 2023 Delayed Draw Term Loan agreement. The $250 Million February 2023 Delayed Draw Term Loan was drawn on February 2, 2023 and matures on August 5, 2027.
On July 26, 2022, and later amended on October 7, 2022, Bunge entered into an unsecured $750 million delayed draw term loan (the "$750 Million Delayed Draw Term Loan") with a group of lenders giving Bunge the option to draw the loan
by January 25, 2023. The $750 Million Delayed Draw Term Loan will bear interest at SOFR plus a SOFR adjustment and applicable margin, as defined in the $750 Million Delayed Draw Term Loan agreement. The $750 Million Delayed Draw Term Loan was drawn on January 25, 2023 and matures on October 24, 2025.
As described in Note 2 - Acquisitions and Dispositions, Bunge has secured a total of $8.0 billion in Acquisition Financing in the form of a $7.7 billion financing commitment from a consortium of lenders, arranged by Sumitomo Mitsui Banking Corporation and a $300 million 5-year delayed draw term loan from CoBank and the U.S. farm credit system executed July 7, 2023 that may be drawn upon the closing of the acquisition. The commitment for the $7.7 billion financing commitment is in the form of a three tranche term loan maturing 364-days, 2-years and 3-years from closing of the acquisition. Bunge intends to use a portion of the Acquisition Financing to fund the cash portion of the Transaction Consideration, and the remainder for repayment of certain indebtedness of Viterra which is expected to be repaid at closing and for the ongoing operations of the combined company following closing.
The following table summarizes our short and long-term indebtedness:
| (US$ in millions) | (US$ in millions) | | September 30, 2022 | | December 31, 2021 | (US$ in millions) | | September 30, 2023 | | December 31, 2022 |
Short-term debt: (1) | Short-term debt: (1) | | | | | Short-term debt: (1) | | | | |
Short-term debt(2) | Short-term debt(2) | | $ | 1,327 | | | $ | 673 | | Short-term debt(2) | | $ | 914 | | | $ | 546 | |
Current portion of long-term debt | Current portion of long-term debt | | 773 | | | 504 | | Current portion of long-term debt | | 301 | | | 846 | |
Total short-term debt | Total short-term debt | | 2,100 | | | 1,177 | | Total short-term debt | | 1,215 | | | 1,392 | |
| Long-term debt: | Long-term debt: | | | | | Long-term debt: | | | | |
| Term loan due 2024 - three-month TONAR plus 0.75% (Tranche A)(2) | | 213 | | | 267 | | |
Term loan due 2024 - three-month LIBOR plus 1.30% (Tranche B) | | 90 | | | 89 | | |
3.00% Senior Notes due 2022(4) | | — | | | 399 | | |
1.85% Senior Notes due 2023 - Euro | | 780 | | | 906 | | |
4.35% Senior Notes due 2024(3) | | — | | | 598 | | |
Term loan due 2024 - three-month TONAR plus 0.75% (Tranche A) (3) | | Term loan due 2024 - three-month TONAR plus 0.75% (Tranche A) (3) | | 206 | | | 232 | |
Term loan due 2024 - three-month SOFR plus 1.40% (Tranche B) (3) | | Term loan due 2024 - three-month SOFR plus 1.40% (Tranche B) (3) | | 90 | | | 90 | |
Term loan due 2025 - SOFR plus 0.90% | | Term loan due 2025 - SOFR plus 0.90% | | 750 | | | — | |
Term loan due 2027 - SOFR plus 1.125% | | Term loan due 2027 - SOFR plus 1.125% | | 250 | | | — | |
Term loan due 2028 - SOFR plus 1.325% | | Term loan due 2028 - SOFR plus 1.325% | | 249 | | | 249 | |
1.85% Senior Notes due 2023 - Euro(4) | | 1.85% Senior Notes due 2023 - Euro(4) | | — | | | 853 | |
1.63% Senior Notes due 2025 | 1.63% Senior Notes due 2025 | | 597 | | | 596 | | 1.63% Senior Notes due 2025 | | 598 | | | 597 | |
3.25% Senior Notes due 2026 | 3.25% Senior Notes due 2026 | | 697�� | | | 697 | | 3.25% Senior Notes due 2026 | | 698 | | | 698 | |
3.75% Senior Notes due 2027 | 3.75% Senior Notes due 2027 | | 597 | | | 596 | | 3.75% Senior Notes due 2027 | | 597 | | | 597 | |
2.75% Senior Notes due 2031 | 2.75% Senior Notes due 2031 | | 990 | | | 989 | | 2.75% Senior Notes due 2031 | | 991 | | | 990 | |
Cumulative adjustment to long-term debt from application of hedge accounting | | Cumulative adjustment to long-term debt from application of hedge accounting | | (363) | | | (341) | |
Other | Other | | (194) | | | 154 | | Other | | 202 | | | 140 | |
Subtotal | Subtotal | | 3,770 | | | 5,291 | | Subtotal | | 4,268 | | | 4,105 | |
Less: Current portion of long-term debt | Less: Current portion of long-term debt | | (773) | | | (504) | | Less: Current portion of long-term debt | | (301) | | | (846) | |
Total long-term debt(5) | Total long-term debt(5) | | 2,997 | | | 4,787 | | Total long-term debt(5) | | 3,967 | | | 3,259 | |
Total debt | Total debt | | $ | 5,097 | | | $ | 5,964 | | Total debt | | $ | 5,182 | | | $ | 4,651 | |
(1)Includes secured debt of $29$106 million and $43$56 million at September 30, 2022,2023, and December 31, 2021,2022, respectively.
(2) Effective January 1,Includes $321 million and $207 million of local currency borrowings in certain European, South American, and Asia-Pacific countries at a weighted average interest rate of 68.32% and 32.12% as of September 30, 2023, and December 31, 2022, the three-month Yen LIBOR rate was discontinued and replaced by the Tokyo Overnight Average Rate ("TONAR" or "TONA").respectively.
(3) On February 23, 2022,October 6, 2023, Bunge issued a notice of redemptionprepaid and terminated its 5-year term loan agreement due in 2024. See Note 13 - Debt for further details on the termination.
(4) Upon maturity in June 2023, Bunge repaid the principal and accrued interest due on all of the issued and outstanding 4.35%1.85% Senior Notes due March 15, 2024. The redemption of the 4.35% Senior Notes occurred on March 10, 2022. In connection with the redemption, during the nine- months ended September 30, 2022, Eurothe Company recorded a $47 million charge within Interest expense, of which $31 million related to a "make-whole" provision based on the sum of the present values of the remaining scheduled payments of principal and interest on the 4.35% Senior Notes, plus accrued and unpaid interest as of the March 10, 2022 redemption date, and $16 million related to the recognition of unrealized mark-to-market losses on terminated and de-designated interest rate hedges.
(4) On August 23, 2022, Bunge issued a notice of redemption for all of the issued and outstanding 3.00% Senior Notes due September 25, 2022. The redemption of the 3.00% Senior Notes occurred on September 7, 2022. In connection with the redemption, during the three and nine months ended September 30, 2022, the Company recorded a $405 million payment for redemption of the notes, at par, plus accrued and unpaid interest..
(5) Includes secured debt of $47$19 million and $50$21 million at September 30, 2022,2023, and December 31, 2021,2022, respectively.
Credit Ratings — Bunge’s debt ratings and outlook by major credit rating agencies at September 30, 2022,2023, were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Short-term Debt (1) | | Long-term Debt | | Outlook |
Standard & Poor’s | | A-1A-2 | | BBBBBB+ | | Positive |
Moody’s | | P-1P-2 | | Baa2 | | StableReview for Upgrade |
Fitch | | | | BBB | | StableRating Watch Positive |
(1) Short-term debt rating applies only to $1 Billion Commercial Paper Program with Bunge Asset FundingLimited Finance Corp., as the issuer under our commercial paper program.issuer.
Following the announcement of the Viterra acquisition, all three rating agencies reviewed our credit ratings and published updated credit opinions on us, reflecting their views of the credit profile of the company both on a current standalone basis, and a pro-forma at closing basis. Based on its review, Standard and Poor's upgraded our credit rating to BBB+ and further placed us on positive outlook for an upgrade to A-. Moody’s kept our credit rating unchanged at Baa2 and placed us on a review for upgrade to Baa1. Fitch kept our credit rating unchanged at BBB and placed us on credit watch positive for an upgrade to BBB+. We expect Standard and Poor's, Moody’s and Fitch to resolve their positive outlook, review for upgrade and credit watch positive status respectively at or before the closing date of the acquisition, based on a variety of factors including but not limited to our operating performance, our financial position and high certainty that the acquisition will close.
On June 21, 2023, we terminated our then existing $600 million asset-backed commercial paper program and the related liquidity and letter of credit facilities as well as established a new $1 billion unsecured corporate commercial paper program (the “$1 Billion Commercial Paper Program”). Standard & Poor’s and Moody’s assigned short-term ratings to the $1 Billion Commercial Paper Program of A-2 and P-2, respectively.
Our debt agreements do not have any credit rating downgrade triggers that would accelerate maturity of our debt. However, credit rating downgrades would increase borrowing costs under our syndicated credit facilities (a credit rating upgrade, on the other hand, would reduce our borrowing cost) and, depending on their severity, could impede our ability to obtain credit facilities or access the capital markets in the future on competitive terms. A significant increase in our borrowing costs could impair our ability to compete effectively in our business relative to competitors with higher credit ratings.
Our credit facilities and certain senior notes require us to comply with specified financial covenants including minimum net worth, minimum current ratio, a maximum debt to capitalization ratio and limitations on secured indebtedness. We were in compliance with these covenants as of September 30, 2022.2023.
Equity
Total equity is set forth in the following table:
| (US$ in millions) | (US$ in millions) | | September 30, 2022 | | December 31, 2021 | (US$ in millions) | | September 30, 2023 | | December 31, 2022 |
Equity: | Equity: | | | | | Equity: | | | | |
Convertible perpetual preference shares | | $ | — | | | $ | 690 | | |
| Common shares | Common shares | | 1 | | | 1 | | Common shares | | $ | 1 | | | $ | 1 | |
Additional paid-in capital | Additional paid-in capital | | 6,655 | | | 5,590 | | Additional paid-in capital | | 6,727 | | | 6,692 | |
Retained earnings | Retained earnings | | 9,980 | | | 8,979 | | Retained earnings | | 11,555 | | | 10,222 | |
Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) | | (6,611) | | | (6,471) | | Accumulated other comprehensive income (loss) | | (6,224) | | | (6,371) | |
Treasury shares, at cost; 2022 - 18,835,812 shares, and 2021 - 16,726,697 shares | | (1,320) | | | (1,120) | | |
Treasury shares, at cost; 2023 - 23,163,348 shares and 2022 - 18,835,812 shares | | Treasury shares, at cost; 2023 - 23,163,348 shares and 2022 - 18,835,812 shares | | (1,808) | | | (1,320) | |
Total Bunge shareholders’ equity | Total Bunge shareholders’ equity | | 8,705 | | | 7,669 | | Total Bunge shareholders’ equity | | 10,251 | | | 9,224 | |
Noncontrolling interest | Noncontrolling interest | | 666 | | | 156 | | Noncontrolling interest | | 892 | | | 732 | |
Total equity | Total equity | | $ | 9,371 | | | $ | 7,825 | | Total equity | | $ | 11,143 | | | $ | 9,956 | |
Total Bunge shareholders’ equity was $8,705$10,251 million at September 30, 2022,2023, compared to $7,669$9,224 million at December 31, 2021,2022, an increase of $1,036$1,027 million. The increase was primarily due to $1,274$1,627 million of Net income attributable to Bunge, $234 million in Additional paid-in capital on formation of a joint venture, Bunge Chevron Ag Renewables LLC, $47$147 million of stock-basedOther comprehensive income, as described in Note 17 - Equity, $51 million of share-based compensation expense, $45partially offset by $488 million repurchases of common shares, as described in Additional paid in capital on the acquisitionNote 17 - Equity, $290 million of an additional 10% ownership interest in our subsidiary, Bunge Loders Croklaan Group B.V.,declared dividends to common shareholders and $44$20 million from the issuance of common shares under our share based compensation programs, partially offset by $268 million of declared dividends to common shareholders, $200 million of common share repurchases, and $140 million of Other comprehensive income, as described in programs.Note 19 - Equity.
Cumulative Convertible Perpetual Preference Shares — On March 18, 2022, we announced all issued and outstanding shares of our 4.875% Cumulative Convertible Perpetual Preference Shares ("convertible preference shares") would automatically convert into common shares of the Company, par value $0.01 per share, effective March 23, 2022 (the "Conversion Date"). On March 18, 2022, the closing price of the common shares of the Company on the NYSE was $104.91, marking the 20th trading day in the previous 30 trading days that the closing price of the common shares of the Company exceeded 130% of the conversion price, triggering our right under the certificate of designation for the convertible preference shares, at our option, to mandatorily convert the convertible preference shares. The conversion price adjusted from $78.1322, per Note 24 - Equity included in the Company's 2021 Annual Report on Form 10-K, to $77.8482 on February 16, 2022.
Each convertible preference share automatically converted into 1.2846 common shares of the Company on the Conversion Date and cash was paid in lieu of fractional common shares of the Company. There were 6,898,268 convertible preference shares issued and outstanding prior to the conversion, which resulted in the issuance of 8,861,515 new common shares of the Company. Additionally, during the first quarter of 2022, prior to the conversion, 1,415 convertible preference shares were voluntarily converted by preference shareholders into 1,816 common shares. As a result of the conversions, no convertible preference shares are issued or outstanding, and all rights of the former holders of the convertible preference shares terminated as of March 23, 2022.
Share repurchase program - During October 2021, ourAs noted in Note 2 - Acquisitions and Dispositions, on June 12, 2023, Bunge's Board of Directors approved a newthe expansion of an existing $500 million program for the repurchase of up to $500 million of ourBunge’s issued and outstanding common shares. At the time, approximately $300 million of capacity for the repurchase of Bunge common shares remained available under the existing program and Bunge's Board of Directors approved the expansion of the program by an additional $1.7 billion, for an aggregate unutilized capacity of $2.0 billion at June 12, 2023. The program has no expiration date. Under this program, 2,109,115continues to have an indefinite term. During the three and nine months ended September 30, 2023, Bunge repurchased 4,327,536 common shares for $488 million. As of September 30, 2023, 6,436,651 common shares were repurchased for $200$688 million during the three and nine month periods ended September 30, 2022. As of September 30, 2022, $300 million remains$1.5 billion remained outstanding for repurchases under the program.
During the three and nine month periods ended September 30, 2021,In October 2023, Bunge repurchased 1,298,384an additional 1,080,325 common shares for $100$112 million. Therefore, as of October 26, 2023, 7,516,976 common shares were repurchased for $800 million thereby completing a previous $500 million share repurchase program, established May 2015.and $1.4 billion remains outstanding for repurchases under the program.
Cash Flows
| | | Nine Months Ended September 30, | | Nine Months Ended September 30, |
US$ in millions | US$ in millions | | 2022 | | 2021 | US$ in millions | | 2023 | | 2022 |
Cash provided by (used for) operating activities | Cash provided by (used for) operating activities | | $ | (5,031) | | | $ | (1,642) | | Cash provided by (used for) operating activities | | $ | 1,860 | | | $ | (5,031) | |
Cash provided by (used for) investing activities | Cash provided by (used for) investing activities | | 5,113 | | | 3,562 | | Cash provided by (used for) investing activities | | (646) | | | 5,113 | |
Cash provided by (used for) financing activities | Cash provided by (used for) financing activities | | (102) | | | (1,166) | | Cash provided by (used for) financing activities | | (213) | | | (102) | |
Effect of exchange rate changes on cash and cash equivalents, restricted cash, and cash held for sale | Effect of exchange rate changes on cash and cash equivalents, restricted cash, and cash held for sale | | 112 | | | (79) | | Effect of exchange rate changes on cash and cash equivalents, restricted cash, and cash held for sale | | 40 | | | 112 | |
Net increase (decrease) in cash and cash equivalents, restricted cash, and cash held for sale | Net increase (decrease) in cash and cash equivalents, restricted cash, and cash held for sale | | $ | 92 | | | $ | 675 | | Net increase (decrease) in cash and cash equivalents, restricted cash, and cash held for sale | | $ | 1,041 | | | $ | 92 | |
Our cash flows from operations vary depending on, among other items, the market prices and timing of purchases and sales of our inventories. Generally, during periods when commodity prices are rising, our Agribusiness operations require increased use of cash to support working capital to acquire inventories and fund daily settlement requirements on exchange traded futures that we use to minimize price risk related to purchases and sales of our inventories.
During the nine months ended September 30, 2022,2023, our cash and cash equivalents, restricted cash, and cash held for sale increased by $92$1,041 million, compared to an increase of $675$92 million during the nine months ended September 30, 2021.2022.
Operating: Cash provided by operating activities was $1,860 million for the nine months ended September 30, 2023, an increase of $6,891 million, compared to cash used for operating activities wasof $5,031 million for the nine months ended September 30, 2022, an increase of $3,389 million, compared to $1,642 million for the nine months ended September 30, 2021.2022. The increase was primarily due to lower net income, and higherchanges in working capital and increaseddecreased beneficial interest in securitized trade receivables, driven by higherlower average commodity prices duringas well a change in structure of the nine months ended September 30, 2022.securitization program as discussed further below.
| | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
US$ in millions | | 2023 | | 2022 |
Cash provided by (used for) operating activities | | $ | 1,860 | | | $ | (5,031) | |
Proceeds from beneficial interest in securitized trade receivables (1) | | 85 | | | 5,176 | |
Cash provided by (used for) operating activities, adjusted | | $ | 1,945 | | | $ | 145 | |
| | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
US$ in millions | | 2022 | | 2021 |
Cash provided by (used for) operating activities | | $ | (5,031) | | | $ | (1,642) | |
Net proceeds from beneficial interest in securitized trade receivables | | 5,176 | | | 3,255 | |
Cash provided by (used for) operating activities, adjusted | | $ | 145 | | | $ | 1,613 | |
(1) On November 16, 2022, Bunge and certain of its subsidiaries amended its trade receivables securitization program from a deferred purchase price structure to a pledge structure, see Note 4 - Trade Accounts Receivable and Trade Receivables Securitization Program to our condensed consolidated financial statements for further details.
Cash provided by (used for) operating activities, adjusted for netthe proceeds from beneficial interests in securitized trade receivables, was cash provided of $1,945 million for the nine months ended September 30, 2023, compared to cash provided of $145 million for the nine months ended September 30, 2022, compared to cash provided of $1,613 million for the nine months ended September 30, 2021.2022. The decreaseincrease was primarily due to lower net income and higherchanges in working capital, adjusted for net proceeds from beneficial interest in securitized trade receivables, driven by higherlower average commodity prices, and higher reported net income during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.
Certain of our non-U.S. operating subsidiaries are primarily funded with U.S. dollar-denominated debt, while currency risk is hedged with U.S. dollar-denominated assets. The functional currency of our operating subsidiaries is generally the local currency. The financial statements of our subsidiaries are calculated in the functional currency, and when the local currency is the functional currency, translated into U.S. dollars. U.S. dollar-denominated loans are remeasured into their respective functional currencies at exchange rates at the applicable balance sheet date. Also, certain of our U.S. dollar functional operating subsidiaries outside the U.S. are partially funded with local currency borrowings, while the currency risk is hedged with local currency denominated assets. Local currency loans in U.S. dollar functional currency subsidiaries outside the U.S. are remeasured into U.S. dollars at the exchange rate on the applicable balance sheet date. The resulting gain or loss is included in our condensed consolidated statements of income as Foreign exchange (losses) gains. For the nine months ended September 30, 2022, weWe recorded a foreign currency gain on our debt of $151 million and $96 million, and for the nine months ended September 30, 2021, we recorded a foreign currency loss on our debt of $7 million,2023 and September 30, 2022, respectively, which were included as adjustments to reconcile netNet income to cash used forCash provided by (used for) operating activities in the line item "foreignForeign exchange (gain) loss on net debt"debt in our condensed consolidated statements of cash flows. These adjustments are required as the gains andand losses are non-cash items that arise from financing activities and therefore will have no impact on cash flows from operations.
Investing: Cash used for investing activities was $646 million for the nine months ended September 30, 2023, a decrease of $5,759 million, compared to cash provided by investing activities wasof $5,113 million for the nine months ended September 30, 2022, an increase of $1,551 million, compared to cash provided by investing activities of $3,562 million for the nine months ended September 30, 2021.2022. The increasedecrease was primarily due to higherlower net proceeds from beneficial interests in securitized trade receivables driven byas a result of the change in the program structure discussed above, and higher average commodity prices, partially offset bycapital expenditures including the Avondale refinery. Additionally, lower proceeds were received on the sale of our Russian operations during the nine months ended September 30, 2023, compared to proceeds received on the sale of our Mexican wheat milling business during the nine months ended September 30, 2022, compared to proceeds received from the sales of our oils facilities in the Netherlands and Mexico during the nine months ended September 30, 2021.2022.
Financing: Cash used for financing activities was $213 million for the nine months ended September 30, 2023, a decrease of $111 million, compared to cash used for financing activities of $102 million for the nine months ended September 30, 2022, a decrease of $1,064 million, compared to cash used for financing activities of $1,166 million for2022. During the nine months ended September 30, 2021.2023, we received net cash proceeds of short and long-term debt of $512 million, primarily from delayed term draw loans of $750 million and $250 million offset by the repayment of the 1.85% Senior Notes - Euro in June 2023, repurchased $466 million of common shares and paid $287 million in dividends to common shareholders. During the nine months ended September 30, 2022, we made net cash repayments of short and long-term debt of $147 million, paid $256 million inof dividend payments to common shareholders, repurchased $200 million of common shares, and paid $102 million to acquire an additional 10% ownership interest from redeemable noncontrolling interest holders in our subsidiary, Bunge Loders Croklaan Group B.V. These cash outflows were partially offset by $521 million in cash received from the sale of a noncontrolling interest onin relation to the formation of a joint venture, Bunge Chevron Ag Renewables LLC, as described in Note 1 - Basis of Presentation, Principles of Consolidation, And Significant Accounting Policies, and $30 million in proceeds from the exercise of options for common shares. During the nine months ended September 30, 2021, we made net cash repayments of short and long-term debt of $643 million, paid $147 million to acquire the noncontrolling equity interests of our Polish subsidiary, Z.T. Kruszwica S.A., paid $240 million in dividends to our common and preferred shareholders, paid $75 million in dividends to noncontrolling interest shareholders, and repurchased $100 million of common shares, partially offset by $72 million in cash received from the exercise of options for common shares.
Off-Balance Sheet Arrangements
Please refer to Note 1615 - Commitments and Contingencies to our condensed consolidated financial statements for details concerning our off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Dividends
We paid a regular quarterly cash dividend of $0.625$0.6625 per share on September 2, 2022,1, 2023, to common shareholders of record on August 19, 2022.18, 2023. On August 11, 2022,17, 2023, Bunge announced that the Company's Board of Directors had declared a dividend of $0.625$0.6625 per common share, payable on December 2, 2022,1, 2023, to shareholders of record on November 18, 2022.17, 2023.
Critical Accounting Policies and Estimates
Critical accounting policies are defined as those policies that are significant to our financial condition and results of operations and require management to exercise significant judgment. For a complete discussion of our accounting policies, see Note 1 to our Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed with the Securities and Exchange Commission on February 24, 2022.2023. For recent accounting pronouncements refer to Note 1 - Basis of Presentation, Principles of Consolidation, And Significant Accounting Policies, to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q. For accounting considerations in connection with the Ukraine-Russia war, refer to Note 2 - Ukraine-Russia War to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management
As a result of our global activities, we are exposed to changes in, among other things, agricultural commodity prices, transportation costs, foreign currency exchange rates, interest rates, energy costs, and inflationary pressures, which may affect our results of operations and financial position. We actively monitor and manage these various market risks associated with our business activities. Our risk management decisions take place in various locations, but exposure limits are centrally set and monitored, operating under a global governance framework. Additionally, our Board of Directors' Enterprise Risk Management Committee overseesand our internal Management Risk Committee oversee our global market risk governance framework, including risk management policies and limits.
We use derivative instruments for the purpose of managing the exposures associated with commodity prices, transportation costs, foreign currency exchange rates, interest rates, energy costs, and for positioning our overall portfolio relative to expected market movements in accordance with established policies and procedures. We enter into derivative instruments primarily with commodity exchanges in the case of commodity futures and options and major financial institutions or approved exchange clearing shipping companies in the case of ocean freight. While these derivative instruments are subject to fluctuations in value, for hedged exposures those fluctuations are generally offset by the changes in the fair value of the underlying exposures. The derivative instruments that we use for hedging purposes are intended to reduce the volatility of our results of operations. However, they can occasionally result in earnings volatility, which may be material. See Note 1312 - Derivative Instruments And Hedging Activities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a more detailed discussion of our use of derivative instruments.
Credit and Counterparty Risk
Through our normal business activities, we are subject to significant credit and counterparty risks that arise through commercial sales and purchases, including forward commitments to buy or sell, and through various other over-the-counter ("OTC") derivative instruments that we use to manage risks inherent in our business activities. We define credit and counterparty risk as a potential financial loss due to the failure of a counterparty to honor its obligations. The exposure is measured based upon several factors, including unpaid accounts receivable from counterparties, as well as unrealized gains from forward purchase or sales contracts and OTC derivative instruments. Credit and counterparty risk also includes sovereign credit risk. We actively monitor credit and counterparty risk through regular reviews of exposures and credit analysis by regional credit teams, as well as a review by global and corporate committees that monitor counterparty performance. We record provisions for counterparty losses from time to time as a result of our credit and counterparty analysis.
During periods of tight conditions in global credit markets, downturns in regional or global economic conditions, and/or significant price volatility, credit and counterparty risks are heightened.heightened, such as during 2023 when concerns about the financial condition of a number of banking institutions in the United States and globally developed and resulted in government and regulatory intervention. Although our counterparty risk and exposure to these financial institutions has been de minimis, we continue to monitor our exposure to all financial institution counterparties. This increased risk is monitored through, among other things, exposure reporting, increased communication with key counterparties, management reviews, and a specific focus on counterparties or groups of counterparties that we may determine as high risk. We have reduced exposures and associated position limits in certain cases, and also decreased our use of non-exchange cleared derivative instruments.cases.
Commodities Risk
We operate in many areas of the food industry, from agricultural raw materials to the production and sale of branded food products. As a result, we purchase and produce various materials, many of which are agricultural commodities, including: soybeans, soybean oil, soybean meal, palm oil (from crude to various degrees of refined products), softseeds (including sunflower seed, rapeseed and canola) and related oil and meal derived from them, wheat, barley, shea nut, and corn. Agricultural commodities are subject to price fluctuations due to a number of unpredictable factors, including inflationary pressures, that may create price risk. As described above, we are also subject to the risk of counterparty non-performance under forward purchase and sales contracts. From time to time, we have experienced instances of counterparty non-performance as a result of significant declines in counterparty profitability under these contracts due to movements in commodity prices between the time the contracts were entered into and the contractual forward delivery period.
We enter into various derivative contracts with the primary objective of managing our exposure to adverse price movements in the agricultural commodities used and produced in our business operations. We have established policies that limit the amount of unhedged fixed price agricultural commodity positions permissible for our operating companies, which are generally a combination of volumetric, drawdown, and value-at-risk ("VaR") limits. We measure and review our commodity
positions on a daily basis. We also employ stress-testing techniques in order to quantify our exposures to price and liquidity risks under non-normal or event driven market conditions.
Our daily net agricultural commodity position consists of inventory, forward purchase and sales contracts, and OTC and exchange-traded derivative instruments, including those used to hedge portions of our production requirements. The fair value
of that position is a summation of the fair values of each agricultural commodity, calculated by valuing all of our commodity positions for the period at quoted market prices, where available, or by utilizing a close proxy. VaR is calculated on the net position and monitored at the 95% confidence interval. In addition, scenario analysis and stress testing are performed. For example, one measure of market risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in prices. The results of this analysis, which may differ from actual results, are as follows:
| | | Nine Months Ended September 30, 2022 | | Year Ended December 31, 2021 | | Nine Months Ended September 30, 2023 | | Year Ended December 31, 2022 |
(US$ in millions) | (US$ in millions) | | Value | | Market Risk | | Value | | Market Risk | (US$ in millions) | | Value | | Market Risk | | Value | | Market Risk |
Highest daily aggregated position value | Highest daily aggregated position value | | $ | 1,809 | | | $ | (181) | | | $ | 1,706 | | | $ | (171) | | Highest daily aggregated position value | | $ | 459 | | | $ | (46) | | | $ | 1,809 | | | $ | (181) | |
Lowest daily aggregated position value | Lowest daily aggregated position value | | $ | (416) | | | $ | 42 | | | $ | (3) | | | $ | — | | Lowest daily aggregated position value | | $ | (377) | | | $ | (38) | | | $ | (416) | | | $ | (42) | |
Ocean Freight Risk
Ocean freight represents a significant portion of our operating costs. The market price for ocean freight varies depending on the supply and demand for ocean vessels, global economic conditions, inflationary pressure, and other factors. We enter into time charter agreements for time on ocean freight vessels based on forecasted requirements for the purpose of transporting agricultural commodities. Our time charter agreements generally have terms ranging from two months to approximately threefive years. We use financial derivatives, generally freight forward agreements, to hedge portions of our ocean freight costs. The ocean freight derivatives are included in Other current assets and Other current liabilities on the condensed consolidated balance sheets at fair value.
Energy Risk
We purchase various energy commodities such as electricity, natural gas and bunker fuel, which are used to operate our manufacturing facilities and ocean freight vessels. These energy commodities are subject to price risk, including inflationary pressures. We use financial derivatives, including exchange traded and OTC swaps and options for various purposes, including to manage our exposure to volatility in energy costs and market prices. These energy derivatives are included in Other current assets and Other current liabilities on the condensed consolidated balance sheets at fair value.
Currency Risk
Our global operations require active participation in foreign exchange markets. Our primary foreign currency exposures are the Brazilian real, Canadian dollar, Euro, and Chinese yuan/renminbi. To reduce the risk arising from foreign exchange rate fluctuations, we enter into derivative instruments, such as foreign currency forward contracts, swaps and options. The changes in market value of such contracts have a high correlation to the price changes in the related currency exposures. The potential loss in fair value of such net currency positions resulting from a hypothetical 10% adverse change in foreign currency exchange rates as of September 30, 2022,2023, was not material.
When determining our exposure, we exclude intercompany loans that are deemed to be permanently invested. Repayments of permanently invested intercompany loans are neither planned nor anticipated in the foreseeable future and are therefore treated analogous to equity for accounting purposes. As a result, the foreign exchange gains and losses on these borrowings are excluded from the determination of Net income (loss) and recorded as a component of Accumulated other comprehensive income (loss) in the condensed consolidated balance sheets. Included in Other comprehensive income (loss) are foreign exchange lossesgains of $61$97 million for the nine months ended September 30, 2022,2023, and foreign exchange lossesgains of $74$1 million for the year ended December 31, 2021,2022, related to permanently invested intercompany loans. Activity in the nine months ended September 30, 2023 includes reclassification of $85 million in foreign exchange losses from Other comprehensive income (loss) to net income, net of tax of zero, related to the sale of Bunge's Russian operations. See Note 2 - Acquisitions and Dispositions to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for more information.
Interest Rate Risk
We have debt in fixed and floating rate instruments. We are exposed to market risk due to changes in interest rates, including inflationary pressures. We may enter into interest rate swap agreements to manage our interest rate exposure related to our debt portfolio.
The aggregate fair value of our short and long-term debt, based on market yields at September 30, 2022,2023, was $5,126$5,208 million, with a carrying value of $5,097$5,182 million. There was no significant change in our interest rate risk as of September 30, 2022.
A hypothetical 100 basis point increase or decrease in the interest yields on our fixed rate debt and related interest rate swaps at September 30, 2022,2023, would result in a decrease of approximately $10 millionless than 1% change in the fair value of our debt. Similarly, a decrease of 100 basis points in thedebt and interest yields on our debt at September 30, 2022, would cause an increase of approximately $2 million in the fair value of our debt.rate swaps.
A hypothetical 100 basis point change in LIBORthe applicable reference rate, such as SOFR, would result in a change of approximately $55 million in interest expense on our variable rate debt at September 30, 2022.2023. Some of our variable rate debt is denominated in currencies other than in U.S. dollars and is indexed to non-U.S. dollar-based interest rate indices, such as ESTREURIBOR and TONAR,TLP, and certain benchmark rates in local bank markets. As such, the hypothetical 100 basis point change in interest rate ignores the potential impact of any currency movements. See Part I, “Item 1A. Risk Factors” in our 20212022 Annual Report on Form 10-K for a discussion of certain risks related to LIBOR.interest rates.
Inflation Risk
Inflationary factors generally affect us by increasing our labor and overhead costs, as well as costs associated with certain risks identified above, which may adversely affect our results of operations and financial position. We have historically been able to recover the impacts of inflation through sales price increases, however we cannot reasonably estimate our ability to successfully recover any impact of inflation through price increases in the future. Our inability to do so could harm our results of operations and financial position. For details relating to the impact of inflationary pressures in Turkey, see Note 1 - Basis of Presentation, Principles of Consolidation, And Significant Accounting Policies to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
Derivative Instruments
Foreign Exchange Derivatives—We use a combination of foreign exchange forward, swap, futures and options contracts in certain of our operations to mitigate the risk of exchange rate fluctuations in connection with certain commercial and balance sheet exposures. The foreign exchange forward swap and option contracts may be designated as cash flow hedges or fair value hedges. We may also use net investment hedges to partially offset the translation adjustments arising from the remeasurement of our investment in certain of our foreign subsidiaries.
We assess, both at the inception of the hedge and on an ongoing basis, whether the derivatives that are used in hedge transactions are highly effective in offsetting changes in the hedged items.
Interest Rate Derivatives—We may enter into interest rate swap agreements for the purpose of managing certain of our interest rate exposures. Interest rate swaps used by us as hedging instruments are recorded at fair value in the consolidated balance sheets with changes in fair value recorded contemporaneously in earnings. Certain of these agreements may be designated as fair value hedges. In such instances, the carrying amount of the associated hedged debt is also adjusted through earnings for changes in fair value arising from changes in benchmark interest rates. We may also enter into interest rate basis swap agreements that do not qualify as hedges for accounting purposes. The impact of changes in fair value of interest rate swap agreements is primarily presented in Interest expense.
Commodity Derivatives—We primarily use derivative instruments to manage our exposure to movements associated with agricultural commodity prices. We generally use exchange-traded futures and options contracts to minimize the effects of changes in the prices of agricultural commodities held as inventories or subject to forward purchase and sales contracts, but may also enter into OTC commodity transactions, including swaps, which are settled in cash at maturity or termination based on exchange-quoted futures prices. Changes in fair values of exchange-traded futures contracts, representing the unrealized gains and/or losses on these instruments, are settled daily, generally through our 100% owned futures clearing subsidiary. Forward purchase and sales contracts are primarily settled through delivery of agricultural commodities. While we consider these exchange-traded futures and forward purchase and sales contracts to be effective economic hedges, we do not designate or account for the majority of our commodity contracts as hedges. Changes in fair values of these contracts and related RMI are included in Cost of goods sold in the condensed consolidated statements of income. The forward contracts require performance of both us and the contract counterparty in future periods. Contracts to purchase agricultural commodities generally relate to current or future crop years for delivery periods quoted by regulated commodity exchanges. Contracts for the sale of agricultural commodities generally do not extend beyond one future crop cycle.
Ocean Freight Derivatives—We use derivative instruments referred to as freight forward agreements, or FFAs, and FFA options to hedge portions of our current and anticipated ocean freight costs. Changes in the fair values of ocean freight derivatives are recorded in Cost of goods sold.
Energy Derivatives—We use derivative instruments for various purposes, including to manage our exposure to volatility in energy costs and our exposure to market prices related to the sale of biofuels. Our operations use substantial amounts of energy, including natural gas, coal, and fuel oil, including bunker fuel. Changes in the fair values of energy derivatives are recorded in Cost of goods sold.
Other Derivatives—We may also enter into other derivatives, including credit default swaps, carbon emission derivatives and equity derivatives, to manage our exposure to credit risk and broader macroeconomic risks, respectively.risks. The impact of changes in fair value of these instruments is presented in Cost of goods sold.
For more information, see Note 1312 - Derivative Instruments And Hedging Activities to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures - Disclosure controls and procedures are the controls and other procedures that are designed to provide reasonable assurance that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the principal executive and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
As of September 30, 2022,2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as that term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this Quarterly Report on Form 10-Q.
Internal Control Over Financial Reporting - There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2022,2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. However, we continue to migrate certain processes from across our operations to shared business service models in order to consolidate back-office functions while standardizing our processes and financial systems globally. These initiatives are not in response to any identified deficiency or weakness in our internal controls over financial reporting. We plan to continue these initiatives in phases over the next several years and, accordingly, we have and will continue to align and streamline the design and operation of our internal controls over financial reporting, as necessary, to accommodate modifications to our business processes and accounting procedures. Specifically, during the nine months ended September 30, 2022, we beganhave continued migrating certain of our financial reporting systems in Argentina to our South American Enterprise Resource Planning (ERP) system, a process that is expected to takecarry on for several months, and which may result in changes to our internal controls over financial reporting relating to our Argentinian operations.
Additionally, management performed an evaluation of the impacts of the Ukraine-Russia War (discussed further in Note 2 – Ukraine-Russia War to our financial statements included as part of this Form 10-Q) on our internal controls over financial reporting. In doing so management noted that, as a result of the war, we are currently unable to perform certain of our Ukrainian internal controls over financial reporting, primarily relating to on-site physical inspections of certain of our operating facilities,inventory, due to safety concerns, particularly in areas of active conflict. Additionally, someAs of our Ukrainian employees haveSeptember 30, 2023, the carrying value associated with Company inventories in areas of active conflict has been forced to relocate to other countries or safer locations elsewhere within Ukraine.substantially reserved. In response, management has implemented compensating controls, including using third party contractors to carry out visual inspections of the physical condition of our assets held at Ukrainian facilities as well as certain other internal controls over financial reporting capable of being performed on a remote basis. To date, our Russian offices and facilities have remained open and operating with no changes to related internal controls over financial reporting.in non-active conflict areas.
PART II.
INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are involved in litigation and other claims, investigations and proceedings incidental to our business. While the outcome of these matters cannot be predicted with certainty, we believe the outcome of these proceedings, net of established reserves, will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.
For a discussion of certain legal and tax matters see Note 1615 - Commitments and Contingencies to our condensed consolidated financial statements included as part of this Quarterly Report on Form 10-Q. Additionally, we are a party to a large number of labor, civil and other claims, primarily relating to our Brazilian operations. We have reserved an aggregate of $73$69 million and $99$109 million, for labor and civil claims, respectively, as of September 30, 2022.2023. The labor claims primarily relate to dismissals, severance, health and safety, salary adjustments and supplementary retirement benefits. The civil claims relate to various legal proceedings and disputes, including disputes with suppliers and customers.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 20212022 Annual Report on Form 10-K and incorporated by reference in the “Risks Related to the Acquisition” and “Risks Related to the Redomestication” sections of the Company's definitive proxy statement filed with the SEC on August 7, 2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K and the definitive proxy statement are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. Following are material updates to the risk factors previously disclosed in our 20212022 Annual Report on Form 10-K:
We are subject to global and regional economic downturns and related risks.
The ongoing war between Russia and Ukraine may adversely affectlevel of demand for our business, financial condition or results of operations.
We maintain operations in Ukraine and Russia.On February 24, 2022, Russia initiated a military offensive in Ukraine. Ukraine forms part of a key international grain originating region andproducts is also the world’s largest supplier of sunflower seed and sunflower oil; commodities that cannot be completely replaced from other origins. Bunge's Ukrainian operations comprise two oilseed crushing facilities, located in Mykolaiv and Dnipropetrovsk, a grain export terminal in the Mykolaiv commercial seaport, numerous grain elevators, and an office in Kiev. The Company also operates a corn milling facility in Ukraine via a joint venture. Assets and operations located in regions affected by the war could be at an increased riskglobal and regional demographic and macroeconomic conditions, including population growth rates and changes in standards of property damage, inventory loss, business disruption,living. A significant downturn in global economic growth, or recessionary conditions in major geographic regions, may lead to reduced demand for agricultural commodities and expropriation. As of the date of this memo, no material damage has been noted at any of Bunge's Ukrainian facilities, including its Mykolaiv port facility that sustained minor shelling damage earlier in the year. However, due to safety concerns, it is not always possible to conduct onsite physical inspections of all of the Company's Ukrainian facilities to understand the full extent of the impact of the war. As of September 30, 2022, we had total assets and total liabilities of $293 million and $180 million, respectively, in Ukraine.
The Company’s Ukrainian operations employ over 1,000 employees. While as of the date of this report some of the Company’s Ukrainian employees have been forced to relocate to other countries or elsewhere within Ukraine, our workforce remains largely intact and we are resuming idled operations when and where possible. The ongoing war could cause harm to our employees and otherwise impair their ability to work for extended periods of time,food products, which could have a material adverse effect on our operations. Disruption to telecommunications systems, banks, and other critical infrastructure necessary to conduct business in Ukraine could also severely impair our Ukrainian operations.
The scope, intensity, duration and outcome of the ongoing war is uncertain and the continuation or escalation of the war may have a material adverse effect on Bunge’s assets, operations and financial condition.
Additionally, in response to the war, the United States, other North Atlantic Treaty Organization ("NATO") member states, as well as non-member states, have announced targeted economic sanctions on Russia, certain Russian citizens, and Russian enterprises. Any continuation or escalation of the war may trigger a series of additional economic and other sanctions. On September 16, 2022, Bunge signed an agreement to sell its remaining Russian operations, primarily comprising an oilseed crushing and refining facility in Voronezh, southwest Russia, to Karen Vanetsyan. Please refer to Note 3 - Acquisitions and Dispositions to our condensed consolidated financial statements included as part of this Quarterly Report on Form 10-Q for further details regarding the transaction. Until the sale is complete we continue to operate our Russian oilseed crushing and refining facility, doing so in compliance with all legal requirements imposed following the start of the war, hence remain exposed to the risks associated with operating in Russia as the conflict in Ukraine continues. The economic and other sanctions imposed, or that may be imposed, against Russia may result in an adverse effect on our remaining Russian operations until the date the sale is completed.
The risk of cybersecurity incidents has increased in connection with the ongoing war, driven by justifications such as retaliation for the sanctions imposed in conjunction with the war, or in response to certain companies' continued operations in Russia. For example, the war has been accompanied by cyberattacks against the Ukrainian government and other countries in the region. It is possible that these attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affect our operations and could increase the frequency and severity of cyber-based attacks against our information technology systems. While we have taken actions to mitigate such potential risks, the proliferation of malware from the war into systems unrelated to the war, or cyberattacks against U.S. companies in retaliation for U.S. sanctions against Russia, or U.S. support of Ukraine, could also adversely affect our operations.
Although we insure ourselves against many types of risks, including certain of the risks associated with the ongoing war, our level of insurance may not cover all losses we could incur. The potential impact of our insurance being unable to adequately insure against the possible exposure we could experience as a result of the war could have a material adverse effect on our business, results of operations and financial condition.
Risks associated with the Ukraine-Russia war (the "war") are overseen at the Board of Directors level by the Enterprise Risk Management Committee ("ERMC"), which has responsibility for supervising the quality and integrity of our risk management practices, and at the executive level as part of our enterprise risk management ("ERM") framework, overseen by our Chief Risk Officer, who reports to our CEO, with input from relevant teams and functions.
To the extent the current war adversely affects our business, it may also have the effect of heightening many other risks disclosed in Part I, “Item 1A. Risk Factors” in our 2021 Annual Report on Form 10-K, any of which could materially and adversely affect our business and results of operations. However, dueFurther, deteriorating economic and political conditions in our major markets, such as inflation, increased unemployment, decreases in disposable income, declines in consumer confidence, uncertainty about economic stability, or economic slowdowns or recessions, could cause a decrease in demand for our products.
Additionally, weak global economic conditions and adverse conditions in global financial and capital markets, including rising interest rates and constraints on the availability of credit, have in the past adversely affected, and may in the future adversely affect, the financial condition and creditworthiness of the financial institutions that serve as our lenders and as counterparties to the continually evolving natureover-the-counter derivative instruments we use to manage risks and some of our customers, suppliers, and other counterparties, which in turn may negatively impact our financial condition and results of operations. Recently, concerns have arisen with respect to the war,financial condition of a number of banking organizations in the potential impact that the war could have on such risk factors,United States and others that cannot yet be identified, remains uncertain.
Even if the war moderates, or a resolution between Ukraine and Russia is reached,globally. Although our exposure has been de minimis to these financial institutions, we expect that we will continue to experience ongoing financialmonitor our counterparty exposure. See "Item 2. Management's Discussion and operational impacts resultingAnalysis of Financial Condition and Results of Operations" and "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for more information.
In 2022 and continuing into 2023, the United States has reported and is continuing to report high inflation rates and weaker GDP growth, with some economists forecasting a continuation of these conditions for the remainder of 2023. Brazil is experiencing a slowing GDP growth rate coupled with relatively high interest rates as it emerges from the warCOVID-19 pandemic, which may result in an uncertain economic and political environment that could in turn lead to reduced demand for our refined and specialty oils and milling products in the foreseeable future as Ukraine rebuilds itscountry. Additionally, a slowdown in China's economy and infrastructure.
Adverse weather conditions,over a prolonged period, including as a result of climate change, may adversely affect the availability, quality and pricecontinuing impacts of agricultural commodities and agricultural commodity products, as well as our operations, supply chains, and operating results.
Adverse weather conditions have historically caused volatility in the agricultural commodity industry and consequently in our operating results by causing crop failures or significantly reduced harvests, which may affect the supply and pricing of the agricultural commodities that we sell and use in our business, reduce demand for our fertilizer products and negatively affect the creditworthiness of agricultural producers who do business with us.
Severe adverse weather conditions, such as hurricanes, severe storms, may also result in extensive property damage, extended business interruption, personal injuriesCOVID-19, population decline and other loss and damagefactors, could lead to us. Our operations also rely on dependable and efficient transportation services, including via ocean vessel, river barges, rail, and truck. A disruption in transportation services as a result of weather conditions, for example low river levels following periods of drought, or otherwise, may also significantly adversely impact our operations and related supply chains.
Additionally, the potential physical impacts of climate change are uncertain and may vary by region. These potential effects could include changes in rainfall patterns, water shortages, changing sea levels, changing storm patterns and intensities, shifts in agricultural production areas, changing temperature levels, and climatic volatility. The frequency and severity of the effects of climate change or weather patterns have been increasing and could adversely impact our business operations, the location, costs and competitiveness ofreduced global agricultural commodity production and related storage and processing facilities, as well as the supply and demand for agricultural commodities,commodities. To the extent that such economic and may result in incidents of stranded physical assets. These effects could be material topolitical conditions negatively impact consumer and business confidence and consumption patterns or volumes, our business and results of operations liquidity or capital resources.could be significantly and adversely affected.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table is a summary of purchases of equity securities during the third quarter of 20222023 by Bunge and any of its affiliated purchasers, pursuant to SEC rules.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares (or Units) Purchased | | Average Price Paid per Share (or Unit) | | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(1) | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(1) |
July 1, 2022 - July 31, 2022 | | — | | $ | — | | | — | | $ | 500,000,000 | |
August 1, 2022 - August 31, 2022 | | 2,109,115 | | $ | 94.83 | | | 2,109,115 | | $ | 300,000,071 | |
September 1, 2022 - September 30, 2022 | | — | | | $ | — | | | — | | | $ | 300,000,071 | |
Total | | 2,109,115 | | $ | — | | | 2,109,115 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares (or Units) Purchased | | Average Price Paid per Share (or Unit) | | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(1) | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(1) |
July 1, 2023 - July 31, 2023 | | — | | $ | — | | | — | | $ | 2,000,000,000 | |
August 1, 2023 - August 31, 2023 | | 2,490,354 | | $ | 113.02 | | | 2,490,354 | | $ | 1,718,528,122 | |
September 1, 2023 - September 30, 2023 | | 1,837,182 | | | $ | 112.32 | | | 1,837,182 | | | $ | 1,512,169,533 | |
Total | | 4,327,536 | | $ | 112.73 | | | 4,327,536 | | |
(1) Program was originally established in October 2021 for the repurchase of up to $500 million issued and outstanding common shares. On June 12, 2023, Bunge's Board of Directors approved the expansion of the existing program for the repurchase of Bunge’s issued and outstanding common shares. At the time, approximately $300 million of capacity for the repurchase of Bunge common shares remained available under the existing program and Bunge's Board of Directors approved the expansion of the program by an additional $1.7 billion, for an aggregate purchase price of $2.0 billion. The program has no expiration date.continues to have an indefinite term. To date under the program, 6,436,651 common shares were repurchased for $688 million.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
(a) The exhibits in the accompanying Exhibit Index on page E-1 are filed or furnished as part of this Quarterly Report.
EXHIBIT INDEX
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| | Revolving$1.665 billion Credit Agreement, dated as of July 7, 2023, by and among Bunge Limited Finance Corp., as borrower, Sumitomo Mitsui Banking Corporation,Borrower, CoBank, ACB, as syndication agent, BNP Paribas, Citibank, N.A., Natixis, New York Branch,Administrative Agent and U.S. Bank National Association,Lead Arranger, and the several lenders from time to time parties thereto (incorporated by reference from the Registrant’s Form 8-K filed on July 11, 2023) |
| | Guaranty, dated as co-documentation agents, Coöperatieve Rabobank U.A., New York Branch,of July 7, 2023, by Bunge Limited and Bunge Global SA, as administrative agent, and certain lenders party thereto, dated July 15, 2022 (the “RabobankGuarantor, to CoBank, ACB, as Administrative Agent under the $1.665 billion Credit Agreement”)Agreement incorporated as Exhibit 10.1 into this Quarterly Report on Form 10-Q (incorporated by reference from the Registrant’s Form 8-K filed July 18, 2022)11, 2023) |
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| | Guaranty by Bunge Limited pursuant to the Rabobank Credit Agreement, dated July 15, 2022 (incorporated by reference from the Registrant’s Form 8-K filed July 18, 2022) |
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| | Term Loan Agreement among Bunge Limited Finance Corp., as borrower, Sumitomo Mitsui Banking Corporation, Bank of America, N.A., BNP Paribas, Citibank, N.A., Coöperatieve Rabobank U.A., New York Branch, ING Bank, N.V., JPMorgan Chase Bank, N.A., Mizuho Bank, Ltd., PNC Bank, National Association, Royal Bank of Canada, The Toronto-Dominion Bank, New York Branch, Truist Bank, U.S. Bank National Association and Wells Fargo Bank, National Association, as syndication agents, JPMorgan Chase Bank, N.A., as administrative agent, and certain lenders party thereto, dated July 26, 2022 (the “Term Loan Agreement”) (incorporated by reference from the Registrant’s Form 8-K filed July 26, 2022) |
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| | Guaranty by Bunge Limited pursuant to the Term Loan Agreement, dated July 26, 2022 (incorporated by reference from the Registrant’s Form 8-K filed July 26, 2022) |
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| | Credit Agreement among Bunge Limited Finance Corp., as borrower, CoBank, ACB, as administrative agent and lead arranger, and certain lenders party thereto from time to time, dated August 5, 2022 (the “CoBank Credit Agreement”) (incorporated by reference from the Registrant’s Form 8-K filed August 9, 2022) |
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| | Guaranty by Bunge Limited pursuant to the CoBank Credit Agreement, dated August 5, 2022 (incorporated by reference from the Registrant’s Form 8-K filed August 9, 2022) |
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| * | Subsidiary Issuers of Guaranteed Securities |
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| * | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 |
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| * | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002 |
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| ** | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 |
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| ** | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 |
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101 SCH | | XBRL Taxonomy Extension Schema Document |
101 CAL | | XBRL Taxonomy Extension Calculation Linkbase Document |
101 LAB | | XBRL Taxonomy Extension Labels Linkbase Document |
101 PRE | | XBRL Taxonomy Extension Presentation Linkbase Document |
101 DEF | | XBRL Taxonomy Extension Definition Linkbase Document |
101 INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
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* Filed herewith.
** Furnished herewith.
E-1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | BUNGE LIMITED |
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Date: October 26, 20222023 | | By: | /s/ John W. Neppl |
| | | John W. Neppl |
| | | Executive Vice President, Chief Financial Officer |
| | | |
| | | |
| | | /s/ J. Matt Simmons, Jr. |
| | | J. Matt Simmons, Jr. |
| | | Controller and Principal Accounting Officer |