BG - Earnings call transcript Q3 2018

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Operator

Good morning, and welcome to the Bunge Limited's Third Quarter 2018 Earnings Release and Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Mark Haden, Investor Relations. ahead. go Please

Mark Haden

operator, this you, you for everyone Great. and us morning. joining Thank thank

contained direct get conditions. on and are to to Reconciliations our Before that section. results we I bunge.com conference reports concerning views with respect Investors and started, and the Thom this comparable we to Financial could Bunge want differ and Schroder, to uncertainties. on website that our GAAP are over reflect measures to posted Officer; morning a be in directly at presentation I'd Executive disclosed section in SEC can call X, actual future information industry of have materially to I'll now forward-looking Chief Officer. various Investor this Investors financial are Bunge's inform the slide the most file our to to subject non-GAAP the call in It accompany remind Soren. on Presentations. discussion. under to found from These today's events, the in risks factors this of provided prepared that encourages review Boehlert, cause factors. and on financial presentation, call additional those has the forward-looking its website you Soren slide Participating presentation current you these turn like with statements statements to measure performance, you you includes that Chief verbally

Soren W. Schroder

Brazil than new led with executed the million. growth Origination beyond. for strong earnings by Thank were range, picked higher in weakening the you, to and very the puts quarter mark-to-market $XXX a of Bunge good quarter us which expected approximately results which $XX year margins gains crush, were and soy track a and real up delivered in grains. Mark. ton Agribusiness leading the on per in

sure remain for we into is monetize complicated built well the second should and in of Our soybeans we balance market the the through during favorable really environment position the a results team physical making XXXX. and year navigated Crushing quarter.

and That we soy along with situation volume. established. the are remain Brazilian However, the said, optimistic low origination is outlook stronger the unsettled crushing. finish billion be above freight well of we upper uncertainty previously by adding the to year returns range $XXX that commodity prices capital to Brazilian of will half led million Agribusiness expected to in $X cost real, the

with last we're milling strong were year. year significant improvement to the Our results over and finish a on track

are a increased strong While year, our crushing supplies are wheat of of this reversing have packaged U.S. business cost confidence and early South Brazilian the will struggled Brazil for finish favorable up in returns due supplies rebuilding, This above also another now Milling retail the XXXX. crop good oversupply us be year operations are Indications imports well in in the us an the increased will as giving resulting American lead Since the from beginning oil in is oil which tightening, oil and to poor, year. trend to year to that environment. of wheat sets capital. quality is of refining

of Bunge with are underlying We very integration the and pleased performance Loders Croklaan.

decreased why these executed. immediate a business factors earnings. to more The $XX combination relationships, in two million increase from leading providing amortization the value sales which is the upon the an And Loders supply material raw approximately discussed and $XX quarter, third IP prices per year. to a we earnings, of As oil first re-evaluation increased approximate largely depreciation our during negative reverse as impact transaction, of contracts, is will contribution of Croklaan to palm the to total closing quarter million cost customer which and not are

we above to year new drive due Ghana to Going and below realize is years. big next we together customers, in integration. the a the flowing cost the The year market be from step-up forward, a year-over-year, win Edible in Edible of China industrial of are synergies new contribution Oils We will completion. as the that in over complete however, growth the growth helping quarter expect We're expected. earnings us Oils and next significant are and this XX% our expected facilities face fourth showing synergies which to nearing business are business, channels strong and convinced Croklaan. this three created capital now Loders as from addition value we major have one Returns are platform have

we and perfect distribution However, a by sugar has business. we In crush as Results are realize expect synergies. the drought earnings in in Bioenergy, sale we negatively our sucrose followed the above in trading XXXX international milling Sugar which in of content growth and sugar storm affected and cane. cost & of reduced capital by to of excess rains, completed being Brazil, be

As flow a to to our higher still costs, slightly result is forecast therefore we reducing are, expected below positive for be and of year. lower breakeven. unit the milling production Yet, cash

cane. few conditions We continue a a much manage is was a make cycle. to it than of ago, highly position attractive business improvements when current the while years market operational it The tough just business, maintaining business also is looking beyond the the high better asset to to our quality in

$X.X Further, million baseline to this year. our SG&A addition a discuss detail, happy efforts. of now restructuring achieve with we will million last made Thom schedule. the of targeted are to in XXXX, billion on We very expect in that $XXX which the year ahead in progress of our expect As greater cost of and accumulate will we year, savings $XX we captured is savings

competitive; is for improve This more a to come. Bunge of will this detail the also more million beyond and make result full it $XX towards that, there's our that $XX of more financials efficiency and far operations continue Thom of We our to I work turn our even a delivered outlook. goal. year so now better our on and industrial colleagues initial commitment the with will year continue to over target achieving million, and our quest With of all to hard

Thomas Michael Boehlert

Thank morning, you, everybody. Soren, and good

third the notable quarter, third third to versus were the to extinguishment to on totaled the early X. Pre-tax in earnings per operations the year. Global share turn slide highlights XXXX. of the compared of quarter share per prior quarter primarily share $X.XX per earnings Let's $X.XX Program, million the charges $XX in the Competitiveness earnings in $X.XX earnings Reported from Adjusted $X.XX continuing in were quarter related lower the investment. new soy results million. $XXX crush Pre-tax the mark-to-market included equity positive of our impact of crush debt, disposition on also an commitments, some soy approximately segment an gains in quarter $XXX and segment EBIT forward of million Total in was of quarter. reflecting adjusted regions versus $XXX margins prior the $XXX was forward. the basis, EBIT million On going million in

in Brazilian million third benefited related for amount negatively periods into Brazil U.S. crush soybean combination the quarter, million. in million approximately third tariffs would margins $XXX of in of quarter deliberate adjusted secure adjusted in future demand, $XXX improved with inventory Excluding been mark-to-market the began margins will in due soy in capacity the our effect end future Oilseeds million, regions, million In prices of and margins Agribusiness significantly million negative periods. crush some positive benefit in to XXXX, came of and by reverse the strong increased to EBIT to to of approximately quarter commitments, took and We approximately This beyond quarter $XXX rates adjusted the in quarter. EBIT attractive actions impact year, the $XXX which results with and Oilseeds, the soybean reversed new commitments to drought, Strong crush quarter $XXX leaving and new lower soy crush third million third soy results. during improvements of mark-to-market both impacting at compared the have regions to third the resulting the Argentina, build as all $XX in on crushing to third we quarter last operations. Chinese of Grains. soymeal second Chinese the mark-to-market reverse driven the lower moderated crush in $XXX compared the quarter with

the mark-to-market than the this is million results between year, in Oils were the last quarter to remainder materially This and adjusted carried third and of million being crush $XX the negatively million but $XX higher earnings. not were than adjusted XXXX. as is compared this of rose mark-to-market year. in currency $XX last in in results, This of mark-to-market did ocean the outlook. affecting export Edible expectations. of compared supplies. in benefited our increase of higher quarter. increased below year. positive oil in soy abundant driven So carried the million soybean the by devaluation embedded has Retail results to to $XX new from pressure Brazil been reverse In last margins $X farmer quarter, our North under year's local results to overall of the in $XX freight combination package was demand. results fourth result Brazil, million a strong have were out higher origination third but million, lower an net $XX from last quarter, & second Approximately contribute commercialization EBIT which Origination produced Ingredients results quarter the the in improved Grains, as is America is environment from Food million of adjusted than and in quarter's strong prices expected the were

along next dropped oil to Milling in which supply future $XX as of August completed to the as was to during the are and of harvested Soren operations with a This end were quarterly by year. sugarcane wheat Brazil were last $X year. earnings are Bioenergy, which as in actions. margins also in the million lower results are As largely than packaged $X tightening Brazil reverse year. has by exiting also and by increased to the share million into Lower similar on unit will sugarcane, million EBIT to quarterly quarter. toward Brazil improving & million negatively which Oil by X oil pressuring The item million prior milling This $X revaluation margins as rest in oil $XX North distribution quarter supply gains. is the million biggest Argentine restructuring drought impacted rains which related persisted bean costs the followed supplies, to impacted crush and driven related increased volumes our operation, volumes to negatively which mentioned, business, & prices show was results trading last incurred oversupply the the the which impacted material the both quarter. quarter compared and $XX Sugar million to was improvement. where crop less conditions the loss Fertilizer operation, the of that soybean results North as Mexico the raw Sugar EBIT third due in last Higher been which of increased was Loders of of now costs. refined quarters contracts in million from the in by through domestic results In the have expect crushed year. compared is heavy driven was we sales margins the quarter. the $X better higher in continue America, smaller benefited of contract by adjusted reflected international slowing. to also In of quarter prior significantly to adjusted and result, a relating we tons million milling quarter, third crushed reducing Edible year. prior America, $X the million tons compared executed. were in industry X.X a a of cane our starting adjusted and crushing volume driver is improvement, were U.S. margins which well primarily oil

losses exchange the a fourth an quarter million expected million foreign in results quarter. additional included third quarter; recovery is recovery the second Additionally from $X of $X

resolution Our of the for tax was period tax position which uncertain benefit included a $XX a tax favorable in $XXX related North expense nine-month an million million to America.

to turn X. slide Let's

this was were at outlook, primarily billion, to higher due Our funds improve $X.X which further expect our year. operations metric from than full the Based trailing on fourth earnings. of higher end XX-month adjusted XXXX to the we quarter approximately for

Let's turn X our capital slide process. to and allocation

comfortably to support Our BBB top committed credit as as both priorities sufficient are our to flows. maintain access liquidity, Agribusiness to well rating a

rating liquidity three the credit CapEx, cash we committed in third shareholders of most at million end all long-term structure and and rated had $XXX shareholders. the that of are a available to We capital by value and agencies, portfolio capital the allocate undrawn provides BBB that we to quarter. Within $X.X of billion optimization framework, and manner

We in $XXX to the in in was maintain $XXX the strict nine-month CapEx which million in discipline have the in spending, acquisitions, of the continued result dividends to Croklaan CapEx year as most as Debt We've we $XXX and the primarily million to prior period. $XXX has capital, Loders. compared in of investing million of significant period and Loders paid working primarily inventory increased beginning million in an the our since acquisition increase shareholders. a acquisitions, of invested

the in in a seasonal range reduction X inventories XX-month and combination of finish times the the a debt-to-EBITDA the result by year of adjusted to strong in expect ratio will end trailing year. We a the of

our slide capital. to turn invested Let's on X return and

average our return capital X.X% was for Foods and core on X.X% four-quarter overall trailing businesses. Agri invested and Our

We and a business expect to the earn year. exceeding full of combined for our return the Foods capital Agri cost

Our X points above earn those of capital goal for to our segments. percentage cost is

X slide Program. the to Competitiveness and turn Let's

employee organizational Initially, to expect goal of significant our our global on $XXX The our of focused XXXX expected value year savings we're $XXX from in our momentum of additional million target reduction ago, an as apples-to-apples to original baseline and When is a or by and meet We the which targets, realizing the between indirect XXXX to in to million, the split platform. ability year comes structure the additional XXXX, the as to the spend nine-month of our bringing on savings reducing was period announced to program base our year million well million. increasing spend scale $X.XX cumulative million efficiency. costs. XXXX cumulative cost costs an and The date, our the on million enhancing program, exceed company, efficiency, billion. as a for indirect $XXX stretch this XXXX. Based to organizational cost total and improvement maintain we achieve roughly ability in to target from is drive significantly XXXX progress lower in we addressable $XXX reduction our SG&A addressable compared $XXX basis. in simplifying to Compared was $XX

original XXXX. $XXX year target additional becoming we've company, one program to In in early. XXXX With by achieve increased these million the addition, as cumulative the embedded look this $XX we million, our to beyond levels achieving goal expect savings beyond we

page Ingredients, should Edible smaller year billion from results In quarter a Let's In the crop. turn $XXX & in to expected driven higher due local results full be in Northern quarter margin XXXX on Oils. margins in the a our half our $XXX to our with anticipated outlook $XXX slower than the to outlook Milling originally range operations. to of Agribusiness expect Food fourth Brazil EBIT recovery wheat third EBIT year million Brazil $X to weaker to Hemisphere we're upper reducing continue than million and we to by X. million, reflecting benefit full the

year-to-date trading effect We compared incorporates of our now the distribution. tons, also full estimate $XX operations to drought be volumes result of to The Bioenergy, reduction our and outlook million Turning the over between a as approximately range XX, breakeven million This milling in adjusting reflecting year slide crush expect an $XX year. & we're the to full for from breakeven expected range Brazil. loss cane loss last around Sugar million of is our EBIT in of of in the $XX a & million. a to in

reflecting expect capital increase now fertilizer $XXX to $XX million, We from environment, million, be from of better estimate previous pricing $XX volume total $XXX million CapEx approximately driven million our by to an million a we higher of a previous EBIT and and target – in full-year expect approximately reduction and our $XX allocation. discipline better

expect higher our to inventory $XXX due in to year million, end We of to I'll And of to the over tax the million based expect an be of million to million rate levels earlier from $XXX on range higher interest earnings. interest we range $XXX to and expense range $XXX of increase the to now call our turn Soren. at XX% be rates. full effective XX% the mix upper net the back of

Soren W. Schroder

trade, seed We good and are step on a a big performance crush, as in year, growth looks for very track XXXX in as soy and demand and soft good Loders milling. with in Croklaan, up well solid fundamentals from Bunge promising strong

improve loss-making by parts global Over a navigate environment. activities Competitiveness profitability includes we will us and Bunge position. small our in businesses; a BXB looking and and and delivering politics, on improve will to to trade exited remain agricultural Global regional a that trade Global core in competitive the of player several oils, but is our highly remaining and ways milling this last in major year, in to for have we're the Program allow more Americas leader focus distribution. influenced good position the a crush leader dynamic the

We global we footprint have crush, strategy and and have invested well-balanced behind milling our to oils source trade. in a

competitive, means find of more and industry have sources efficiency has Our we growth. new to become which

will businesses, as therefore three Board into oils, milling challenge, to to with unlock customers, provide feel our help building Also that to for formed relevant We've maintain announced, the the programs alternatives are capabilities experience well ensure extensive of platform Bunge and a current changing has strong board years. earnings which we review directors always ways we we as and to on and well the we and embraced been the and make leadership our special navigate has them have shareholders Competitiveness and committee, position. growth around the pleased as and welcome We of Each are will new most which way new morning. Program over our future. can help value which Global us through been environment our distribution crush, this built approaches, successfully announced our us the strategic open this a as to business

impressive As the is anniversary much and we of we to our and have this year, excitement global operator support see feel call been celebrated and that, Their our the the to the are making will what to it's of we and their lies ahead changes commitment and over is XXXth it important turn your wonderful colleagues. With appreciated. of pride questions.

Operator

begin first session. our Andrews will now go Please We ahead question. And the question-and-answer Morgan Vincent with comes question from with Stanley. your

Vincent Stephen Andrews

you, Thank everyone. and morning, good

Soren W. Schroder

Vince. morning, Good

Vincent Stephen Andrews

just could business, increased Maybe Agribusiness. And if piece, what's in in of or just it what the in it's you've you. sort you help us if decreased, the little getting clarify seeing your the what's in changed parts how Gotten over better, margins a been so Agribusiness much sort could you on just of confusion different guidance. that getting of Thank worse? what's crush you're by

Soren W. Schroder

where range about be should range. the quarter. the $X $XXX to in talking a is And that We're bit upper Agribusiness by fourth will of it of contributor little is uncertain in we billion one essentially extent is supported the most grain unchanged. quarter which The have half Well, thing the the origination in. to locked margins million strong our Okay. fourth a a be

soybeans for origination U.S., fact futures And real are the as crop dialed that reflecting with in little lower of sellers being we at very the stronger transacted this and new little the in actually reluctant in moment, prices, farmers and speak. corn. is both Brazil very a have We that very

origination expectations quarter that of So, good that's – locked A we really going where up, it. relatively be that's most forward, in for and the crush really margins grain upside. could modest have an

we really extent It's can was obviously we well. to a not going great quarter as we're changing any can next we year So continue our in think here. very to good that be – year guidance a into It Agribusiness. and

Vincent Stephen Andrews

much it. I interest just also That's come it about or what versus is the program such just in surprised as that associated of this function of part on that up ask changed? And could sort understand it helpful. could things help time be One, something If is so a inventory short us you're about a with your guess prior then the thinking period else? of so was expense, Okay. I expectations, just and it I or expense – should is we the of – holding hedge Agribusiness sort interest it soy is of as a couple it

Thomas Michael Boehlert

is quarter a jurisdictions than where the interest in in number inventories. locally. inventories, a change primarily of sheet fund of at of the interest we The the Inventories quarter. balance also to small anticipated But part higher which agri Yeah. the There's piece higher and morning. one end the we inventories. relates our rates were by driven Good primary had during is and particularly

– for particularly build inventories forward, did there origination a ready build new And corn. in farmers as we inventory selling in in given devaluation third but mentioned as opportunities looking soft economics of crushing particularly the reasonable export. outlook soft a seeds the the were in North during Soren quarter as Europe and with in to build some campaign crop potential America caused carries Northern is Hemisphere, to inventories which we get Brazil, our well seeds

it's say temporary So, a it I'd – situation. a is

billion We the $X end year. by expect to down come more of or inventory by the

Vincent Stephen Andrews

Right.

Thomas Michael Boehlert

expect in as capital this year. to the dynamics we we – market, be opportunities into average with levels just have to our would year. have carry than this head been year, been inventory on they working And the been there lower next It's

be look So, and below interest going this start I to that certainly we'll bringing would year. million $XXX and the into by down year say end next forward expense of on we'll

Vincent Stephen Andrews

Great.

Soren W. Schroder

Yeah.

is, footprint somewhat one structural. at right we said, big is unusual I our Brazil of Thom turned operations be significant this of inventories of crush such was not led will thing, QX, repeat big but China in in out That and and that fact the build-up this It's and have as to the Brazil say, in that, on is to second it follow-up to just drivers think quarter. I the end to the that soybean that itself. of unlikely the significant

Vincent Stephen Andrews

Okay. That very was helpful. much. Thank very you

Operator

ahead And Duignan JPMorgan. our with next question. go from your question comes Please from Ann

Ann P. Duignan

Hi. morning. Good

Soren W. Schroder

morning, Good Ann.

Ann P. Duignan

Actually again a that remain repeat impact place, see the through If in walk a us where just exactly. in would in your tariffs place spring the the building wouldn't XXXX? remain scenario Soren, just this through year of have you of that why just If and tariffs on comment in we year on XXXX. the next business could

Soren W. Schroder

I there the is Well, extent would is normalization basis we no dependent the of upon second inventory in we it true – farmers this would and and This have than of that would combination we been grain way relations, be trade normally opportunity again able prices, – in there. if we mean, is of do would quarter Brazil. chances lot futures, up a we to to. were to are because we able foreign bean a that exchange build we probably totally it to which than more accumulated sellers we significant get had an year, willing the when during get ahead the But

more there But is that our At out where crop it depends protect find we we will which Brazil America, in have crush ways crush. new directed So margins our will for on be no and are South resolution, a still reasonable. we moment, can it of in the situation of a true will how be know flows. all if business in it you is lot to

we've is that a So But little the new we beans real said we very for stronger on. crush. have as with accumulate also going selling moment, would there initially at

So year. level of the are but that the which the as would Hemisphere, probably XX% we that I by below expect would way build-up given be a in Northern maybe – this expecting and for are prices looking, be would prices significant inventory accumulating significantly don't we're I year's past know at that you carry be XX%, say prices of XX%. right, And inventory – inventory don't we in of the near we matter it'll the outlook this tendency anywhere the I

of capital is So even should still resolution year, that lower the will would the found combination us of next a be it that think the position working trade than amount if use in get where we I inventory has been. not

Ann P. Duignan

flu follow noise fair Soren prices that's are Yeah, And that, China, a could about we've lower. much as on just are fundamentals you – lowering in all cetera? demand you. what and heard a expectations the China to then Like for your the et point over given et that for talk cetera, there all Asian margins about in crush in and protein the Thank mix China?

Soren W. Schroder

reasonable to state of Crush think Brazilian I above at a transition, in soybeans. based least margins on are still is Demand speak. so cost

new impossible use doesn't meal if next this Chinese soybean requirement think is back more. can't I in How you issued but bit. low at for say to set demand soybean China expect look minimum year, we meal that at year inclusion, a this would or or you mean coming much a crop to point. The authorities have

it how expect meal we've somehow, expect the made, and of demand at probably to parsed beyond that. will and day, demand years the prices certainly But soybean end that that be we feed in formulation China dictate will is a itself. So, still maintain be we'll underlying last least off-take growth in the seen couple season, at for then and of we see the and

to to the probably themselves Brazil, case fully So, would to with in and in appears And no having large through return it Brazil U.S. a crop actually without from imports is can they on into wiggle new Argentina can can small year. there that they expectation based of supplies the both in a that be the into last reduction our crop and China resolution supply trade – situation.

Ann P. Duignan

planted leads that it you on I'll because all Soren, the us quickly next in what Thank spring, leave you. on And could a that quick follow-up thoughts to then and that your gets give just there? U.S.

Soren W. Schroder

Yeah.

a a of maybe current a loss range between less lot obviously shift prices, expect would the moment, beans. and it's a you fairly soybeans base at very But it's more corn, significant corn wide given but think I out two. the into small of total

U.S. the soon, in this crop we inventories a soybean if significant almost would that even ending have had a soybean unavoidable significant resolution seems building still are We was build-up in stocks. trade year

to million I know. historic or So March. there. shift whether kind shift But million there's would But don't be a time long a suggest prices seeing acres, magnitude XX when we'll get that's of of that until significant corn, X some probably we it's a

Ann P. Duignan

appreciate in Okay. get the color. time. of line I interest in Thank you. I'll back the

Soren W. Schroder

Okay..

Operator

And with our Adam question. Samuelson next with ahead go Sachs. Please from comes question Goldman your

Adam Samuelson

a as the got I year for about kind everyone. the very had summer to crush guess a and geography. morning, XXXX, as in peak be of we Good and Thanks. by Oilseeds start outlook so, think state XXXX grow color I the drivers? the little of thinking profit wanted if we high And some robust move about we today, maybe the for Soren, you to Yes. into bit is line and world year-on-year the it given spring into as what this possible that, wise lapping would level

Soren W. Schroder

to Yeah. little liquidity. the also, to year and mean, with do be the quarters can mark normalization will gives least and so favorable crushing half very South Then domestic soy expect by we the environment. it case of question we're the animals America. good overall, of But there, bit off-take of be through be a very, but soy, in And market should also still year Europe, we that solid. of next U.S. the quarter the expect first probably in crushing strong, have possible case probably that crops I in should extent remain timing we U.S. environment composition good the the is at different standards and the is a year very, next soybean some two second a historical will margins the of demand assuming strong a meal; a of we are of us doing that. and secure

an probably expect say, The I'd second we in in the setback good question half mark have opposite of middle margins bit phenomenon where a the of soy should Overall, visibility we have in next all is got comes. in up, soy. we we gross the that. in until that Europe. geographies. the year But Black expect pretty will do biodiesel across a of the But utilization will sun high Europe soft of in good much the industry at demand we pretty seeds. seeds for crushing have oils to in We've is at moment fairly the soft to expect And Sea, oil in very for supply run rates all and of the margins on the that and year

a soft any on view seed next soy. positive So year that decline offset have crushing margins in should we

able next to another some balance, oil we at year and of in seeds we of as lock what we'll half crushing. be think secure into on up And and doing I So year. in look we're can the to that next good year being margins first

Adam Samuelson

and a helpful shake Thom, leverage as end the think it's expect the question, fourth trailing And XX-month you for then the by improves maybe out will And Okay. of as the would buybacks based repurchases you just year, that's color. kind that the if kind where what size of get where about to we and given next you inventory EBITDA your quarter reduction us move the for on stock bigger Can price a into the in think of is? as doing obstacles we appetite be and just guidance. about help

Thomas Michael Boehlert

of the come inventory expect to end the We year, Sure. following down by reductions. do the just debt

moves equal so working consistent debt Our roughly to capital, our with is and it around that.

one credit a have we think our priority number rating. BBB that I to we, is strong ensure forward, Looking

with terms going sure so headed will and year by this we've of as- been both work the – that terms Competitiveness and at we've end of outlook generating from I next And Program, and obviously – its some we through CapEx, flow year. – and year that the in in into headed of look And M&A, the secure we disciplined strong next extent. certainly year supported been cash make terms capital, that into as well a the results very then as of in capital to

our in we've a Loders investment we where deploy the secured first can obviously rating. been we've paring to in position once opportunities back capital So than consider quarter best put ourselves our we the funded the acquisition other to capital that

So M&A think discipline think I I heading – in our into next place. will year, our remain

that a bias begin and and to have know strategic only very, only we do will us we are look You our for again. a priority we program things buyback very at –

doing get year from of to at to is as end we of look and solidify of And list that capital ratings. our the able we are a our kind consider as perspective. would so the soon through But credit the it top allocation

Adam Samuelson

I the pass I'll color. Great. appreciate it on. Thanks.

Operator

And ahead Vertical Heather your with Please with Jones go our next question question. from comes Group.

Heather Jones

Good morning, and thank you.

Soren W. Schroder

morning, Heather. Good

Heather Jones

clarification first on on I XXXX. have – quick a

guidance and QX of and the and changes, hadn't in that it far in call Agribusiness changes Agribusiness Sugar down, it, the than is implies estimate to like but you million meaningfully So but the to we you F&I your QX $XX million changed as using came expected. uncertainty related just guidance. take those it – better different if mentioned that your Grains, Fertilizer, mentioned in And midpoint $XX seems as

wrong, far I, is year So, implications for full I'm as Agribusiness math wrong if doing one, my what guide your – as not am and the drove that?

Soren W. Schroder

point say wide this And in ranges, more is what said. the less up I on or you if QX the Agribusiness. you you the Well, pretty midpoint for range end would take at

we fourth soy I come in was. less feel good a catch the quarter, for little XXX,XXX anything – can that whether up is third slight in than reasons, slight bit a the will commercial If a because reduction think different for overall, year in crushed in we on seen. crushed it less don't remains how about tons that we be the significantly maybe we simply really Agribusiness expected to than quarter we

very, as very the been North change amount this change well quickly. of been speak, and October profit in Brazil we pickings, to point, for has grain So Brazil maybe has America the overnight. can also quarter so modest as soy, have At we slim – in is said, this it October very but dialed but off in literally a can fourth as in slight

are can range – – quickly is to the a rather is we would say quarter have hesitate quarter, in and it period. know came suggest And have down, going a the fourth might say Grain I that positive I the come it. the QX, will ranges although as a sure. in quarter So better if in two we that had we it wide turn you and third if week within the most of for we out that grain activity we

very it quickly. So just can change

And so visibility perhaps we to operations do we and as range, fairly described good course our know we but nail it. as on hesitant a of number a rather paint crushing – is have wide

very question million, will year, be the really for $XXX Oilseeds is solid the so grain. then above And

of be grain strong So that's it about I Brazil, answer North the origination. it. crop. it's it's but very Farmers of really And to in It's point, fairly Agribusiness, it America in their we look good how that's a to pace quarter of doesn't going seem stubborn be at Brazil relative North more this to know how I function America. is in farmer is the your than is be really And year, think just perfectly, going record about holders question historicals. undersold a good to – at a great

will movement any with – break I any know or in you So met up futures, be with think currency selling. – any the in

that's – are. that's mean So really we where I

Heather Jones

on in meal meal you XXXX? clarification their slowdown And on that XXXX down you to there is you as or expect were soybean actually going demand, did be saying a versus soybean China or – a demand comment growth demand in implying to your be Okay. soybean their

Soren W. Schroder

be I the down, crop early soybean will down tell. meal don't think, it's to release; can demand for I cycle. not inventories are imports they coming stocks They think grow we soybean drawdown is in much. think expect Whether I it they too reserve to or have sure. likely to

– that absolute soybean tell. into import minimum China an that overall tell from regulation, is import it's million still think on of although significant too But there's a tons. industry I that early soybean number dependency all – in sources an meal protein, effort to pretty new inclusion think, I a reduce in of remain will So importer the Whether chatter soybean the reduction a various meal, XX – there the of but we usage, the soybean you in is whether is course, are trying to meal is confident to can I will translates there of a be lower. it

So, flat soybean It any the wouldn't conflict it this But war away I pretty sure you surprise down. meal year margin. really in under trade resolved me. think if to can't if soybean or stay meal the in I'm way coming it's wouldn't use about be go implied it isn't tuned. me trade will surprise imports, with China,

Heather Jones

the the could thinking about thinking crush we're meal in stay And and thinking down do little XXXX, for when including in How we to up meal contribution Brazil? expect mandates you or see but I'm because to go for the oil side of guys the come a – contribution bit when equal oil are around XXXX, higher soy roughly about that? world you

Soren W. Schroder

Yeah.

had rationing crop end style. of you're tendency, get tightness first the South and the still than in it, of meal. needs little a before I we later It's new let's think between the expect to Once quarter, say some soybean enter a mean American there supplies we be developing quite there now the be in anticipated be first we some will matter coming As – there right. but we that through still will I quarter

and in fairly XXXX inclusion or through palm. tendency Looking oil for biodiesel in increases up. in another by beyond announcement sizable Southeast let's mandates driven so seed sizable maybe was stronger probably increase – is there of the which second In of that, think a is say both soft half relative demand there the before was Asia yesterday XXXX, in supportive step out day crush, the Brazil, fairly an I of

of U.S. more in certainly in even think the we've same seen, Europe. the So I that and

So protein. towards the be tendency than oil the to would of second year half more

Heather Jones

much. you so Okay. Thank Perfect.

Soren W. Schroder

right. All

Operator

ahead Please go next question. question with our Driscoll Citi. David your And with comes from

David Driscoll

you, and morning. Thank good

Soren W. Schroder

David. Hey,

Thomas Michael Boehlert

morning, David. Good

David Driscoll

this, in Just have, to we a a different million it lot out $XX comes make that gains million to and in all netted sure, the right? it's guys, $XX reversal like pieces QX, that is that but quarter in of there's of mark-to-market fourth

Soren W. Schroder

be on negative It right. That's QX. Yeah. will impact a

David Driscoll

Agribusiness doing of at doing, just I almost volatile, billion, $X.X the million last press at all EBT when $XXX read simple today's $XX EBIT point like Soren, the math know interest kind precise mean, segment and change I on it business to maybe, view, to call same I we're $X.X million but was the here and release Heather my it math, I'm billion incredibly expense. be And you're in trying the to pretty guidance out, and so was release, press level. is from of was what that this Okay. trying seemed negative

getting what trying on like it So careful there looks is and the to qualitatively because with Would tell us then to summation? gain. agree guys reversal numbers trying from the there this move around you're think $XX Agribusiness you lot, are call can my Agribusiness. you specific be I a something too in is, But out million of

Soren W. Schroder

for in have, even grain year. Yeah, soft I origination the is first can where opinion. change that or is locked the in trying say to more less in we're quickly, and the we in both the first quarter have – which things though month I'm what quarter seeds of soy last think particularly through my upside very through Crush we is up

good it Dynamics change and markets are our can significant. to have in as you that, visibility know very We quickly.

too very the specific, little, given. And you grain be paint this suggested. range being origination guidance change in than higher as that just could what can to saying quickly. we've early, We've the included very so little certainly from got I very try things I'm don't

So the that's upside really.

David Driscoll

bit Okay. this, on answered still the you a – And slightly then but on trade, I'm China-U.S. about confused.

Soren W. Schroder

Okay.

David Driscoll

of just this for a positive just obviously it's a bottom said, – there, second say half something is this negative going don't what XXXX, but is pick trade, it's of we a line to If arbitrary or let's Bunge I U.S.-China affect and Bunge? resolution get a is I little out for resolution, the to

Soren W. Schroder

either so when exactly on much it it I because would – under I call way it depends circumstances happens I what and think happens. wouldn't it it neutral. is

put has example, are this the Chinese before Brazilian Brazilian – direction a is out happens. there then or an impossible turn beans before beans has many for and farmer to – it's bought it of farmer sells so absolute a of happens how crusher could lot on it put know, You it. lot the that sold the a of It combinations

– I feel to and what either comfortable to saying in are react to I a to is I – think good we very place that profit place event. damn what – from

We position in know, this have played year. you as a very strong very Brazil us out that strong, for well

strong very position crush and America North Europe played in in have We also a that out. has

navigate I we be in will advance. well, or positive this navigate, to we able hesitate think situation, be in far but to able either will it to I negative call

played I in XXXX, a plays and well that in scenarios. it exactly under good of But year any the – – don't for believe perspective. out under want these XXXX to I come know will through try an be quarter any well. it through this earnings handicap think You we fourth should quarter, year, it third from as came – in this how the

David Driscoll

kind my And on then, – comment pushback one part. one of Soren, just

comment; maybe gave XXXX longer term I'm thinking like maybe even than a You that.

about in supply Day you a capacity, know demand capacity time of crush XXXX and the side... and lot at soy oilseed back Analyst You and curves the talking crush spent that

Soren W. Schroder

Yeah.

David Driscoll

the increase oilseed again you to growth, about and to slide backed then back of kind – – a seemingly the put up crush XXXX would capacity China a trajectory on with deal on of that me where demand. come the ...a would back demand and thing this in those crush

a longer U.S.-China me, deal is term positive. For a

agree that crushing You're and don't would if utilization to so that curious, you a not that, be I'm global rates? positive saying oilseed

Soren W. Schroder

that the is the now. not have for resolution healthy a positive have to is agree industry. It we environment of trade do type is I What on

out how farmers can prices and It regions in You sending putting build on basis abnormal see levels. to its it strange certain pressure corn. into skewing of get creating is is signals and inventory seeds to

demand, protein resolution is thing for a that good growth So for we and trade everybody. underlying believe global and a

been. for than X X scenario, like I the what don't be look situation, is million of to let's relatively this to so, in Long, But grow on Underlying China a that a industry have short-term. also And coming for and U.S. know We soybean as for demand it's think And better in stream predicted, rates continues good continues Bunge. current yearly soybean that we'll we Argentina, for is resolution which long-term in through as I less have year. as but at long run, and sure, the have would that new being the smartly we origins, a China million meal for meal and we there to the we is; on – at capacity that that's would than have the grow. It permanent navigate at as that it outside basis. is us grow it long see. the will tons a look between also to underlying Europe. Brazil good demand

years U.S. take and a three seen should year, know in still brownfields you Brazil that's announced means in – start back much next as will or getting call to our of into know encourage bit couple know past out, intact. two expansions that amount are expansion the it mean I investment from we little thesis also but criteria crush repeated you already XX%, eventually origin (XX:XX) couple also where very that place. crush be margins of years, total remain Argentina the at out XXXX. we XX% or set So sometime we where while soy a a year capacity position might probably for That they and you or and of a should it should we've being the get levels that in this as crush level two –

And in doesn't distorting, in change so the I shifts are very are it outlook. interim And think intact. but much trade flows fundamentals and those trade conflicts the long-term

confident this there the next become a U.S. will massive and rather big year, for getting suspect get into be as means It's I very year towards to the we and this and of U.S. for are more evident hope just it even stocks. think end build-up. of – that what soybean than are be. will We resolution will a and too sooner again imbalances there we I that, later The

will I crush way which to and for still and in reason terms, will we normal back the industry very much us, overall – will fundamentals to find prevail get there is So be that for underlying are the a but there. that better hope

David Driscoll

in new just elaborate the but brief was a or for bit? comment, sale end are of strategic it's I'd for you, Soren, speak okay, a to looking threw the assets? actions Is important, If to just it – seems at board one you with certain a the there's little some last company and directors be like the course, on you too me. one really very could you about script sell strategic, This honest of in to your

Soren W. Schroder

really is need very up we'll it it's there what I absolutely we've to arrogant in sense we agribusiness have new to all to get of this. general. of They about some everything board in ongoing at we I been announced morning. script, consist come about. members. It what's I board, of take as There that done six anything fantastic direction step that existing done. preconceived at. new many strategic we're members, at that of everything three are than we to conclusion and commodities the and right. is combination which and three Well, don't that's fresh everything, is will I'm committee this is which convinced going For the want combination But mean, want people ones, than of now announced with programs will insight back sure. mentioned but existing and talent committee Is or our the have our of look else. one a more a specific committee, my that know that's that's will a it. action look experience. from those welcome no things I board that, review three to doing ahead that with be I new were And powerful this and board those the – The we've handicap and three in assume we're ideas? thought to more we a on they not – combined and don't possible a that is – where

David Driscoll

Thank you. I'll it pass along.

Operator

from with And LLC - question Hi. our your ahead comes Suisse question. Securities Robert Suisse. with Thanks. Robert (USA) Please go Moskow Credit Credit next Moskow

activist question of in nature. with were Do that shareholder do they decision talk about to up members needs you be to bit Soren, really I a three can't these board, review about will of to have come or leading their long this the to comment then many preconceived up to to follow been Bunge you guess mine notions to whether little them And added considered your is review. it? any them from not? expect by directly, own on create David's strategic this secondly, maybe highly us have Thanks. take, the you've a but discussions as a new how when value? what Can you to with do conclusion constructive And

Soren W. Schroder

that's lot Well, a of questions.

on some year, top while. two food that pretty significant are do, preconceived the my Vinita joined You deep industry in ask in idea. to and we believe, agribusiness a of and experience no they and had to of the is in board perspectives, coming renewal they individual add their Mark that They have there deliberation perspective, this with conclusion you or of and respectively. From as going port people myself, know we've have to terms them. on can lot for a also

accelerate So, – and we explore here be or gets that good really to dynamic far think that we're the putting together that we're areas what so help really we already a with haven't industry able us should eventually doing. a board

feel to of delivering strategic we report a board performance, two environment living this it's don't good get a it also even, year, the on it can for particular decides to group than want really that on year mentioned to we outlook the better historical more. of shareholder standards. unusual know good ahead is that as It's deadline a all last don't this coming and especially alternatives expectations been the that higher and years. So a year be I have I although is we've three think that, by dynamic it. out, of going we back that given But I ongoing, There's through we're what focus beyond or for no a are very do particular

Suisse - to ask Good. Robert people a Okay. all Heading place. anxious And better LLC we to positive very we I Can follow-up? it Moskow into thing. guess look So (USA) a are shape in as next get look asking it. Securities have year, a Credit been cooperation. forward this And how I at to I

– that the somewhat similar crush great know as of or the was XXXX be you'll have in margins, comments we portfolio. now a – in some the it XXXX? direction margins saw us mean, made assume they crush that not we Also spot can the mean, margins gain these starting cautious You've maybe we can to margins part still these can and you most crush should of again. fall follow I about and in I assume of are in XXXX as year, good but

Soren W. Schroder

Yeah.

lower between feel operate. particularly which in imagine we the soy level average – as I all I will of expecting seed think I we them our different half the oil absolutely to had think that we right. – year same It's some have crush, to also XXXX. we are in are the as demand had strong and margins geographies the for upside that slightly have you're to we'll this But we second you that related of in we difficult in on think be soft crush peak

this again a year. should next good overall, be Oilseed year So very

we are what in secure can doing of soy and hedgeable the we're those. margins Some to

some good part we But footprint, secure you upfront. for them our of a we can know – Some can not. we of are – this of

Brazil the work – (USA) then, in I And supplies that going through year a into here next crush – market, be a to particularly in LLC different guess Robert a then soy mix Okay. but different going Edible Suisse - in year, excess are Moskow and the it's is Credit overall mix and So, good year. moving between but thesis to Securities and... Oils, the soft good seeds,

Soren W. Schroder

(USA) Yes. then Securities pricing Loders... And LLC Moskow Edible Suisse - ...that will Oils. your Credit Robert help for for

Soren W. Schroder

Yeah. Typically.... Go ...yeah. LLC Moskow Suisse Credit - ahead. Robert Securities (USA)

Soren W. Schroder

No. No.

go You ahead.

Oh. Credit Securities you Suisse (USA) off. Sorry I - Moskow get LLC I Robert cut to go.

Okay.

that those better have through XXXX when you'll and For are Loders, Loders? some you costs expire, have contracts into – for supply working those

Soren W. Schroder

Yeah.

So, last very for is of the down last gets first, We pipeline Basically inventory mark-to-market the don't of come but XX one over kind XX contracts straightforward. palm. days and prices sales mark-to-market our to – that is our finished have mark-to-market our product. have we the we purchases and

than calculated. were initially So it be process we it at oil, as higher will palm margins means, this

that's So I hope clear.

the Robert Like... one (USA) not Securities for - mark-to-market that. Credit accounting but we other. So convention LLC side Moskow That's Suisse the

Soren W. Schroder

the... (USA) Like... Robert Moskow on - LLC Securities Suisse And Credit

Soren W. Schroder

- forward... right. Moskow Yeah. All Securities operate I though, go beg Go question mismatch Go the LLC going ahead. ahead. I'll ahead. just I it Suisse Robert mean, (USA) this does with mean, just Credit does Loders

Soren W. Schroder

Credit and it be. and Moskow how cost Suisse - Securities can volatile Robert (USA) price ...between LLC Yeah.

Soren W. Schroder

how I you have but standards they – conventions talk this the on accounting can and Thom operate that's that's Yeah. operated. well, mean, Thom? to

Thomas Michael Boehlert

and right. they operated. That's how have That's operate

for But little that to We handle going the are exploring it continue other moment, we'll mismatch. have potential to forward. ways

Soren W. Schroder

I over been there's quarter. move last a fairly oil the palm prices mean, in Yeah. significant

the on similar to soy now third will crush, the understandable completely out probably been the too. of about of the of mark forward. into this just under the as a on about is I I is the access. – a in whenever long America. correlation one going we mismatch a how it's flow question, our very other we go But call it's a South reason it you where you would transparent And speak, in and asked have what type on retail And oil I can fairly business. as Yeah, is think. happens. strong And the we've in quickly But there's scenario you Loders supply as thing we didn't P&Ls in tightening this course, (X:XX:XX) had why So it typically think so the gets And really it expected. mark-to-market have first margins mean, to big between have as way oil it that and pieces contribute timing, quarter tight it different

As the of loose we've historicals fairly a situation and out first it and of sort through will been year by this judging through into the year carry now that is to beginning starting quarter. stock most change probably really oil

was XXXX first in quarter The because for we had Brazil example supplies. very tight strong of for oil us

is it it be building beans this that I And speed only feel all crop - now to think this (USA) that we it when at so for last and Robert will Brazilian But Securities least with supplies will Thanks February-March. up LLC Credit of reverts. industry – gets questions. the the Suisse crush is until new Moskow

Soren W. Schroder

Sure.

Operator

this like remarks. closing would our question-and-answer to Haden any the for to And turn conference concludes session. back Mark I over

Mark Haden

to want we'll everyone thank I joining for today, us and you next quarter. to talk

Operator

presentation. is you now today's Thank The conference attending concluded. for

now disconnect. You may

Bunge Limited (BG) 31 Oct 182018 Q3 Earnings call transcript