Bunge revises guidance for 2006 after "challenging" Q2

By staff reporter

- Last updated on GMT

Related tags Oilseed processor bunge Brazil Bunge

The world's biggest oilseed processor Bunge has announced a
revision of its net income guidance for full year 2006, after Q2
was more challenging than expected.

And the company is expecting poor result for Q2 2006, which may only be close to breakeven.

The poor returns from Q2 2006 have led Bunge to revise the net income guidance for the full year ending December 31, 2006 to $425m to $445m, a reduction from the prior guidance of $495m to $515m.

The company's CFO, Bill Wells, said in a statement: "Business conditions in the second quarter have been more challenging than expected.

"Volatility from time to time is normal in agriculture-related businesses, but this quarter has been particularly difficult. Nevertheless, we believe that the major issues affecting the quarter are temporary in nature and substantially behind us."

Wells made reference to the farmer protests in Brazil that resulted in supply chain disruptions, plant stoppages and slow sales of agribusiness, fertilizer and edible oil products.

These protests have since stopped, and Wells said that the new farmer aid package granted by the Brazilian government and a more stable real​ should help Brazilian farmers.

Nonetheless, the effects of these actions on Q2 results will not be recovered in the second half of the year, said Wells.

Wells finished his statement with a note of optimism: "New demand for biodiesel inputs is a positive sign for the future. Longer-term fundamentals for Bunge and our industry remain positive."

In fact, Bunge is set to increase its capacity in Eastern Europe with two facilities already in construction, one in Russia and one in the Ukraine. It has also recently acquired a new facility in China and has increased capacity in Argentina.

Indeed, according to Bunge, Argentina is set to be the largest export platform for soybeans in the future, as it is the "advantaged location"​ worldwide in terms of cost.

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