Bunge Limited Q4 2002 Earnings Conference Call Transcript

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

Question: David Driscoll - Smith Barney - Analyst : Hi, Good morning everyone.

Question: David Driscoll - Smith Barney - Analyst : Congratulations on a very nice quarter.

Question: David Driscoll - Smith Barney - Analyst : A couple of questions. Can you give us kind of a macro picture that for the year what you would expect your total volume growth to be, and then if you could talk about '05, I think it would be, quite helpful. And, I suppose maybe if I digressed and just told you that what I'm trying to drive at here there's been a number of activities from cereal, that have come into play. I mean, the company has changed since you have become public. So then if we think about the effects that have happened in terms of volume growth this year, what should we be looking for next year and can you reiterate your long-term EPS targets?

Question: David Driscoll - Smith Barney - Analyst : So, Bill and Alberto, when I looked at my quarterly numbers for the back half of the year, I know you don't want to give quarterly guidance anymore, but if you could you at least directionally give me some indications here that it looks to me like Q3, we were still suffering under the lower crop from last year in the United States, but then in Q4 if the US crop is a good crop, then the volume comparisons year-on-year should be very favorable and that's where we should see the largest boost. Do I have that directionally right?

Question: David Driscoll - Smith Barney - Analyst : Also, if I could follow up on the food product segment. The performance on that division, at least sequentially was a lot better, but yet the conditions sequentially don't seem to have changed much, but obviously something has changed. What drove the gross profit improvement sequentially 93 versus 74?

Question: David Driscoll - Smith Barney - Analyst : And then lastly, Bill, if I can ask my favorite question on interest expense. Can you give us some indications as to where we might be headed for the final two quarters of the year and then your outlook on '05? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: David Driscoll - Smith Barney - Analyst : Your other division was a net expense this quarter of a million dollars. That line, if I recall correctly, contains your Solae and Lesieur ventures. It is -- what's going on there, and when do we expect to see meaningful profit contributions?

Question: David Driscoll - Smith Barney - Analyst : Then on the forward look for I expect that line to be driven by Lesieur and Solae, is that a good assumption? When would you say that there be meaningful contributions from those entities?

Question: David Driscoll - Smith Barney - Analyst : Super. Again, great quarter. Thanks a lot.

Question: David Nelson - Credit Suisse First Boston - Analyst : Good morning and congratulations.

Question: David Nelson - Credit Suisse First Boston - Analyst : US margins seemed to have held up quite well in soy processing, obviously, despite volumes, how much crushing capacity do you think has been shut down and therefore, what utilizations -- what has utilization been, and how much has been shut down permanently?

Question: David Nelson - Credit Suisse First Boston - Analyst : I'd like to turn to Asia. There has been some more Avian influenza -- cases of Avian influenza over there, including in China. Could you talked about how demand may be coming back in China, or how it may be inhibited by the new cases?

Question: David Nelson - Credit Suisse First Boston - Analyst : Right. Post the equity offering in your filing, your prospectus, you talked about the potential for -- or assuming no G&A savings from while of this minority interest, and now that's done, can you talk it all about what potential do you might see for G&A savings with that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: David Nelson - Credit Suisse First Boston - Analyst : Great. Thank you very much.

Question: Eric Katzman - Deutsche Bank - Analyst : Hi. Good morning, everybody.

Question: Eric Katzman - Deutsche Bank - Analyst : I suppose congratulations are in order. Also, to Christine and Greg. It's another mouth to feed in the world, so you have to be excited about that.

Question: Eric Katzman - Deutsche Bank - Analyst : Exactly. I have to raise my volume growth target. I guess a few questions. First, on the tax rate with it being down to around 29%, but for the full year, you're still assuming a relatively high rate. Even if the -- wouldn't -- I mean, even the Riyal stays where it is, wouldn't the tax rate still be lower on a full-year basis?

Question: Eric Katzman - Deutsche Bank - Analyst : OK. And, I guess I was-wondering, if you would comment, at one point you said, the cost of a new plant, depending upon where you are in the world for a fully integrated oil processing facility was between, I think, $50 to $100 million or $60 to $120, and, I'm wondering, if you could kind of put that in context of barriers to entry and where you see processing capacity, I guess, to a certain extent a follow-on to Dave Nelson's question.

Question: Eric Katzman - Deutsche Bank - Analyst : And the other, I guess, the last question and I will let it go, is I suppose that to a certain extent we've tried to assume that the low-carb diet trends in the US have promoted more animal-based protein consumption and that has helped your business. But to the extent that that plateaus or falls off, would that be a material drag on the business, or is this just such a US -- kind of US-centric diet change that on the global scale, it really doesn't matter?

Question: Eric Katzman - Deutsche Bank - Analyst : OK. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Eric Katzman - Deutsche Bank - Analyst : OK. Fair point. Thank you.

Question: Leonard Teitlebaum - Merrill Lynch - Analyst : Good morning

Question: Leonard Teitlebaum - Merrill Lynch - Analyst : good quarter. Did you have a -- talk about the just one small thing, and I'm trying to get a handle, we had a good move up in the food products area, margins got squeezed. Can you talk a little bit about the margin impact on the food products area? I know it's a small part of the business. I'm just trying to see if there's something here that I'm missing.

Question: Leonard Teitlebaum - Merrill Lynch - Analyst : I'm more -- I think Dave Nelson brought up a point I was going to try to hone in on a little bit and that is, are we permanently moth balling plans for a plant in the US and relocate the investment more into another part of the world, or is this still an issue to be decided? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Leonard Teitlebaum - Merrill Lynch - Analyst : I'm asking really for you.

Question: Leonard Teitlebaum - Merrill Lynch - Analyst : The point I'm taking away from this and we've talked about this before, you're trying to decouple, I think, the AG cycle from the business cycle as far as your participation. And that -- we look at it, I think the term was US-centric, and I think it's a good one instead of globally, and that's probably our error. But if we're going to put this thing on a pure business cycle, why would you not want to keep crushing capacity in the US constrained to protect margins there and concentrate on areas of growth? I guess that's the one part that I'm not fully appreciating.

Question: Leonard Teitlebaum - Merrill Lynch - Analyst : Well I guess, what I'm just -- and maybe we can follow-up off-line here, and I guess I'm trying to get to the integrity of the growth rate after having something that has been impacted I think by extraordinary margins this career. Even I'm just in the US but also in the world and how that translates into growth is really the point I'm trying to get to. And are we going to see a year next year that we may not grow at the 10%, and that's going to come after '05? Or do we look for a growth rate to push forward from the adjusted level that you have just given us? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Leonard Teitlebaum - Merrill Lynch - Analyst : Thank you very much.

Question: David Driscoll - Smith Barney - Analyst : Thanks a lot. The follow-up is related to the similar line of questions going on here. But specifically, can you guys tell us how much capacity you are going to add the remaining portion of '04? Or maybe give me the metrics however you look at them, '04 versus '03 and then '05 versus '04?

Question: David Driscoll - Smith Barney - Analyst : Collectively then, can you say that capacity expansion industry wide in Brazil and Argentina is equal to the production increases of soybeans, greater than or less than? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: David Driscoll - Smith Barney - Analyst : Would you also say that your ability -- this is a concern that I have heard from some -- some clients that the ability -- the expansion has all happened very rapidly in Argentina and consequently, actually having supply for your plants is not assured. Now, it doesn't sound like that's really true given what you guys have just said, but if you could give me a little color there and how have you protected yourself, i.e., I think you've got some other projects going on in Brazil, railroad, etc. that you guys were trying to participate in, and I never heard what eventually happened there.

Question: David Driscoll - Smith Barney - Analyst : And then maybe one final question. It's related, I think to your -- it's minority interest and, you know, Bill, if you could give us some understanding here as to when you expect, I think you mentioned on your prepared comments, something by the end of the year, you know, buying those fertilizer interest in, but then -- if you could give us as much details you can on how that minority interest line will be going forward, it'll be very helpful?

Question: David Driscoll - Smith Barney - Analyst : Very good. I have seen that. Would you -- what's left in the minority interest line once we've completed this transaction?

Question: David Driscoll - Smith Barney - Analyst : Superb. Thanks a lot everyone.

Question: Lavonne Von Redden - Hockey Capital - Analyst : Yes. Good morning everyone. I'm a little new to this story. I wanted to discuss, I guess, how the lower, I guess, AG commodity prices kind of work into the cash flow equation. If you can kind of talk about when the prices start to moderate decline in the quarter, and kind of how should we think about that, obviously, the inventories came down but as the inventories come down, do we look at the accounts receivable going up, just trying to get some understanding of how that all comes together? Unidentified Speaker Sure. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Lavonne Von Redden - Hockey Capital - Analyst : And the cash flow that you expect from that its going to be used really for, I guess, repurchase of short term debt?

Question: Lavonne Von Redden - Hockey Capital - Analyst : OK. Thank you.

Question: Philip Wilson - Credit Suisse First Boston - Analyst : Yes. Good morning. Philip Wilson research here CSFB. And, also relatively new to this story. Two questions this morning. I recognize that Argentina is only a small percentage of your business, but I still have one question related to it. Based on the latest I had heard from the IMF, they had not concluded the review yet of their credit lines to the country. Now in a bad case scenario that the debt rescheduling initiatives were not to happen later this year, is that having any impact whatsoever on your ability to finance straight out of that country or all of that is being financed through inter-company loans anyhow? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Philip Wilson - Credit Suisse First Boston - Analyst : OK. Thank you. And then the second question I had this morning, kind of follow up on the earlier question on the Atkin's diet. This morning there was an article on the journal review of the food pyramid by the US government. Is that review going to have any impact whatsoever on your business here in the US?

Question: Philip Wilson - Credit Suisse First Boston - Analyst : OK. Great. Thanks so much gentlemen.

Question: Bradley Tirpak - Sigma Capital - Analyst : Hi guys.

Question: Bradley Tirpak - Sigma Capital - Analyst : Good morning. The tax rate came in lower than I expected, and I was hoping you could explain to us what the debits and credits are for that, why was it lower -- start with the statutory rate, and then just bring us through why it was lower?

Question: Bradley Tirpak - Sigma Capital - Analyst : OK. Can you tell me what the cash paid for taxes was this quarter?

Question: Bradley Tirpak - Sigma Capital - Analyst : But was it more or less in line with the $58 million accrued?

Question: Bradley Tirpak - Sigma Capital - Analyst : Would have been less. And so that goes to the other non-current asset lines that your deferred tax asset went up? And that other current asset line went from 596 to 696, was that $100 million there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Bradley Tirpak - Sigma Capital - Analyst : What else would be any other current asset line?

Question: Bradley Tirpak - Sigma Capital - Analyst : OK. On the road show, you were explaining to us that there was a gain from the Sole, the structuring the Sole joint venture, and that you are amortizing part of that gain for a period of time. What amount was that amortization in this quarter?

Question: Bradley Tirpak - Sigma Capital - Analyst : So you are not amortizing that gain?

Question: Bradley Tirpak - Sigma Capital - Analyst : OK. The deferred gain is not being aim advertised?

Question: Bradley Tirpak - Sigma Capital - Analyst : I notice that accounts receivable went up this quarter a little more than I expected. What can you just explain to me why that was? It was up to $300 million. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Bradley Tirpak - Sigma Capital - Analyst : OK. And what was the allowance for doubtful accounts?

Question: Bradley Tirpak - Sigma Capital - Analyst : Ok. Thank you.