Bunge names acting CEO, cuts 2018 guidance

(Dave Bedard photo)

Reuters — Global grains trader Bunge appointed one of a slew of new board members as its acting CEO on Tuesday and cut its 2018 earnings forecast as the U.S.-China trade war battered soybean prices and devalued the company’s inventory in Brazil.

Gregory Heckman, a founding partner of private investment firm Flatwater Partners and former CEO of grains trader Gavilon Group, was appointed acting CEO. Heckman joined the board as part of a deal to ease shareholder pressure on management late last year.

Bunge shares were down about 2.5 per cent near the lowest point in almost three years.

One of the “ABCD” companies that dominate global grains trading along with Archer Daniels Midland, Cargill and Louis Dreyfus, Bunge has been battered by low crop prices and thin trading margins amid a glut of grain and oilseed crops.

Meanwhile, the U.S.-China trade war has slashed exports of U.S. soybeans to China. That has further depressed prices of the oilseed, including what soybeans Bunge has bought from farmers in Brazil.

Bunge’s troubles have left the company vulnerable to takeover attempts by ADM and global commodities trader Glencore since 2017.

In October, Bunge bowed to the demands of activist investors D.E. Shaw and Continental Grain, adding four new board members and creating a strategic review committee that would explore all options for the company, including selling itself.

Bunge, which in December removed long-serving CEO Soren Schroder, said Heckman would step into the role on an acting basis as the company continues its search.

Three board members — Patrick Lupo, Ernest Bachrach and Enrique Boilini — would also not stand for re-election, the company said on Tuesday.

Bunge said adjusted earnings before interest and taxation in its agribusiness segment, its largest in terms of revenue, would be about $90 million to $100 million below the low end of previous expectations.

Earnings in its sugar and bioenergy segment would be about $60 million to $70 million short of expectations due to low Brazilian ethanol prices and weather-reduced crops (all figures US$).

That would reduce the overall number to less than $1.05 billion that it had given as the lower end of a previous earnings guidance for 2018.

Bunge is scheduled to report fourth-quarter and full-year 2018 results on Feb. 21.

— Reporting for Reuters by Karl Plume in Chicago and Debroop Roy in Bangalore.

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