Agricultural commodities trader Bunge Global BG.N disclosed a smaller-than-expected decline in first-quarter profit on Wednesday, with favorable oilseed processing results in Europe and Asia offsetting the impact of weaker grain trading margins.
Despite the challenging market conditions, the world’s largest oilseed processor reaffirmed its 2024 outlook for annual adjusted earnings of $9 per share, down from $13.66 last year, as processing margins are anticipated to remain compressed in most regions.
In premarket trading, shares of Bunge fell by 4.7%, reflecting the market’s response to the company’s Q1 performance.
Bunge, along with its agribusiness counterparts such as Archer-Daniels-Midland ADM.N and Cargill, has experienced a decline in profits from recent historic highs due to increased global crop supplies and reduced prices. These companies generate revenue by processing, trading, and shipping crops globally, often benefiting from shortages triggered by crises such as droughts or conflicts.
The release of Bunge’s Q1 results coincides with the company’s efforts to finalize the acquisition of grain handler Viterra, a merger that would position it as a significant player in the agribusiness sector, comparable in size to Cargill and ADM. However, the proposed acquisition has raised antitrust concerns, with Canada’s Competition Bureau expressing major competition concerns in a nonbinding report.
CEO Greg Heckman indicated that while regulators in 13 jurisdictions, including the U.S., the European Union, Brazil, and China, have not yet approved the deal, he remains optimistic about closing the transaction by midyear.
In the first quarter, Bunge’s agribusiness segment, its largest in terms of revenue and volumes, reported lower adjusted earnings, while the refined and specialty oils segment experienced weakened results in North America and Asia. However, the milling unit’s earnings witnessed a notable increase.
Bunge posted an adjusted profit of $3.04 per share for the three months ending March 31, surpassing analysts’ estimates of $2.53 per share.