Q1 2025 Bunge Global SA Earnings Call
Good day and welcome to the Bunking Global as a first quarter 2025 earnings release and conference call. Today all participants will be less than only mode. Should you need assistance during today's call? Please sign up for a conference specialist by pressing the star key fall by zero.
After today's presentation, there will be an opportunity to ask your questions.
Speaker Change: To ask a question, you may press star and then one on your telephone keypad. To withdraw your question, you may press star and then two. Please know that today's event is being recorded. I would now like to turn the conference over to Ruth and Wisener. Please go ahead, Madam.
Speaker Change: Thank you, Operator, and thank you for joining us this morning for our first quarter earnings call. Before we get started, I want to let you know that we have slides to accompany our discussion. These can be found at the Investor Center on our website at bunge.com under events and presentations.
Speaker Change: Reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well. I'd like to direct you to slide two and remind you that today's presentation includes forward-looking statements that reflect Bunge's current view with respect to future events, financial performance, and industry conditions.
Speaker Change: These forward-looking statements are subject to various risk and uncertainties. Bunge has provided additional information and its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation and we encourage you to review these factors.
Speaker Change: On the call this morning of Greg Heckman, fund these chief executive officer and John Neppl, chief financial officer. I'll now turn the call over to Greg.
Thank you, Ruth Ann, and good morning, everyone.
Speaker Change: I want to start by thanking our team for their hard work and adaptability and why it has already been a highly dynamic 2025.
Speaker Change: Theurer continued focus and great execution to deliver a strong start to the year, to demonstrate it once again that we can navigate market environments, agility and speed, harnessing a truly global platform and strengthen our core markets.
Speaker Change: Continue to believe in the strategic merits of our planned combination with Viterra. Expect to close the transaction in the near term.
Speaker Change: All the timing of regulatory approvals has not been what we anticipated.
Speaker Change: We've engaged in constructive conversations with the relevant authorities, prepared to close in very short order once received.
Speaker Change: Recently chose to execute our rights to terminate the definitive share purchase agreement with C.J. Selecta, pursuant to its terms.
Speaker Change: However, soy protein concentrate for feed means an attractive market with promising growth prospects, nicely compliments our soy origination, crushing capabilities in Brazil.
Speaker Change: At the same time, with great progress in other key areas, further sharpening our portfolio, strengthening our business.
and Positioning Bungie for the future.
Speaker Change: Recently announced the sale of our European margins of spreads business and our North American corn milling business.
Speaker Change: Both of these transactions allow us to further align around our global value chains.
Speaker Change: This alliance furthers our long-term strategy to create alternative paths towards meeting our customers demand to lower carbon agricultural and oil supply chains.
Shifting Operating Results [inaudible]
Speaker Change: First quarter exceeded our expectations, driven in par by some whole forward of activity for Q2 into Q1.
Speaker Change: Later in the quarter, shifts in trade dynamics, including tariff and regulatory uncertainty, prompted some farmers and consumers to act ahead of potential changes.
Speaker Change: Speaking ahead, we're reaffirming our full year 2025 adjusted EPS guidance, approximately $7.75. It remains confident in our ability to continue to execute despite the current market environment.
Speaker Change: As we mentioned last quarter, we expect to provide an outlook for the combined company once we've closed the fight to a transaction.
Speaker Change: With that, I'll turn it over to John for a deeper look at our financials and outlook. John , thanks Greg and good morning everyone. I'll turn to the high, Bernie's highlights on slide 5.
As Greg mentioned, the first quarter exceeded our expectation.
Speaker Change: This tariff and regulatory uncertainty increased later in the quarter, some farmers and customers moved ahead of potential changes, full earnings from Q2 and Q1.
Speaker Change: I'm sorry. I'm sorry. I'm sorry. I'm sorry. [inaudible]
Speaker Change: I reported the first quarter release per share was $1.48, $1.68 in the first quarter of 2024.
Speaker Change: Reported results include an unfavorable market market timing difference of 8 cents per share to a negative impact 25 cents per share, the notable items related to the transaction integration costs associated with Viterra.
Speaker Change: Adjusted EPS was $1.81 in the first quarter. This is $3.04 for the prior year.
Speaker Change: Joseph Segment Ernie's before interest in taxes for EBIT was $406 million in the quarter
Speaker Change: processing by the results in the Brazil, Europe , and Asia's story Crush Value Chains.
Speaker Change: Hold an offset by lower results in North America, Parjantina, and European Saucines.
Speaker Change: Virgin Dising, improved performance in global grains, financial services business, or the one-off step by a low result in ocean freight.
Speaker Change: The exception of Asia by an especially oils results for down-and-all regions, reflecting more balanced global supply and demand environment, proven in part by the uncertainty in U.S.
Speaker Change: Milling, slightly higher results in North America, and offset by lower results in South America, building margins were pressured by a more competitive facing environment.
Speaker Change: Over to the other, the Increasing Corporate Expenses was primarily driven by lower-performance
Speaker Change: Ray or other results include $24 million from the sugar and bioenergy joint venture that will be divested in the fourth quarter of last year.
Speaker Change: An interest expense of $45 million down in the quarter compared to last year to increase capitalized interest. I very interested in come on investments in interest-bearing instruments and interest received on Brazilian tax refunds.
Speaker Change: The increased in income tax expense for the quarter was primarily due to lower pre-tax income in 2025. The prior year unfavorable adjustments related to foreign currency fluctuations in South America.
Speaker Change: Let's turn to slide 6 where you can see our adjusted EPS and EVA trends over the past four years along with the trailing 12 months.
Speaker Change: Elvis Period, our team has excelled in navigating the complexities, dynamic markets, while simultaneously executing various internal initiatives.
Speaker Change: Recent trend indicates a more balanced supply and demand environment and the impact of trade of biofuel uncertainty. Swins leading into less volatility and lower.
Speaker Change: Slide 70 details for capital allocation. From the first quarter we generated $392 million
Speaker Change: After allocating $54 million to sustaining CAP-X, which includes maintenance, environmental health, and safety.
He had $338 million of discretionary cash won't available.
Speaker Change: Now this amount would pay $91 million in dividends, that's the $256 million in
Speaker Change: We also received $306 million of cash proceeds related to the sale of an interest in our Soy Crush footprint in Spain to Repsol, as part of our newly formed joint venture. And a final payment for the sale of our interest in the sugar and bioenergy joint venture.
Speaker Change: This resulted in approximately $300 million of retained cash flow.
Who did you say it ain't?
Speaker Change: A quarter-end, readily marketable inventories, or are my exceeded or net debt by approximately $3 billion.
Speaker Change: Just a leverage ratio, which reflects our adjusted net debt to even dot 0.6 times at the end of the court.
Slide 9, Highlighter, liquidity position
Speaker Change: The quarter end, we had committed credit facilities in approximately $8.7 billion, all of which were unused, unused, providing ample liquidity to maintain on-going capital needs.
Speaker Change: In addition, we had a cash balance of approximately $3.2 billion accumulated in large part from the U.S. public debt offering that we closed last September in support of the Biterotransaction.
Speaker Change: There were no amounts outstanding on her $2 billion commercial paper.
Please turn to slide ten.
Speaker Change: Controlling 12 months adjusted in RIC was 9.4% and RIC was 8.2%.
Speaker Change: Justing for construction and progress on our large, multi-year projects, not yet operating, and the excess cash on our ballot sheet from the Viterra Closing.
Speaker Change: Justin R.Y.C. would increase by 1.5 percentage points at R.Y.C. by approximately 1 percentage.
Speaker Change: The interns have declined recent highs, made above our adjusted weighted average cost of capital of 7.7%.
We'll use slide 11.
Speaker Change: In twirling 12 months, we produce discretionary cash flow approximately $1.2 billion, and a cash actual yield of 10.2%, or to our cost of equity of 8.2%.
Please turn to slide 12 in our 2025 Outlook [inaudible]
Speaker Change: As Greg mentioned in his remarks, taking into account Q1 results the current margin of macro environment and foreign curves. It continues to expect full year 2025's Adjusted EPS for approximately $7.75.
Speaker Change: This forecast excludes the impact of announced acquisitions in the vestitures that are expected to close during the year.
Speaker Change: The agribusiness, fully results are forecasted to be slightly lower than our previous outlook. It down from last year, primarily due to lower results in processing.
Speaker Change: Bina especially oils, when your results are expected to be similar to our previous outlook, and down from the prior year, we are rarely driven by a more balanced, flying-demand environment in North America.
Milling for you.
Previous Outbooking Up From Last Year
Speaker Change: Cooper and another full-year results are expected to be more favorable than our previous outlook and the prior year.
Additionally, the company expects a following for 2025.
Speaker Change: Justin Annual Effective Tax Rate in the range of 21 to 25 percent.
Speaker Change: Andrew's expense in the range of $220 to $250 million is down from our previous expected range of $250 to $280 million.
Speaker Change: Several expenditures in the range of $1.5 to $1.7 billion in depreciation and amortization of approximately $490 million.
Greg Heckman: Oh, through things back over to Greg for some closing comments.
Thanks John , Steven.
Speaker Change: We're trying to Q&A the one offer for new closing thoughts.
Speaker Change: In today's uncertain global environment, it can be certain of the strength of our team, global footprint, and our operating model.
Speaker Change: Our purpose of connecting farmers to consumers to deliver a central food feed-in fuel is something the world depends on, regardless of external circuit stances.
Speaker Change: For the last few years, our team has consistently risen to the challenge, navigating an ever-changing world, exceeding expectations.
in the face with global pandemic, trade wars, geopolitical uncertainty.
Speaker Change: Confident, the same focus, discipline, and ability to execute continue to drive our success.
Speaker Change: Our business is built on a resilient global infrastructure that ensures an efficient supply, staple crops and food and feed products that has proven its ability to withstand volatility.
Speaker Change: We have the right systems and strategies in place to manage risk, adapt external challenges to remain focused on what truly matters.
Speaker Change: Planned Combination with Viterra will only enhance our diversification across assets, geographies, and props.
Speaker Change: Fighting us with more optionality to help address the world's food security needs.
It's corn. The business is resilient.
Trackwriter, prunes this.
Speaker Change: I have no doubt that we'll continue to deliver value for customers at both ends of the value chain.
Who that? Stern to Q&A.
Speaker Change: The first question from the phone comes from Salvator Tiano with Bank of America. Please go ahead.
Speaker Change: Yes, thank you very much. Firstly, I want to ask to follow up a little bit on acquisition. So with Viterra, you make it very clear that it seems the approval is very, very imminent.
But also, um...
Speaker Change: Thomas seems to be the hold-up here, and there's always limited visibility what they do. So,
Speaker Change: How confident are you that actually they will approve the transactions soon?
Speaker Change: And if actually there is a chance that this may not happen, what is your backup plan there?
Speaker Change: And also of C.J. Selector, can you provide a little bit more commentary on why the transaction didn't go through? And it seems to indicate that you chose to terminate it, but at least by our mass it was a pretty nice, very accredited transaction. So why would you make this decision?
Let me start with my terror, of course.
Speaker Change: Number one, look, the strategic merits of this transaction, so perfecting in place and, you know, it accelerates everything that we're doing strategically.
Speaker Change: We've had very constructive interaction with the authorities as we've submitted additional information as needed. They've done a really excellent job engaging with all the parties and advancing the process.
Speaker Change: We're confident the traction is going to be improved when you look at the merits, it's very, very clear.
Speaker Change: We are, we're purpose-built to create a resilient supply chain and that's the surf China and the rest of the key demand markets globally. So, in times of some of the extreme market disruptions that we've seen and one like we're experiencing now...
Speaker Change: The reliability that comes from a company like ourselves that's operating in every major origin is even more important.
Speaker Change: So, timing we don't know, but the process moves and we feel very good about the ultimate destination.
Speaker Change: Now, as far as CJ, we went through the long-stop date, we passed that, and we just kind of looked at the circumstances of currently where things were at, where the business...
Speaker Change: and it just made sense at this point to terminate the transaction.
Now, as you know, as I said in the comments,
Look at the market for… [inaudible]
Speaker Change: CSPC on the feed market. That continues to be attractive and it really fits well with our Brazilian business. So, you know, we'll continue to look for the right opportunity to extend in that market.
Speaker Change: Maybe just to clarify, the Salvatore on CJ, going through the end day was a result of not having all the regulatory approvals, and at that point, could have chose to extend it.
Speaker Change: Felder was appropriate, but Greg Manchin, we just felt at that time the right thing to do was
Speaker Change: Great, thank you. And I also want to ask you about your processing business and
Speaker Change: Specifically, can you break down your margins for US Soy and Canadian Canola versus the margins you have in the rest of the world? How did they trend Q1 versus Q4? And also, how are they on an absolute base? Because I guess US Soybean Historical has been a much stronger performer, but that may not necessarily be the case in Q1.
Speaker Change: Yeah, look, I guess hit the high spots here quickly. You know, we definitely saw if you look, you know, the fact on soy that we're holding the year, you've kind of got to look down into the quarters. So
Speaker Change: Q1 was better because of the performance, but unfortunately things have gotten softer here on the curves as we've gone into Q2 and some of that definitely is not open capacity.
Speaker Change: Crush will be lower in Q2 and then with the crop coming off the curves are telling us should be better again in Q4. The net of that is the year will be flat but.
has often happens in this business.
Speaker Change: You know, when you've got two crops a year coming off and you look at the 12-month cycle, the timing can move around a little bit.
and really, in soy, the spot-crush margins.
are pretty good, you know, are better everywhere.
Speaker Change: And then the outlook is definitely tougher in the curve, except for North America, where we...
Speaker Change: See you getting better with crops. Now in the soft seeds, North America.
Speaker Change: Canola, in Canada, much the same, we had a tighter crop there and the curves get better as we look out.
Bisapti
for NewCrop.
Speaker Change: and then in soft seeds in Europe and the Black Sea, both Sun Seed and Rake Sea production.
Speaker Change: Was tighter last year, so we got slow farmer selling, and then of course with soybean oil being very competitive globally, that has been tough on soft seed crushed margins, so again we look to new crop in the septes period for that to improve.
Speaker Change: And maybe to put a 500 point on that, you know, looking at Q1 versus a year ago, US, the soy crush margins weren't dramatically different than they were a year ago for Q1, a little bit lower. The big impact on North America was the soft seed margins were much lower.
Q-1 versus...
Speaker Change: last year. And then, you know, in terms of soy kind of globally, the Greg mentioned, it was stronger, probably strongest in Europe and Q1, and then US, US is number two, and then we had really a big week margins in Argentina and Q1.
Speaker Change: And of course, that's seeing the improvement there in the spot in Q2, given former activity in Virginia, so we're running harder down there now.
Perfect, thank you very much.
Thank you.
Speaker Change: The next question comes from Tom Palmer with City. Please go ahead.
Speaker Change: Hi, and thanks for the question. Maybe just to follow up on the last question on Kate's sub-earnings, you did indicate the pull forward and you know kind of the one Q2 dynamics and then how they do.
Speaker Change: especially North America, ramps up a bit to close out the year.
Um...
Speaker Change: You provided some specificity last quarter talking about 40% of annual earnings coming in the first half of the year. I guess just any updated thoughts on thinking about the cadence of earnings as we move through this year, just given the one key dynamics. Thanks.
John Neppl: Tom, I think this is John , the look at the year.
John Neppl: The 4060 really hasn't changed first half, second half. What we saw was really a flip between Q1 and Q2 instead of 4060, it came out more 60, it looks to be more 6040.
John Neppl: So we pulled the earnings forward from Q2 and expect a little bit of softness in Q2 from our prior forecast. But half that over performance in Q1 was pulled from Q2 and the other half were saying, we had some other things go well in Q1 but see a little bit of softness in Q2 so
John Neppl: We're looking at, you know, 60, maybe 62, 38 if I wanted to put a really fine point on it from Q1 to Q2 but we're on our first half second half is the same look as we had last year last quarter.
Speaker Change: Thank you. And then just on the assumptions embedded in guidance, you did know kind of Necroff better crush margins late in the year as is normal. I wondered about kind of what you're embedding for other items such as US biofuels, policy, and potential clarity on the RVO for next year
Speaker Change: What you're embedding for U.S. China trade relations and how that might impact you as the year progresses. Thanks.
Speaker Change: Yeah, so just as a reminder, we don't have any M&A or share repurchases factored in, and we only assume, you know, what's kind of we can see in the current
Speaker Change: in kind of the current trade tensions is reflected in the curves. It's in our...
Speaker Change: It's in our forecast, an outlook. We're not making any calls that are different from what the market is telling us.
All right, thank you for that.
He's gone. It's you.
Speaker Change: The next question comes from Manav Gupta with UBS. Please go ahead.
Manav Gupta: Good morning. I just wanted to focus a little bit on this development with Repsol. Looks like you're moving forward with it. Help us understand the benefits and, you know, why does it make strategic sense to move ahead with Repsol on this kind of a JV? You know what I mean?
Speaker Change: We're really excited, Repsol is a great partner, you know, they're making investments.
Manav Gupta: In their infrastructure as they're moving to lower carbon fuels and, you know,
Manav Gupta: We're excited to form the joint venture to be able to help that not only with the soy processing assets that went into the JV, but in the origination of the lower carbon intensity feedstocks.
Manav Gupta: And of course, some of that is the announcement we made at the same time to bring novel crops to be part of that solution of...
Manav Gupta: Lower Carbon Intensity Oils to then go into their global diesel and NSAF process. So we're at the front end of that, but we're excited. We really want to be the partner of choice in every space that we operate and that includes working with the fuel industries.
Manav Gupta: as they look to put lower carbon fuels into their portfolios. And I just add that, you know, while there's a lot of...
Manav Gupta: One discussion around uncertainty, the US biofuel policy, there's a lot more certainty than that in Europe and other places.
Manav Gupta: You seem very committed to it, and Ruppsell is part of that commitment, and we wanted to be as Greg pointed out, partnered with someone that we think is a great position to take advantage of the
on the growing fuel's opportunity here.
Manav Gupta: Perfect. My quick follow-up is I understand it's not in your guidance, but you know there's a lot of chatter that in the next two or three weeks you could get a much higher revised RVO with stronger biomass, you know, diesel volumes. So in the event you do get a higher RVO which is significantly better. How is Pungy going to benefit from it probably in the second half or in 2026 if you could provide some thoughts on it? [inaudible]
Manav Gupta: Yeah, but that would definitely strengthen the oil leg of the crush here in North America and in North America as an exporter of oil. Of course, that would help the oil leg globally [inaudible]
that would be good for crush margins.
Manav Gupta: You know, we're not very covered, we're not very lucky for Q3, Q4.
So, to the extent of the second half, [inaudible]
Manav Gupta: The Origin Environment Improves. We should be well positioned to take advantage of that. And right now, energy customers are relatively low percentage of our fine oil volume, so any demand there will be certainly good for our outlook.
Thank you so much.
Speaker Change: The next question comes from Heather Jones with Heather Jones Research. Please go ahead.
Thank you. Thanks for the question.
Speaker Change: I recently, and this was from a conference, as well as other things, recently I've heard from some industry watchers that the five and a quarter billion gallon D4 headline number that's been in media reports, etc.
Speaker Change: that it may not be that high, that it may be more in the mid fours with the backfill opportunity taking you into the five. So just wanted to get your thoughts on that. And a follow up to that is...
Speaker Change: Do you think that would be enough to make the domestic market much tighter given the limitations that we have on feedstock imports and biofuel imports this year that we didn't have previously?
Speaker Change: Yeah, the man is good, but what I'd like to start with is...
Speaker Change: We are really proud to be part of that first-of-a-kind coalition where we've got farmers, large segments of petroleum refineries in the crushing industry, right, driving to consensus.
Speaker Change: and then advocating for an RVO that's aligned with what the US can produce. And when I say the US, I mean think about the investments that have been made that are already in place to help the US achieve energy security and dominance.
and provide a lot of support for the local communities.
Speaker Change: The farmers have invested, right? They've invested in the land and the machinery.
Speaker Change: Know how around the inputs and the crop production, the oil companies invested in converting their plants to biofuels.
Speaker Change: The Crush Industry, we've added production capacity to provide the inputs. So the infrastructure is in place, and every part of supply chain. We can serve the demand right now. This is the unused capacity.
So this is not aspirational. And that's been the message. So we remain, you know,
Speaker Change: I think encouraged and optimistic that we'll get to the right number. And if it doesn't right off the bat, the coalition's going to continue to advocate, continue to explain the facts, [inaudible]
Speaker Change: at the RVO has on rural America, what it really does to drive value at the farm gate and all the way through the local economies by adding that domestic demand.
Speaker Change: Okay, thank you for that. And then I wanted to move on to the care situation and clearly it's a very dynamic
Speaker Change: Environment, and who knows, it might be very different by next week, but as it sits right now with the tariffs in place, with China, and the impacts on U.S. beans, etc.
Speaker Change: How are you thinking about how that impact Brazilian crush, Brazilian crush margins, and could that potentially, if those dynamics don't shift quickly, could that potentially affect the slowdown that build out a crush down there?
Yeah, look to start with the-
The policy is going to work itself out.
Speaker Change: You know, we like policies that are good for farmers because that's good for the entire
Ag-Value Chain
Speaker Change: The markets do work and they send the right signal to farmers and they send the right signal to industry. One of the things we like about our footprint.
Is it?
Speaker Change: Whether, you know, we're going to crush more in the US.
Speaker Change: Domestically, if exports are lower, the same would be offset in Brazil if exports are higher than will crush less. So, you know, we're going to flex our system not only by regions globally, but within those regions between, between crush and export and other domestic demand. So, I think that's what we love about our battles footprint.
Speaker Change: Heather, when you think about it, there are three things we do in any origin.
Storage
Speaker Change: Thanks for it in processing. And so, depending on what the global markets are telling us for many of those origins, we can either choose to store it.
Greg Heckman: and ultimately process or export it, whatever the market's telling us to do. So, to the very point, we have ultimately good flexibility around whatever the tariff situation ends up being.
Awesome. Thank you so much.
You.
Poran Sharman: The next question comes from Pooran Sharma with Stephens. Please go ahead.
Great. Thanks for the questions.
Poran Sharman: Just wanted to ask about South America, do you expect accelerated farmer selling out of South America in the coming months out of Argentina in the coming months? What would this mean for kind of global crush margins and your footprint?
Poran Sharman: Yeah, in Argentina I think we talked about pretty slow farmer selling there in Q1. Now we've seen a recent pickup in the farmer selling and that's been better for margins there in Argentina and then we've adjusted the global footprint a little bit. You've got a temporary lower export tax window that closes late June .
Poran Sharman: You've got better weather, which is telling the farmers what their beliefs are and some of the capital controls.
Poran Sharman: You know, that's driving the farmer selling today. We'll see how long the duration of that goes and how that'll affect.
Poran Sharman: and then in Brazil, the driver, you know, another record soybean crop.
Poran Sharman: There's no take or pay this year which should help improve the value chain performance versus 24.
Poran Sharman: and then if you think about it, we've got a big total corn crop coming behind that so from
Poran Sharman: The farmer selling a beans, historically, the farmer has been marketed more regularly to get ready for the Supreme of Harvest to free up the bin space and to deal with some of any of the logistical timing and ordination that needs to happen.
Speaker Change: I appreciate that detail. My follow-up was actually going to be on the take or pass, so I appreciate you getting ahead of that. I guess I wanted to maybe hone in on. I'm going to hang on.
Speaker Change: Some of the divestitures you've announced with the divestiture of corn milling just wanted to A. Ask, does this just leave you with wheat milling in your milling business, is it just wheat milling now, and then how should we think about that business when it comes to kind of your core operations as you look ahead?
Speaker Change: Yeah, correct. We've got a real nice South American wheat milling business there in Brazil.
Speaker Change: some South Indian, some Brazilian wheat milling. Those book prints fit together very nicely to serve our customers there.
Speaker Change: We like our position. They're in Brazil in the wheat milling business because not only the local crop.
But we feed that from our Argentine wheat value chain.
Speaker Change: as well as other global wheat markets as they make sense to import into Brazil, which happens quite often. So, you know, that business is a good fit and we think we're in a very competitive position for the long term to serve our customers.
Speaker Change: Just to clarify the first part of your question, our South American wheat milling will be the only thing left from a milling perspective once we close the transaction.
Great, appreciate the details.
Derek Whitefield: The next question comes from the line of Derek Whitefield with taxes capital. Please go ahead.
Good morning all and thanks for taking my questions.
Derek Whitefield: I wanted to ask a follow-up on Repsol with my first. Could you speak to the amount of Camelina and Sapphauer that could be processed with feedstock for their bi-refinery or the mix that they're solving for through this partnership?
Derek Whitefield: It's probably too early to give the exact numbers on that, but basically what we want to do with our energy companies are give them
Derek Whitefield: The different choices of the lower C.I. feed stocks, and having multiple novel crops and even used the cooking oil and the other things that we're sourcing in our portfolio.
Derek Whitefield: We can then give them the choice on what works in their machinery for cost.
The Quality
Derek Whitefield: and the carbon intensity that works for them. So what we want to be able to provide is that optionality of feedstocks and even in these novel crops then it becomes building the programs and continuing to build the volumes. And that's like Winter Canola in the US.
Derek Whitefield: We got started last year, and then we've seen great uptake by the farmers. We've got a lot more acres out there and so we'll build these programs in partnership with the demand and with the growers. [inaudible]
Speaker Change: Yeah, maybe just one thing, Derrick, we're not targeting a specific exos.
Greg Heckman: Inputs, it's going to be whatever the market tells us is the most economic. It could be, as Greg mentioned, mixed in novel scenes.
Greg Heckman: Soy Oil, Soybean Oil, Yuko, all those things are very mentioned are part of the portfolio and ultimately the economic we're going to drive.
Greg Heckman: But, you know, what's the most logical combination of inputs is.
Speaker Change: Great, that makes sense. And from my follow-up, I wanted to stay on biofuels.
Greg Heckman: Do you expect a more favorable assessment for S.P.O. and Leonard Finola, based on industry feedback and your interaction with the administration on 45Z? There seems to be quite a bit of energy around the inclusion of CSA practices for CEDA-Wills.
We
Greg Heckman: You know, we're optimistic and we're engaging that and trying to bring the facts forward and bringing the economics forward and to do what's good for farmers as well as the entire value chain there.
That's great. Thanks for your time.
John Neppl, John Neppl, John Neppl,
Stephen Haynes: The next question concerns Steven Haynes with Morgan Stanley . Please go ahead.
Hey, good morning, and thanks for taking my question.
Just on U.S. industry, Crush Capacity.
Stephen Haynes: I think one of your peers has announced the shutdown of the plant, and so really maybe just kind of two questions, it doesn't sound like it, but is there anything in your portfolio that you'd be looking to rationalize?
Stephen Haynes: in the U.S. or North America more broadly. And then, you know, how do you expect the rest of the industry to respond to some of the new capacity that's kind of come online over the last 12, 18 months? Thank you.
Stephen Haynes: Yeah, what we've been very thoughtful about our portfolio, really everything we've been doing over the last six years, right, it's always, you know, continuous improvements, so where we've made our investments, whether it's been.
Paul Neckinger, Brownfields, or Greenfields.
Stephen Haynes: to get our footprint to be the most competitive. So, we're running the assets that we're running now because we plan to constantly evaluate that globally and that's part of having that global system.
Stephen Haynes: You know, our goal of course is to have, you know, a cost structure and capabilities that are built for any point in the cycle, and yeah, during the cycle at the tougher parts of the cycle.
Stephen Haynes: It sends signals in and you know certain people with cost structures may you know be shutting down some of these stand-alone plants and that you know they could be different economics than us running it as part of a network here in the U.S. and also as part of our global network so we're just focused on having. Thank you.
Stephen Haynes: The most competitive footprint and system for really any point in the cycle. That's kind of our responsibility.
Okay, thank you.
Thank you for watching!
Speaker Change: The next question from the phone comes through Andrew Strelz, Nick with BMO, please go ahead.
Hey, good morning. Thanks for taking the questions.
Speaker Change: My first one, you mentioned being open on the majority of your capacity for the back half of the year.
Speaker Change: And I guess I'm just curious if you're managing or how you're managing your forward book right now in an environment that's relatively soft and could look a lot different later in the year. So if you change that approach at all, I'm just curious how that compares maybe to normal. Any call on that would be great.
Speaker Change: Sure, our team is constantly focusing on our customers on both ends of value chain and what they're doing to manage their risk.
Speaker Change: I will tell you in this environment we have seen everybody go to more spot right so there is less done. Thank you very much.
on the, on the Forward Curve,
Speaker Change: as people don't know what to do with some of this uncertainty. And so they pulled in the, you know, the farmers have been more spot sellers, the end consumers, whether it's, you know, feed food or fuel unless they've got margins, they've been more spot buyers. So that's led to.
Speaker Change: to less of a forward book. Now, we've got different ways to manage our risk and we're always evaluating what the supply and demand tells us, what the outlook.
Speaker Change: Looks like and where globally we want to be placing our hedges and locking in margins.
Speaker Change: As they occur versus how we believe they will and as they have versus history based on what the supply and demand numbers are telling us. But there's less on right now, one because...
Speaker Change: We're looking at what the curves are challenging us and what we believe and then part of is driven from customers on both sides.
Speaker Change: You know, when you get in that close in, you know, 30 to 90 days, that's when the logistics really start.
Speaker Change: and driving the activity really for all the participants in the market. And of course that's why you've got more visibility on the front end. You think on the books and maximize those logistics to serve everyone.
Speaker Change: Right, okay, that makes sense. And my second question, and I don't know if you'll be able to answer this with any specificity, but I'm just...
Speaker Change: Trying to think about the right earnings base for the core business and obviously this year has a ton of disruption that maybe is abnormal right in depressing numbers this year. Is there any way to frame kind of how much do you think that that is impacted you know relative to your 775?
Speaker Change: Kind of outlook. Yeah, is there any way to think about how much that's impacting here and what maybe a more normal earning space would look like? Thanks.
Yeah, look, I think, you know, this is John , um,
Certainly we're in a little bit more challenging.
Speaker Change: Challenging Environment this year, just given all the uncertainty versus where we would expect to be kind of an immense cycle. And when we look at that, you know, it's really driven by more challenging merchandising environment. You know, this year is one of the big drivers. And as we look at...
Speaker Change: I just take us back to our original mid-cycle modeling, you know, at this point in time.
Speaker Change: You know, a couple of years later, a lot of the projects that we had slated are still under construction and so those haven't contributed yet. And we didn't expect those two yet at this point in time but we made some divestments along the way in Russia.
Speaker Change: Ukraine Impact, those things that kind of pulled our results down from the mid-cycle, and certainly on, you know, margins have largely held in versus kind of how we'd see mid-cycle.
Speaker Change: Other than the refining side, there has actually been better, more longer, but merchandising has been more challenging for us and on the cost side we experienced a couple years of
Speaker Change: High inflation. So overall, offset to some degree a little bit by some of the actions we've taken around share bybacks and things. But ultimately, it's hard to gauge what the 775 would be without the current environment we're in.
Speaker Change: Certainly if things improve here in the back half of the year, we'll have a better sense next year of kind of earnings power going forward, excluding by tarot, of course that will have a big impact on our outlook as we
Speaker Change: I can't agree with that business. And then we've got capital projects that are going to be coming online.
Speaker Change: 325 and 326 and 26, it will have a further impact on going, but it's, it's, you know,
Speaker Change: As you can imagine, pretty hard to put a fine point on...
Speaker Change: with the 775 Wood of Ben Head, we not had all this volatility this year and, and, uh,
We're going to get every dollar we can.
Chair, I absolutely appreciate that and appreciate the perspective. Thanks.
Speaker Change: The next question comes from Ben Hacqueroid-Marclays. Please go ahead.
Speaker Change: Hi, this is Rocky going on for Ben. I've got some questions for a few timeline questions. So first for the milling business, what do you see as a timeline to close? What regulatory processes are we still waiting on and do we see any risks? And also for biofuel, thank you so much for the color on the call. When do you expect an update on that? Thanks so much.
Speaker Change: In terms of corn milling, we're hoping it's purely a US business, so it'll just need to go through the domestic regulatory process.
Speaker Change: We feel like we've got a chance to get that close by the end of Q2.
Speaker Change: Latest Early Q3 is kind of our view right now. You may be clarifying your second question on biofuels.
Speaker Change: and so on and predict when you're going to get an update on the EPA or any other...
Speaker Change: Bonnie, but do you have any weird talk about the volumes that were estimated? Do you?
on the RVO update.
Speaker Change: It couldn't be any day. We're thinking by end of May, it's a good chance that we'll hear something. Of course, they're not obligated to come out with anything until later in the year, but they've indicated as near as we can tell they could do something as early as sometime it's not. And we'll see.
Alright, just leave watching, just like everybody else.
Speaker Change: And ultimately, I think they're being very thoughtful, they're listening. Greg talked about the coalition that was put together with farmers and the energy companies, NAG companies, they're listening. And so hopeful that they're formulating the right approach and we'll be able to do that.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Greg Heckman for any closing remarks.
Greg Heckman: I'd like to thank everyone for joining us today. Thank you for your interest in Bunge. We continue to have great confidence in our team to be able to deliver for our customers, both farmers and consumers.
Speaker Change: Whatever challenging environment that we're in, we look forward to speaking with you again soon and have a great day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
[music]
Gregory Heckman: John Neppl, John Neppl, John Neppl, John Neppl,