Bunge, the agricultural commodities trader, exceeded Wall Street expectations by achieving a record-adjusted profit in the fourth quarter. The robust performance in oilseed processing significantly contributed to the success of its core agribusiness division. The company’s earnings were positively influenced by elevated grain prices and reduced oil expenses, effectively mitigating the effects of increased industrial costs and the depreciation of the Brazilian currency. The Company forecasts a drop in adjusted profit in the year ahead due to narrowing crush margins. The Company expects the spread to narrow between oil and soybean prices, and higher energy costs are expected to remain a headwind for margins in 2023.
Revenue rose 4% to $4.3 billion as higher oil prices offset the impact of the weaker Brazilian currency on its foreign exchange results. The Company reported a 44% average per-barrel crude oil price increase to $49.70 in the quarter, which lifted revenue from its North America and Europe segments. Bunge’s Asia segment also saw its revenues rise, primarily from more substantial oil prices and increased product demand. The Company reported lower sales and marketing, transportation, finance, and administrative expenses, mainly reflecting lower personnel and operating costs.
Bunge’s net income rose to $72 million, or $0.24 per share, from $425 million, or $0.13 per share, in the prior-year period. Adjusted earnings were boosted by a gain from selling its equity stake in its Brazilian sugar joint venture, reduced severance expenses, and other non-recurring items, including charges for asset impairment. Higher interest expense, a lower tax rate, and the loss of income from a commodity swap and other financial instruments partially offset these gains.
The Company’s revenue from its agriculture business rose 5% to $2 billion as higher prices for grain and fuels helped boost volumes. Bunge’s food and ingredients business generated revenue of $1 billion, boosted by the addition of the Loders acquisition last year. The Company’s commodity trading operations contributed $585 million to revenue in the quarter. Revenue from these operations is recognized at a point in time when the Company satisfies its performance obligations and transfers control of a product to a customer, generally when legal title and risks and rewards of ownership transfer.
The Company’s total assets decreased 11% to $39.7 billion on December 31, 2018, from $60.7 billion on September 30, 2016. This decrease was mainly due to lower market values of equities and investments, which were partially offset by the effect of higher cash balances. The Company’s debt declined to $11.9 billion on December 31 from $21.7 billion on September 30, mainly due to the repayment of debt and lower interest expenses.
The Company’s liabilities were primarily comprised of current liability and noncurrent liability. The Company’s current liability primarily comprises accruals for severance, pension, and postretirement benefits. The Company’s noncurrent liabilities comprise long-lived assets, payables, and commitments for future projects. The Company’s cash and short-term investments were primarily invested in investment-grade U.S. government bonds and notes, investment-grade non-U.S. government bonds, and corporate bonds from diversified industries.
