Bunge Ltd Q1 2016 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Cornell Burnet - Citi Research - Analyst : Good morning. This is Cornell Burnette with some questions for David. Congratulations on the quarter.

Question: Cornell Burnet - Citi Research - Analyst : Okay. And then turning to the second quarter for a bit, the commentary is a little bit negative maybe down in South America so it's like related to the crop being smaller than what was originally anticipated. But, going back to your comments on, seeing strong crush margins down there and looking at the first quarter, crush utilization rates in Argentina, seemed to be at record levels, at least absolute crushing numbers were better than anything we have seen in a while and I was wondering, with farmers, still probably eager to commercialize some of the inventories that they've had in soy, wouldn't you expect to see, kind of continued strength or year-over-year increases in crushing volumes out of Argentina and if we're seeing the rally and crush margins, why is it that, seems like you kind of guiding towards a number in agribusiness as least with the South American assets in the second quarter that's, kind of behind what you did last year but just fundamentally outside of maybe the crop being smaller, it seems like the conditions for your business in South America are much better this year than they were last year.

Question: Cornell Burnet - Citi Research - Analyst : Okay. Thanks a lot.

Question: Adam Samuelson - Goldman Sachs - Analyst : Yes, thanks, good morning, everyone. Maybe take on to make sure I understand insides of second quarter weakness and taking it from a different approach. Last year the agribusiness segment did $134 million of profit and there was about $50 million of I think it was wheat hedging losses late in the quarter of corn that negatively impacted those results. Would you actually think that agribusiness would be down against either the hedge impacted on non-hedge impacted results given the landscape in South America that you see today?

Question: Adam Samuelson - Goldman Sachs - Analyst : That's helpful. And then just on the cash flow side, I know you talked about Bunge stepping in and maybe providing a bit more aggressive financing to the Brazilian farmer. Can you give any thoughts on the working capital investment as you're over the balance of the year and given the large REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2016 / 2:00PM, BG.N - Q1 2016 Bunge Ltd Earnings Call investment in working capital that you saw in the fourth quarter and again in the first quarter and maybe some of the cadence of some of that release over the year?

Question: Adam Samuelson - Goldman Sachs - Analyst : Okay. And just this will be the last one in the prepared remarks you alluded to risk management doing well in the quarter. Any way to quantify that or if that was a particularly notable kind of benefit to the 1Q results?

Question: Adam Samuelson - Goldman Sachs - Analyst : All right. That's helpful. Thanks a lot.

Question: Ken Zaslow - BMO Capital Markets - Analyst : Hey, good morning everyone. Just one quick question and then a couple others. One is on the US crush margin environment, is it now good in the second quarter or bad in the second quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2016 / 2:00PM, BG.N - Q1 2016 Bunge Ltd Earnings Call

Question: Ken Zaslow - BMO Capital Markets - Analyst : Okay. I understand that. That clears up. The second question I had is what's the prognosis of farmers selling in US and Brazil? Are the farmers selling or not or can they sell? What's the, you know, given that prices have, I thought there was more selling but maybe it's not as much as kind of, anecdotal evidenced?

Question: Ken Zaslow - BMO Capital Markets - Analyst : And just understanding Argentina, I understand the crop might come down three million to five million metric tons but my understanding is there's still plenty of crops there. So will this eventually come to you? Or the potential that Macri was going to lower all the taxes and devalue, that benefit has come and gone and now we're on to the regular world and now dynamics are more normal?

Question: Ken Zaslow - BMO Capital Markets - Analyst : Okay. My very last question is, the last quarter you alluded to the idea that we're going to get modest growth in agribusiness. Does the modest become better or worse or where does that barometer go at this point? I just couldn't fully understand, I just want to make sure I fully understand what -- has the environment gotten better, worse or indifferent?

Question: Ken Zaslow - BMO Capital Markets - Analyst : I appreciate it. I truly do. Thank you.

Question: Farha Aslam - Stephens Inc. - Analyst : Hi, good morning. Following on to Ken's question, just try to understand your confidence in your back-half with the crush margins. Could it be that Argentina having crop issues is net better for Bunge? Because that's what it sounds like from your last answer. That you're feeling net better about your business even though a significant portion of your assets are in Argentina. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2016 / 2:00PM, BG.N - Q1 2016 Bunge Ltd Earnings Call

Question: Farha Aslam - Stephens Inc. - Analyst : That's helpful. Just on a follow-up on the Brazilian Real, it's been moving around a bit. The recent strengthening, does that help your edible oils business and milling business?

Question: Farha Aslam - Stephens Inc. - Analyst : The current economic weakness is factored into your numbers that you just gave when you answered Ken's question?

Question: Farha Aslam - Stephens Inc. - Analyst : Okay, great. Thank you.

Question: Sandy Klugman - Vertical Research Partners - Analyst : Good morning. I apologize if this has been asked. I jumped on a little late but I way hopping you could provide an update on how you're thinking about the prospects for the sugar business and any implications this has for the potential monetization of these assets?

Question: Sandy Klugman - Vertical Research Partners - Analyst : That's helpful. Thank you very much.

Question: Robert Moskow - Credit Suisse - Analyst : Thanks. I was hoping to understand what soft means I guess for second quarter for agribusiness because, last year was a very soft quarter also. Maybe because of some pull forward. But, you know, is it as bad as last year or is it something a little better? Like hard to say?

Question: Robert Moskow - Credit Suisse - Analyst : Okay. Sorry, we're on several calls at once.

Question: Robert Moskow - Credit Suisse - Analyst : I understand also when you say there's opportunities for more dislocations to emerge, is that specifically a function of the crop in Argentina being, you know, a little weaker because of the weather and that means that North America might find I guess arbitrage opportunities for exports? I guess the reason I'm asking is it wasn't that long ago, maybe a few weeks ago where your company and ADM and Cargill, everyone was talking about REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2016 / 2:00PM, BG.N - Q1 2016 Bunge Ltd Earnings Call this environment as being as bad as it's ever been in terms of the lack of dislocations. Do you feel like, you know, has something really changed for everybody or is it really Bunge because of your global footprint?

Question: Robert Moskow - Credit Suisse - Analyst : Okay. And I guess my follow-up is is your view here, I don't know how to say this, but is it shared by most people who are watching this? Or is there -- is it kind of a conflicted kind of view because I guess I've been to some industry conference where people are still saying that there's way too much inventory out there and customers are not in a -- do not have a sense of urgency to buy right now. You know --

Question: Robert Moskow - Credit Suisse - Analyst : Sure.

Question: Robert Moskow - Credit Suisse - Analyst : That's great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2016 / 2:00PM, BG.N - Q1 2016 Bunge Ltd Earnings Call

Question: Robert Moskow - Credit Suisse - Analyst : Understood, thank you.

Question: Brett Wong - Piper Jeffrey - Analyst : Yeah, thanks for taking my questions. Soren, you had mentioned that you don't really expect the food business to get better without obviously an economic improvement down in Brazil. Could you talk to that happening and maybe (inaudible) discuss a little bit on what that's predicated on?

Question: Brett Wong - Piper Jeffrey - Analyst : Okay. And I guess I guess when you're looking at the economy improving down there, do you expect that to come on changes in the current political regime?

Question: Brett Wong - Piper Jeffrey - Analyst : Okay. Thanks. And then you mentioned or you spoke about the recent real swings and how they've impacted or haven't really impacted the food business. Can you just talk about how it's impacting farmers selling down in Brazil?

Question: Brett Wong - Piper Jeffrey - Analyst : Great. Thanks so much.