UPDATE 3-Bunge 2nd-qtr profit up on agribusiness results, shares rally
(Adds analyst comment, updates stock price)
By Karl Plume
July 28 (Reuters) - Bunge Ltd shares surged on Thursday after the U.S. grain trader said quarterly profit jumped despite volatile grain markets and maintained its higher full-year earnings forecast.
Strong results from its agribusiness unit, the company's largest revenue driver, boosted results. But the company also warned of weakening margins in Brazil and Argentina due to smaller crops and lower prices.
After posting a 51-percent profit rise in the second quarter, the White Plains, New-York-based company said second-half earnings would be weighted toward the fourth quarter, when crops in the Northern Hemisphere are harvested.
"Overall, we continue to expect to grow earnings in 2016," said Bunge Chief Financial Officer Drew Burke.
"However, in the near term, slow farmer selling in Brazil and Argentina, due to smaller than expected crops and lower prices, are negatively impacting margins. We also expect the mark-to-market gains we benefited from in the second quarter to largely reverse in the third quarter," he said.
Bunge had warned of second-quarter headwinds due to smaller-than-expected harvests in South America, home to many of its elevators and processing plants. Excessive rain in Argentina and severe drought in Brazil reduced yields, prompting farmers there to hoard more of their crops than grain traders had anticipated.
The South American crop shortfall, however, has raised demand for shipments from the United States, where rivals Archer Daniels Midland and privately held Cargill have a stronger presence. Continued...