* Bunge swings to unexpected quarterly loss
* Excluding charges, results miss Wall St view
* CEO Alberto Weisser to retire after 14 years
* Shares tumble 9 percent
By Tom Polansek
CHICAGO, Feb 7 Agribusiness giant Bunge Ltd on
Thursday admitted the historic U.S. drought had tripped up its
well-connected risk management team and also said its chief
executive will step down.
The disclosures came as Bunge, one of the world's top
agricultural trading houses, reported it swung to an unexpected
loss in the quarter ended Dec. 31. Excluding one-time charges,
the resulting profit was still well below a year ago and average
Wall Street forecast.
Bunge's risk management team contributed to the weak results
by rushing to buy soybeans and corn in the United States last
year amid concerns that harvests would be slashed by the worst
drought in 56 years, outgoing CEO Alberto Weisser said in an
The team ended up overpaying in October, as crop prices
declined later in the autumn and winter as supply fears eased.
"We were seeing that it would be tighter than it really
was," Weisser said about the supply of crops. "We had a
direction to our buyers that we ended up buying more early."
Bunge is among the four large players, known as the ABCD,
that dominate the flow of agricultural commodities around the
world. The others are Archer Daniels Midland Co, Cargill
Inc and Louis Dreyfus.
Bunge's miscalculation on crop buying was a surprise due to
its vast network of grain merchants and showed how the
widespread drought caught traders off guard.
The company still recorded a record profit of more than $1
billion for its agribusiness sector for the year.
"You have sometimes quarters where you don't get it exactly
right," Weisser said on a conference call with analysts. "Have
we made a mistake? Yes. Have we learned from it? Yes."
Weisser will retire June 1 after transforming Bunge into one
of the world's largest agricultural trading houses from a
regional operator over 14 years as CEO.
He said he had been planning his succession for a few years
and will serve as executive chairman through the end of the
Soren Schroder, CEO of Bunge North America, will replace
"This is the right choice at the right time," Weisser said.
"That is true for Bunge and for me personally."
Schroder, a former employee of rival Cargill, has led
Bunge's North America operations since 2012 and developed its
agribusiness franchise in Europe and the Middle East. He said he
planned no major changes to the company's strategies.
Strong global demand for oilseeds has recently helped
agricultural traders and processors rebound from a tough
environment early last year and in 2011, when grain prices often
swung on economic concerns instead of supply and demand
However, Bunge reported a net loss of $610 million, or $4.17
per share, in the quarter, compared with a profit of $245
million, or $1.65 per share, a year earlier.
Adjusted earnings were 57 cents per share, below analysts'
estimates of $2.36 per share.
The fourth quarter included a series of charges totaling
$683 million, primarily from the sugar and bioenergy business.
Revenue rose 9 percent to $17.04 billion.
"I feel like this quarter was a flat-out disappointment,"
Citi analyst David Driscoll said.
Bunge shares sank 9.6 percent by 1:30 p.m. CST (1930 GMT).
By contrast, ADM on Tuesday reported a six-fold increase in
earnings after U.S. soybean operations ran at record capacity
during the quarter ended Dec. 31.
Cargill said last month that "more fundamentally driven
markets" helped it quadruple earnings in the quarter ended Nov.
30, with results buoyed by gains in global commodities trading
and oilseed processing.
Bunge's strong presence in South America could give it an
advantage over U.S.-focused ADM this year because farmers in
Brazil and Argentina are expected to harvest large crops of
soybeans and sugar cane.
Weisser downplayed concerns about dryness hurting grain and
soy output in Argentina, which drove soybean futures to a
seven-week high at the Chicago Board of Trade earlier this week.
With nearly ideal weather in Brazil, South America will
still harvest a massive crop, he said.
The U.S. Department of Agriculture will update its global
supply and demand forecasts on Friday.