(Bloomberg) -- Bumper harvests across the globe are shrinking profits for Bunge Global SA, with the downturn in crop markets providing the company with “little visibility” for the rest of the year. Shares plunged.
The St. Louis-based company, one of the world’s largest agricultural commodities traders, posted earnings of $1.73 a share in the second quarter, the lowest since the start of the pandemic, according to a statement on Wednesday. Results also missed analyst expectations by 10%.
Profits for Bunge and its rivals including Cargill Inc. and Archer-Daniels-Midland Co. have been under pressure from ample grain supplies, reversing the windfalls from previous years, when crop losses and Russia’s invasion of Ukraine sent grain prices surging. Margins from processing soybeans into meal and oil — a key earnings driver — have also eroded.
The weaker results “reflect a more balanced global supply environment,” Bunge said in the statement.
Farmers have been slow to sell their crops at current lower prices while consumers have been “rewarded” for buying only enough to meet their immediate needs, Chief Executive Officer Gregory Heckman said in a conference call with analysts.
While the company has been able to lock in higher processing margins in the third quarter, there’s still “very little visibility” on what the conditions will be in the latter part of the year, he added.
Shares tumbled as much as 7% in pre-market trading.
The results were a rare earnings miss for Bunge, which had beat analyst consensus for seven straight quarters. The performance echoes that of ADM, which on Tuesday also reported weaker-than-expected profits.
Bunge saw profits slump 78% for the business segment that handles the merchandising of grains such as corn and wheat as lower prices more than offset an increase in volumes. Gains from the trading and processing of oilseeds such as soybeans halved from a year earlier.
The trader, the ‘B’ in the storied ABCD list of companies that have dominated agriculture markets for more than a century, raised the outlook for the year to $9.25 a share. While that’s higher than a previous forecast of $9, it missed analyst expectations.
(Updates with CEO comment starting in fifth paragraph)
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