Bunge Global SA Q3 FY2025 earnings call

• Thanked the team for focus, discipline, and execution in a complex environment. - Viterra transaction closure completed, first quarter as combined company with teams embracing integration and One Bunge culture. - Aligned combined company along end-to-end value chain operating model for greater agility, transparency, and collaboration. - Noted tangible benefits from combined platform beyond cost savings, including improved granularity and information at origin and destination. - Third quarter results showed strong performance in soybean and softseed processing and refining segments, benefiting from balanced global footprint and commercial synergies.

Soybean processing and refining: Improved in all regions, with higher margins, strong execution, and addition of Viterra's South American assets. Revenue contribution from this segment reflected higher processing in Europe and Asia and origination from South America. Softseed processing and refining: Higher results driven by higher average margins and addition of Viterra's softseed assets; higher in Argentina processing and refining, Europe processing and biodiesel, but lower in North America. Other oilseeds processing and refining: Higher results in North America Specialty Oils offset by lower results in Asia and Europe; minimal impact from Viterra. Grain merchandising and milling: Higher results in wheat milling and ocean freight, plus addition of sugar business, partially offset by lower global wheat and corn merchandising. Revenue contribution from this segment reflected higher volumes from the combined company's larger green handling footprint.

• Full year 2025 adjusted EPS expected in range of $7.30 to $7.60, second half adjusted EPS $4 to $4.25. - Expected adjusted annual effective tax rate in range of 23% to 25%, net interest expense $380 million to $400 million, capital expenditures $1.6 billion to $1.7 billion, and depreciation and amortization approximately $710 million. - Anticipates softer fourth quarter in soy processing and refining, soft processing and refining segments due to policy uncertainty, but expects meaningful improvement in grain merchandising and milling segment due to harvest timing.

• Macro trade and biofuel policy uncertainty impacting farmer and end consumer behavior. - Volatility in market conditions, including political and weather-related risks in Argentina and Australia. - Challenges in compliance and execution of biofuel policies, such as uncertainty around RVO and SRE issues.

Q: Just wanted to start off by saying congrats on reporting a strong quarter. I think really demonstrates solid execution on your guys' part. I think the first question I wanted to ask about is just around biofuel policy clarity. I know there's a lot of moving pieces to get to that point of clarity. But as it stands right now, are you able to give us a sense of when you think the soybean oil side or the crush margin formula should start to see a notable improvement?

A: Yes. This was complex enough. Let me start, and I'll let John follow up. But look, on the RVO, we're hearing, I think, the same that the market is. The final proposal, we expect to be at the end of the year or early next. We all hope in the marketplace, I think, that sooner is better. So we prefer to have that by year-end. We know the volume is going to be significantly higher, but we want to have that certainty and get that locked in. And then, of course, the SRE issue, seeing that those are reallocated 100% would make sure that it doesn't -- we don't lose any of that volume from the RVO and that, that gets executed. So look, the industry has made the investments in the soy and in the canola processing. And we need to see that demand put to work because that goes right to the farm gate, right? That supports the farmers, that's domestic demand that we can control. From a timing, you did call out soy oil is really only weak here in the U.S. Oil demand has been pretty good globally. So then that starts to be probably early '26, we would like to think that we would start to see that improvement and then that would continue as the year moved on.

Q: Also congratulations on closing the transaction. Firstly, I wanted to -- now that we can talk explicitly about earnings and other segments they're segmenting, I want to see if you can clarify a little bit the impact on Viterra to EPS and EBIT. So when we think about that $2.27 EPS for Q3 or your full year guide, what was the impact accretive or dilutive from Viterra versus where would Bunge have been on a stand-alone basis? And secondly, can you also clarify on an EBIT basis, as we look at the operating income you made in Q3 versus a year ago, how much of that growth was due to Viterra versus just legacy Bunge earnings growth or contraction?

A: Yes. Let me start and I'll let John put a finer point on it. But the one thing to understand is we're very quickly bringing this together with one team and running this as one company because that's how we're going to maximize profitability. So if you think about the one voice to the farmer to be able to get them to market or the one voice to the consuming customer to get them what they need. So we were much bigger in soy crush, but think about Viterra brought a great footprint there in Argentina, which made us very balanced globally in soy crush. We're running a global soy crush business. So we're not thinking about it as Viterra versus Bunge, which is why we resegmented it along the lines we run the business. Soft, if you think about it, on the soft crush, Viterra brought a great origination and merchandising as well as some additional soft crush. We balanced out our global soft crush franchise. And so we're running that as one global franchise as well as where they were much stronger, of course, in the origination storage handling on the grain merch side and supporting our milling, but even where the origination then is supporting our milling assets. So I'll let John put a finer point, but you really have got to think about this as one company here pretty quickly, and that's why we're kind of focused on the present and going forward.

Q: I guess I wanted to start with Viterra, and I know it's deeply embedded now within the Bunge operations. But I was just wondering, to the extent you're able, thinking about Q3 and just the numbers that Viterra reported a year ago, do you have like a really rough breakout of how much was just better execution by the team relative to a year ago? And how much was a better industry backdrop for those operations for what we saw in this quarter?

A: Yes. I would -- Heather, I'd say we haven't gone back and dissected certainly Viterra's performance from a year ago versus this quarter. Obviously, we are aware that their performance coming into the close wasn't where we would have expected it. But at the same time, we've seen significant improvement already. And as I mentioned earlier, meaningful contribution in Q3 across both the soy and soft sides of things and then maybe less so on merchandising given timing, as I mentioned earlier. Last year, there were certainly more challenges, I think, in the environment with poor Australian crop, which we expect to be much better this year and lower crush environment in Argentina. So those things have improved this year. So I think generally, we feel like there's more momentum on the legacy Viterra side. And again, haven't dissected line by line with a year ago their performance. We're really, as Greg mentioned, focused on getting the stuff integrated and moving forward, but I feel very good about the contribution they made.

Q: Actually, following up on the buybacks, that would be my follow-up question. Where do we stand now with that little over $0.5 billion that you've done in terms of what your initial consideration was for the buybacks when it came to the Viterra deal? Because I remember it was like $2 billion. Maybe help us understand where do we stand? What's missing?

A: Yes. Since the announcement of Viterra, we've actually done a little over $2 billion of buybacks, but $500 million of that was related to our sugar divestment. So we've got about $255 million left on the actual Viterra program. And so we'll get that -- we're well ahead of schedule on getting that executed and our plan is to get that done soon and then we'll go from there. But we're not going to be complete that and be done. I think we'll continue to assess that like we do with any capital allocation going forward and make sure we're making prudent decisions for our shareholders.

Q: Maybe just to ask maybe a similar question, but on Australia. Could you maybe walk through some of the high-level supply and demand trade dynamics there and just kind of how all that's flowing through Viterra's legacy assets there?

A: Okay. Yes, Australia, we've got a real big crop coming off there on wheat barley and Rapesed, which are all really important global crops for us with our origination now in every key producing region. So that's setting up very well. The thing to watch there, of course, weather that can kind of depend whether some of that falls in Q4 or falls in, in Q1 with some of the trade tensions between Canada and China around canola, we'll probably see some increased rapes seed exports coming out of Australia. That should probably be positive. And then, of course, they'll be very competitive in the global market on wheat and barley. So excited to have those big crops and be able to put our origination storage handling export system to work there in Australia. We've got a great business down there.

Q: Congrats on a solid quarter. Regarding capital projects, while I understand that you're winding down several multiyear capital projects from a legacy Bunge perspective. Could you speak to any material projects that were underway at Viterra and if you're seeing new opportunities for growth investment from a Viterra perspective?

A: Yes. There was nothing really big. I'd say Viterra had a -- they had a few smaller, what I'd call kind of debottlenecking and operational improvement projects underway that we're completing now. So they bring a much more modest amount of CapEx pipeline to the combined company than what we had set up with our large projects, our growth. Obviously, we're looking at a number of things as we always do going forward. We don't, on the horizon, see any big large capital projects like the ones we've had underway here for the last few years, but we'll continue to look at that. But as we've always said, we prefer to consolidate the industry and to add capacity where possible. But obviously, with the broader footprint, more opportunity, we'll make sure we're making prudent decisions for our shareholders.

Q: You guys have mentioned strong execution a number of times. It does look like you outperformed the market, outperformed some of the competitors. I was just hoping maybe you could provide some color on where that strong execution was. You've talked about still a lot of work to do to bring the organizations together and make it more kind of holistic going forward. But where are you already seeing some of that strength?

A: Sure. I think it starts with where we've been able to connect the 2 systems, the origination with the crushing and whether that's the soy processing or the soft seed processing and then where we filled in some of the areas where we weren't as strong, as I was talking about in Argentina is a great example on soft crush, on sun crush as well as on soybean processing. And that gives us that information. And in a market that is a bit complicated like we're operating in, having the information to be able to react more quickly. And in this quarter, it was things like where we still had open legs on the crush, executing very well to get every bit of the crush margin that was possible as we maybe rolled off the financial hedges and hedged out the physical to actually execute the programs. And then where we're a better partner on transportation and logistics, right? So working with our transportation providers and even some of the dots that we've been able to connect between our origination and processing. When you look at it as a combined system, you'll make different decisions than when you were running 2 different systems. And so there's early wins falling out in the transportation and logistics as we're pairing the right origins and destinations. And then the other is added liquidity in our own system. You can move faster and have the liquidity to get in and out of the positions that you need to, to execute for the farmer and for your consuming customer more quickly. And you're working inside your business with less friction internally, and that allows us to be externally focused and to move faster. And that happens a whole bunch of times at a lot of places globally, and then you see it start to fall out in the P&L. So we'll be excited over time as we get to fewer systems and fewer processes. But right off the bat, we had a big focus on getting the commercial team the same information at the same time about our combined information along the value chains. And I think we're seeing that paying real dividends.