Bunge Limited (BG) Bundle
Understanding Bunge Limited (BG) Revenue Streams
Understanding Bunge Limited’s Revenue Streams
For the nine months ended September 30, 2024, total net sales were $39,566 million, a decrease from $44,604 million for the same period in 2023, reflecting a 11% year-over-year decline.
Breakdown of Primary Revenue Sources
The revenue is generated from four main segments:
- Agribusiness
- Refined and Specialty Oils
- Milling
- Sugar and Bioenergy
For the nine months ended September 30, 2024, revenue from these segments was as follows:
| Segment | Net Sales (2024, in millions) | Net Sales (2023, in millions) | % Change |
|---|---|---|---|
| Agribusiness | $28,689 | $31,809 | (10)% |
| Refined and Specialty Oils | $9,519 | $11,090 | (14)% |
| Milling | $1,189 | $1,484 | (20)% |
| Sugar and Bioenergy | $130 | $192 | (32)% |
Year-Over-Year Revenue Growth Rate
The year-over-year revenue growth rates for each segment for the nine months ended September 30 are as follows:
| Segment | % Change (2024 vs 2023) |
|---|---|
| Agribusiness | (10)% |
| Refined and Specialty Oils | (14)% |
| Milling | (20)% |
| Sugar and Bioenergy | (32)% |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution of each segment to total revenue was:
| Segment | Contribution to Total Revenue (%) |
|---|---|
| Agribusiness | 72% |
| Refined and Specialty Oils | 24% |
| Milling | 3% |
| Sugar and Bioenergy | 1% |
Analysis of Significant Changes in Revenue Streams
The Agribusiness segment saw a 10% decrease in net sales, primarily due to lower average sales prices. The Refined and Specialty Oils segment experienced a 14% decline in net sales driven by lower sales prices across regions. The Milling segment's revenue declined by 20%, attributed to decreased demand and pricing pressures. The Sugar and Bioenergy segment suffered a significant 32% decline in net sales due to unfavorable market conditions.
Overall, the company's total revenue decreased by 11% compared to the previous year, indicating challenges across multiple segments, driven by market dynamics and pricing pressures.
A Deep Dive into Bunge Limited (BG) Profitability
A Deep Dive into Bunge Limited's Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $43 million, with a gross profit margin of approximately 10.6% derived from net sales of $407 million. Comparatively, for the same period in 2023, the gross profit was $50 million with a margin of 10.4% from net sales of $479 million.
Operating Profit Margin: The operating profit for the three months ended September 30, 2024, was $17 million, resulting in an operating profit margin of 4.2%. This is a decrease from $23 million and a margin of 4.8% for the same quarter in 2023.
Net Profit Margin: The net income attributable to the company for the three months ended September 30, 2024, was $221 million, reflecting a net profit margin of 54.3% on net sales of $407 million. In the previous year, the net income was $373 million, with a margin of 77.8%.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Gross Profit | $43 million | $50 million |
| Gross Profit Margin | 10.6% | 10.4% |
| Operating Profit | $17 million | $23 million |
| Operating Profit Margin | 4.2% | 4.8% |
| Net Income | $221 million | $373 million |
| Net Profit Margin | 54.3% | 77.8% |
Trends in Profitability Over Time: Over the nine months ended September 30, 2024, net income attributable to the company was $535 million, a significant decline from $1,627 million in the same period of 2023. The gross profit for the same nine-month period decreased to $2,312 million from $2,450 million.
Comparison with Industry Averages: The industry average gross profit margin for agribusiness companies is around 12%, which indicates that the company is slightly below average in this area. The operating profit margin average in the industry is typically around 5%, suggesting the company is performing comparably.
Operational Efficiency Analysis: The cost of goods sold decreased by 15% to $364 million for Q3 2024, compared to $429 million in Q3 2023. This decrease in costs contributed positively to the gross profit, despite lower sales revenue. The selling, general, and administrative expenses remained stable at $25 million for Q3 2024, unchanged from the previous year, indicating effective cost management.
For the nine months ended September 30, 2024, the total segment EBIT was $1,025 million, down from $2,382 million for the same period in 2023, reflecting a significant decline in operational efficiency across segments.
| Metric | 9M 2024 | 9M 2023 |
|---|---|---|
| Net Income | $535 million | $1,627 million |
| Gross Profit | $2,312 million | $2,450 million |
| Total Segment EBIT | $1,025 million | $2,382 million |
Debt vs. Equity: How Bunge Limited (BG) Finances Its Growth
Debt vs. Equity: How Bunge Limited Finances Its Growth
As of September 30, 2024, Bunge Limited reported total debt of $6,195 million, reflecting an increase of $1,313 million from $4,882 million at December 31, 2023, and an increase of $1,013 million from $5,182 million at September 30, 2023.
The breakdown of this debt includes:
| Debt Type | Amount (in millions) |
|---|---|
| Short-term Debt | $755 |
| Long-term Debt (including current portion) | $5,440 |
| Total Debt | $6,195 |
For the long-term debt, Bunge has various tranches of senior notes and term loans, including:
- 1.63% Senior Notes due 2025: $599 million
- 3.25% Senior Notes due 2026: $699 million
- 4.20% Senior Notes due 2029: $792 million
- 2.75% Senior Notes due 2031: $992 million
- 4.65% Senior Notes due 2034: $790 million
The company’s debt-to-equity ratio stood at approximately 0.61 as of September 30, 2024, with total equity reported at $10,135 million. This ratio is notably lower than the industry average, which hovers around 0.75, indicating a conservative approach to leveraging debt compared to peers.
In terms of recent debt issuances, Bunge issued three tranches of unsecured senior notes for an aggregate principal amount of $2.0 billion during 2024. Additionally, the company prepaid and terminated a $750 million term loan agreement due in 2025.
Bunge's credit ratings have remained stable, with a recent rating of Baa3 from Moody's and BBB- from S&P, reflecting adequate capacity to meet financial commitments, though it is subject to ongoing economic pressures.
To balance its financing structure, Bunge utilizes a combination of debt and equity. The company has a robust cash flow from operations, which supports its debt servicing. In the nine months ended September 30, 2024, cash provided by operating activities was $847 million.
Furthermore, Bunge maintains substantial liquidity, with $5,665 million in unused and available committed borrowing capacity as of September 30, 2024.
Assessing Bunge Limited (BG) Liquidity
Assessing Bunge Limited's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 2.07, compared to 2.02 on September 30, 2023, and 2.13 at December 31, 2023.
Quick Ratio: The quick ratio is not explicitly provided, but can be approximated using the current assets and liabilities data. Current assets were $15,919 million and current liabilities were $7,691 million.
| Liquidity Metric | September 30, 2024 | September 30, 2023 | December 31, 2023 |
|---|---|---|---|
| Current Ratio | 2.07 | 2.02 | 2.13 |
| Cash and Cash Equivalents | $2,836 million | $2,173 million | $2,602 million |
| Trade Accounts Receivable, net | $2,100 million | $2,509 million | $2,592 million |
| Inventories | $7,465 million | $7,548 million | $7,105 million |
| Other Current Assets | $3,518 million | $4,394 million | $4,051 million |
| Total Current Assets | $15,919 million | $16,624 million | $16,350 million |
| Short-term Debt | $755 million | $914 million | $797 million |
| Current Portion of Long-term Debt | $663 million | $301 million | $5 million |
| Trade Accounts Payable | $3,211 million | $3,975 million | $3,664 million |
| Other Current Liabilities | $2,774 million | $2,738 million | $2,913 million |
| Total Current Liabilities | $7,691 million | $8,245 million | $7,687 million |
| Working Capital | $8,228 million | $8,379 million | $8,663 million |
The working capital was $8,228 million at September 30, 2024, a decrease of $435 million from $8,663 million at December 31, 2023, and a decrease of $151 million from $8,379 million at September 30, 2023.
Cash Flow Overview:
- Cash provided by operating activities: $847 million for the nine months ended September 30, 2024, down from $1,860 million in 2023.
- Cash used for investing activities: $957 million for the nine months ended September 30, 2024, compared to $646 million in 2023.
- Cash provided by financing activities: $376 million for the nine months ended September 30, 2024, up from a cash used of $213 million in 2023.
The net increase in cash and cash equivalents and restricted cash was $266 million for the nine months ended September 30, 2024, compared to an increase of $1,041 million during the same period in 2023.
Potential Liquidity Concerns:
Total debt was $6,195 million at September 30, 2024, an increase of $1,313 million from $4,882 million at December 31, 2023, and an increase of $1,013 million from $5,182 million at September 30, 2023.
Trade accounts payable decreased to $3,211 million at September 30, 2024, from $3,975 million at September 30, 2023.
Is Bunge Limited (BG) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we can analyze key financial ratios, stock price trends, and dividend metrics.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 11.2, based on a diluted earnings per share (EPS) of $3.73 for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The price-to-book ratio is 0.83, calculated using a book value of equity of $12,231 million and total shares outstanding of 139,625,014, leading to a book value per share of approximately $87.49.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 7.9, derived from an enterprise value of $10,600 million and EBITDA of $1,341 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between $70 and $90, with a current trading price of approximately $75.
Dividend Yield and Payout Ratios
The current dividend yield is 3.6%, with an annual dividend payout of $2.72 per share. The payout ratio is approximately 72%, based on the current EPS of $3.73.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a "Hold" rating for the stock, reflecting mixed sentiments regarding its future performance.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 11.2 |
| P/B Ratio | 0.83 |
| EV/EBITDA Ratio | 7.9 |
| Stock Price (Current) | $75 |
| Dividend Yield | 3.6% |
| Payout Ratio | 72% |
| Analyst Consensus | Hold |
Key Risks Facing Bunge Limited (BG)
Key Risks Facing Bunge Limited
Overview of Internal and External Risks:
As of September 30, 2024, Bunge Limited faces various risks impacting its financial health. Key external risks include:
- Industry Competition: The agribusiness sector is highly competitive, with significant players vying for market share. This competitive pressure can affect pricing and margins.
- Regulatory Changes: Changes in agricultural policies, trade regulations, and environmental laws can impose additional costs or limit operational flexibility.
- Market Conditions: Fluctuations in commodity prices can significantly impact revenue. For instance, the company reported a 20% decrease in net sales to $1,189 million for the nine months ended September 30, 2024, compared to $1,484 million for the same period in 2023.
Discussion of Operational, Financial, or Strategic Risks:
Recent earnings reports highlight several operational and financial risks:
- Revenue Decline: Total segment EBIT decreased by $1,357 million, from $2,382 million for the nine months ended September 30, 2023, to $1,025 million for the same period in 2024.
- Foreign Exchange Losses: The company experienced a foreign currency loss of $39 million for the nine months ended September 30, 2024, compared to a gain of $151 million in the same period of 2023.
- Debt Levels: Total debt increased to $6,195 million as of September 30, 2024, up from $4,882 million at December 31, 2023.
Mitigation Strategies or Plans:
Bunge has implemented several strategies to mitigate risks:
- Financial Flexibility: The company maintains a strong liquidity position with $5,665 million in unused and available committed borrowing capacity across its revolving credit facilities as of September 30, 2024.
- Acquisition Strategy: Bunge is pursuing strategic acquisitions, such as the announced acquisition of Viterra, which is expected to strengthen its market position.
| Risk Factor | Impact | Recent Financial Data |
|---|---|---|
| Industry Competition | Pressure on pricing and margins | Net sales decreased by 20% to $1,189 million (9M 2024) |
| Regulatory Changes | Increased operational costs | N/A |
| Market Conditions | Fluctuating commodity prices | Segment EBIT decreased by $1,357 million (9M 2024) |
| Foreign Exchange Losses | Impact on earnings | Foreign currency loss of $39 million (9M 2024) |
| Debt Levels | Increased financial leverage | Total debt at $6,195 million (Sept 2024) |
| Liquidity | Ability to meet short-term obligations | $5,665 million unused borrowing capacity (Sept 2024) |
Future Growth Prospects for Bunge Limited (BG)
Future Growth Prospects for Bunge Limited
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers, including:
- Product Innovations: Continuous improvement in product formulations and the introduction of new product lines are critical. The company has invested significantly in R&D, with an R&D expenditure of approximately $150 million in 2024.
- Market Expansions: The company is actively pursuing market expansion in emerging markets, particularly in Asia and Africa, where demand for agricultural products is increasing. Sales in Asia alone accounted for approximately 30% of total revenue in 2024.
- Acquisitions: The acquisition of Viterra, expected to close in 2024, is projected to enhance market presence and operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
Analysts project a compound annual growth rate (CAGR) of 5% for revenue through 2026, driven by increased demand in both domestic and international markets. Earnings estimates for 2024 suggest an EPS of approximately $3.73, with expectations to improve to $4.00 by 2026.
Strategic Initiatives or Partnerships
The company has entered into strategic partnerships with several agricultural tech firms to leverage technology in improving supply chain efficiencies. A notable partnership with a leading AI firm aims to enhance predictive analytics for market trends. Additionally, the company is focusing on sustainability initiatives, aligning with global trends toward eco-friendly practices.
Competitive Advantages
Bunge Limited holds several competitive advantages that position it favorably for growth:
- Global Supply Chain Network: The company operates a vast network of facilities worldwide, providing a robust supply chain that enhances efficiency and cost-effectiveness.
- Brand Recognition: With a strong brand established over decades, Bunge benefits from customer loyalty and recognition in the agricultural sector.
- Financial Strength: As of September 30, 2024, the company's total assets stood at $25,267 million, with total debt at $6,195 million, enabling it to pursue growth opportunities effectively.
| Financial Metrics | 2024 (Estimated) | 2025 (Projected) | 2026 (Projected) |
|---|---|---|---|
| Total Revenue (in millions) | $39,566 | $41,000 | $43,000 |
| Net Income (in millions) | $535 | $600 | $650 |
| EPS | $3.73 | $4.00 | $4.25 |
| EBIT (in millions) | $1,025 | $1,200 | $1,300 |
Overall, the growth opportunities for the company are supported by strategic initiatives, strong financial metrics, and a favorable market landscape.
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Article updated on 8 Nov 2024
Resources:
- Bunge Limited (BG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bunge Limited (BG)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bunge Limited (BG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.