July 30, 2015 / 11:49 AM / 3 years ago

UPDATE 2-Bunge Q2 profit misses forecast, shares drop

(Recasts, adds details on second-half guidance, adds quotes, updates with share price)

By Karl Plume

July 30 (Reuters) - Agricultural commodities trader Bunge Ltd reported a sharply lower quarterly profit due to weak oilseed processing margins in Canada and Europe and an unexpectedly steep drop in demand for its food products in recession-hit Brazil.

Shares of the White Plains, New York-based company plunged more than 5 percent.

Bunge’s agribusiness segment - which buys, sells, stores and transports crops and processed products and is its largest in terms of revenues - saw earnings drop 57 percent from the year-ago quarter.

Food and Ingredients segment profit fell 68 percent as edible oils margins and volumes contracted amid rising unemployment, inflation and currency devaluation in Brazil.

But the company forecast a stronger second half of the year on a favorable soybean crushing outlook and as expected large crops in the United States and the Black Sea region should provide Bunge ample supplies for trading and processing.

“The headwinds were strong, but largely temporary,” CEO Soren Schroder said.

Although poor Canadian canola margins and weak Brazilian demand for its food products was likely to continue, Schroder noted that the second quarter’s agribusiness losses from trading and distribution have already been recovered. Those losses stemmed from a late-June surge in wheat prices that disrupted global export demand, he said.

Bumper crop harvests in the United States and the Black Sea region, which will boost Bunge’s asset utilization, and good soy processing margins in China could lift returns in the second half of the year. Full-year earnings, before interest and tax, in agribusiness are expected to top $1 billion, from $464 million as of June 30, he said.

The company also expects a second-half rebound in food and ingredients, although returns could still lag the prior-year period.

Schroder said the company is still trying to sell its Brazilian sugar milling business, which has been in the block since November 2013, but the once unprofitable unit was “no longer a drain on the company.”

Bunge’s net second-quarter profit came to $72 million, or 50 cents share, compared with $272 million, or $1.81 a share, a year earlier.

The profit fell far short of analysts’ average estimate of $1.36 per share, according to Thomson Reuters I/B/E/S.

Revenue fell 36 percent to $10.78 billion, below the consensus estimate for $14.94 billion.

Bunge shares were down 5.4 percent on Thursday at a four-month low of $81.00. (Reporting by Karl Plume in Chicago; Editing by Chizu Nomiyama; Editing by Bernadette Baum and Chizu Nomiyama)

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