Bunge Global Q4 2024 Earnings Report

Autoliv EPS Results

• Actual EPS: $2.13
• Consensus EPS: $2.30
• Beat/Miss: Missed by -$0.17
• One Year Ago EPS: N/A

Autoliv Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $13.18 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Autoliv Announcement Details

• Quarter: Q4 2024
• Date: 2/5/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, February 5, 2025
• Conference Call Time: 8:00AM ET

Autoliv (NYSE:ALV), through its subsidiaries, develops, manufactures, and supplies passive safety systems to the automotive industry in Europe, the Americas, China, Japan, and rest of Asia. It offers passive safety systems, including modules and components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels, and inflator technologies. The company also provides mobility safety solutions, such as pedestrian protection, battery cut-off switches, connected safety services, and safety solutions for riders of powered two wheelers. It primarily serves car manufacturers. Autoliv, Inc. was founded in 1953 and is headquartered in Stockholm, Sweden.

Autoliv Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day, and welcome to the Bunge Global S. A. Fourth Quarter twenty twenty four Earnings Release and Conference Call. Today, all participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask your questions.

[Operator]

Please note that today's event is being recorded. I would now like to turn the conference over to Ruth Ann Weisner. Please go ahead.

[Ruth Ann Wisener, Vice President, Investor Relations at Bunge]

Thank you, operator, and thank you for joining us this morning for our fourth 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. Reconciliations 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.

[Ruth Ann Wisener, Vice President, Investor Relations at Bunge]

These forward looking statements are subject to various risks and uncertainties. Fungi has provided additional information in 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. On the call this morning are Greg Heckman, Fungi's Chief Executive Officer and John Neppel, Chief Financial Officer. I'll now turn the call over to Greg.

[Gregory Heckman, CEO at Bunge]

Thank you, Ruth Ann, and good morning, everyone. I'll start by thanking the team for their continued hard work and commitment in 2024. We made good progress on a number of significant growth projects, while also advancing our work to build an even stronger Bunge. Our team is prepared for the close of our business combination with Viterra. Teams at both companies have put in countless hours of planning to ensure a smooth integration so that our customers at both ends of the value chain, both farmers and consumers see good continuity of service.

[Gregory Heckman, CEO at Bunge]

And we expect to close the transaction soon. You likely heard we received regulatory approval from the Canadian government last month. Continue to engage in constructive conversations with the regulatory authorities in China, while we work through the final stages of the asset divestment process in Europe. We're also in the late stage of the regulatory process for our acquisition of CJ Selecta, a leading manufacturer and exporter soy protein concentrate in Brazil. We expect that transaction to close in the near future.

[Gregory Heckman, CEO at Bunge]

In the coming weeks, we expect to close our announced partnership with Repsol to develop new opportunities to help meet the growing demand for lower carbon intensity feedstocks for the production of renewable fuels. This alliance is the first of its kind in Europe. It furthers our long term strategy to create alternative paths towards the decarbonization of agriculture, the role we can play in the liquid fuel supply chain.

[Gregory Heckman, CEO at Bunge]

In October, we announced the completion

[Gregory Heckman, CEO at Bunge]

of the sale of our Sugar and Bioenergy joint venture in Brazil to BP. As we've discussed, this streamlines our business and allowed us to expand our stock repurchases and authorization. Planning for these large initiatives takes teamwork and cross functional collaboration. The team has done a great job of running our day to day business while also working on these strategic growth initiatives. In addition, we continue to return capital to shareholders through our share repurchases and our regular dividend.

[Gregory Heckman, CEO at Bunge]

We repurchased a total of $1,100,000,000 of shares in 2024 and share buybacks will continue to be an important part of our capital allocation strategy. Shifting to our operating results, we didn't close the year as expected. Particular operating conditions have been challenging in South America and they continue to be in the fourth quarter. Fortunately, we're seeing things stabilize and expect to see significant improvement in the region in 2025. After the Viterra transaction closes, we expect to provide an outlook for the combined company.

[Gregory Heckman, CEO at Bunge]

In the meantime, we are providing an outlook for the current Bunge business. Forward visibility is limited, particularly at this point given the increased geopolitical uncertainty. Based on what we see in the markets and the forward curves today, currently expect full year adjusted EPS of approximately $7.75 With that, I'll turn it over to John for a deeper look at

[Gregory Heckman, CEO at Bunge]

our financials and outlook. John?

[John Neppl, Chief Financial Officer at Bunge]

Thanks, Greg, and good morning, everyone. As Greg mentioned, the fourth quarter came in below our expectations. This was particularly true in South America, where market environment has been challenging all year, impacting industry margins throughout the oilseed and grain value chains to include those of our joint ventures.

[John Neppl, Chief Financial Officer at Bunge]

We also felt the impact of a declining margin environment in North America from biofuel rate uncertainty. Now let's turn to the earnings highlights on Slide five. Reported fourth quarter earnings per share was 4.36 compared to $4.18 in the fourth quarter twenty twenty three. Reported results included a favorable mark to market timing difference of $1.25 per share and a net positive impact of $0.98 per share. Notable items primarily related to the gain on the sale of our Sugar and Bioenergy joint venture, partially offset by transaction and integration costs associated with Viterra.

[John Neppl, Chief Financial Officer at Bunge]

Adjusted EPS was $2.13 in the fourth quarter, which was $3.7 in the prior year. Adjusted core segment earnings before interest and taxes or EBIT was $548,000,000 in the quarter inclusive of the Ukraine business interruption insurance recovery $52,000,000 versus EBIT of $881,000,000 last year. In processing, territory results in Europe and Asia were then offset by lower results in North America and South America, as as well as in European soft seats. Higher merchandising results were driven by improved performance in Financial Services, Fusion Freight and Global Grains, more than offsetting lower results in Global oil. Refined in specialty oils, lower results in North America were primarily due to the combination of a more balanced supply and demand environment and certainly related to U.

[John Neppl, Chief Financial Officer at Bunge]

S. Biofuel policy. Bolts in Europe, South America and Asia were also down due to lower margins. The variances were much narrower. In milling, our results in North America were more than offset by lower results in South and Corporate and Other, the increase in corporate expenses was primarily driven by lower performance based compensation, various project related expenses in the prior year.

[John Neppl, Chief Financial Officer at Bunge]

Lower other results related to our captive insurance and securitization programs, Fungi Ventures. Core results in non core reflect only one month of income from the Sugar joint venture, recent was on the sale. Net interest expense of $62,000,000 was down in the quarter compared to last year reflecting lower net debt levels and interest rates. The increase in income tax expense for both the quarter and full year was primarily due to lower pretax income and earnings mix. Adjusting for notable items and mark to market timing differences, full year adjusted effective income tax rate was approximately 23% of the current and prior year.

[John Neppl, Chief Financial Officer at Bunge]

Let's turn to Slide six where you can see our adjusted EPS and EBIT trends for the past five years. Strong performance period reflects a combination of favorable market environment and excellent execution by our team. Recent trend indicates more balanced supply and demand translating into less volatility and lower risk. Slide seven details our capital allocation. For the full year, we generated approximately $1,700,000,000 of adjusted funds from operations.

[John Neppl, Chief Financial Officer at Bunge]

After allocating $451,000,000 to sustaining CapEx, which includes maintenance, environmental health and safety, we had approximately $1,200,000,000 of discretionary cash flow available. Of this amount, we paid $378,000,000 in dividends, up to $925,000,000 in growth in productivity related CapEx, about two thirds of which related to our growth pipeline of large multi year investments, and repurchased $1,100,000,000 of BUNNY shares. Dollars 500,000,000 of those repurchases were from the $728,000,000 of cash proceeds received to date for the sale of our Sugar JV. This resulted in the use of $444,000,000 of previously retained cash flow. Turning to Slide eight, we finished 2024 with total CapEx spend of approximately $1,400,000,000 which was in line with our last forecast.

[John Neppl, Chief Financial Officer at Bunge]

Moving ahead to 2025, we expect CapEx of $1,500,000,000 to $1,700,000,000 reflecting the continued investment in our ongoing multi year Greenfield projects. This range is down from the preliminary estimate of $1,920,000,000 we provided you previously, reflecting our decision to not pursue some projects, as well as timing changes related to existing projects. We continue to expect turning to a baseline run rate on CapEx level during the second half of twenty twenty six. Moving to Slide nine, At year end, readily marketable inventories or RMI exceeded our net debt by approximately $2,300,000,000 Our adjusted leverage ratio reflects our adjusted net debt to adjusted EBITDA was 0.6 times at the end of the quarter. Slide 10 highlights our liquidity position.

[John Neppl, Chief Financial Officer at Bunge]

At year end, we had committed credit facilities approximately $8,700,000,000 all of which were unused at the end of the year, providing us ample liquidity to manage our ongoing capital gains. In addition, we had a cash balance of approximately $3,300,000,000 accumulated in large part as a result of a $2,000,000,000 cash proceeds from The U. S. Public debt offering that would be closed in September. All proceeds will be used to fund the cash portion of the Vicaira transaction.

[John Neppl, Chief Financial Officer at Bunge]

In addition, $6,000,000,000 term loan commitment secured last year is to refinance Vicaira's outstanding bank debt on close to the transaction. Please turn to Slide 11. For the year adjusted ROIC was 11.4% and ROIC was 9.7%. Adjusting for construction in progress, a large multiyear project is not yet operating and the excess cash on our balance sheet for the Viterra closing, our adjusted ROIC would increase by approximately two percentage points and ROIC by approximately one percentage. While returns have declined recent highs, it remained well above our adjusted weighted average cost of capital of 7.7%.

[John Neppl, Chief Financial Officer at Bunge]

Moving to Slide 12. In the year, we produced discretionary cash flow of $1,200,000,000 to cash flow yield of 11.1% compared to our cost of equity of 8.2%. Please turn to Slide 13, 20 20 five outlook. Greg mentioned in his remarks, taking into account the current and macro environment at Ford Focus, we expect full year 2025 adjusted EPS to be approximately $7.75 This forecast excludes the impact of announced acquisitions expected to be closed during the year. In Agribusiness, full year results are forecasted to be down from last year, and lower results in processing where improved performance in South America is expected to be more than offset by North American and European soft seats.

[John Neppl, Chief Financial Officer at Bunge]

Results in merchandising are forecasted to be down slightly from last year. Finally, Specialty Oils, full year results are expected to be down from last year, merely driven by a more balanced supply and demand environment in North America. Corporate and other, full year results are expected to be up from last year. Additionally, the company expects a falling for 2025. Adjusted annual effective tax rate of 21% to 25% and interest expense in the range of $250,000,000 to $280,000,000 capital expenditures in the range of $1,500,000,000 to $1,700,000,000 depreciation and amortization of approximately $490,000,000 With that, I'll turn things back over to Greg for some closing comments.

[Gregory Heckman, CEO at Bunge]

Thanks, John. So before we go to Q and A, I just wanted to offer a few closing thoughts. Today's complicated global environment, we're confident that the work we've done and continue to do to improve our business and operations positions us well to deliver on our critical mission, connecting farmers to consumers to deliver essential food, feed and fuel to the world. We continue to see the benefits of our global operating model, our portfolio optimization work, our financial discipline as we navigate the cycles inherent in our industry. With our culture of continuous improvement, our team continues to strengthen the business, both with the M and A work we talked about at the beginning of the call and our ongoing growth initiatives.

[Gregory Heckman, CEO at Bunge]

Construction is going well on our large scale projects that will not only bring us new capabilities, but will also allow us to more efficiently and sustainably serve our customers. Productivity is at the heart of investments at dozens of our existing facilities around the world. Strategic use of capital along with the implementation of the Bunge production system is enabling our teams to set new performance records each quarter. We're also pleased with our performance on our sustainability priorities. We took a major step forward in November.

[Gregory Heckman, CEO at Bunge]

We became the first global commodity exporter capable of 100% traceability and monitoring of both our direct and indirect soy purchases in Brazil's priority regions. Proud to reach this major milestone in our ten year journey to achieve traceable and verifiable supply chains. As we think about our business in 2025 and beyond, regardless of how the macro environment evolves, confident that our team has the experience, skills and agility to navigate the changes and drive performance. With the addition of Itera, we'll be an even stronger Bungie, further diversification, assets, geographies and crops, providing us with even more capabilities and optionality to help address the world's food security needs. With that, turn to Q and A.

[Operator]

Thank you. We will now begin the question and answer session. And today's first question comes from Manav Gupta with UBS. Please proceed.

[Manav Gupta, Executive Director at UBS Group]

Good morning, Greg. Good morning, John. My first question relates to the 2025 guidance. What are the puts and takes if you could get a little more details? And the reason for the question is that historically, you start at a number and as the execution is better than expected, the number rises.

[Manav Gupta, Executive Director at UBS Group]

So I'm trying to understand what kind of conservatism is built into the guidance. And my follow-up, I'll ask it upfront also is, how are you accounting for the fact that there is policy uncertainty of 45Z? So how are you accounting for that in your annual guidance? Thank you.

[Gregory Heckman, CEO at Bunge]

Okay. Well, let me start and John can follow-up. So as we look at '25, we definitely are in an environment that has less visibility than normal with the trade disruptions, and some of the uncertainty around U. S. Biofuels.

[Gregory Heckman, CEO at Bunge]

But what we did factor in is that really global oil supply and demand is pretty constructive, right? But we got less palm oil and less soft seed competing with soy. So soy is very competitive right now and it's taking a bigger share of global flows. And we are seeing more global biofuel demand when you look at it in total outside The U. S.

[Gregory Heckman, CEO at Bunge]

Soybean meal demand has been very good and that's driven of course by the profitability in the animal protein. There's also less wheat with a little bit tighter supply and demand, so less wheat competing with soybean meal and less competition from the mid proteins. And then in South America, we really expect improvement in Brazil. The industry in 2024 fought the logistical commitments and take or pay, which really create a lot of demand on supply, which kind of hurt margins across the platform for the industry. Those are exited in 'twenty four and won't be fighting that in 'twenty five.

[Gregory Heckman, CEO at Bunge]

And then of course Argentina, we've seen the export tax reductions in that economy continues to stabilize. So that should drive a change in farmer behavior and farmer selling. Now we do expect lower margins in North America and Europe. And of course, as I believe John said, Viterra, CJ Select and share repurchases are not factored into '25.

[John Neppl, Chief Financial Officer at Bunge]

And Manav, I might just add there that relative to 45z and uncertainty around policy, we've got we're making the assumption today that U. S. Crush margins lower as Greg mentioned, but also expect refining premiums to be more challenged in 2025. Obviously, if we get more clarity around policy and you get the right demand for soybean oil relative to renewable fuels, that should be helpful for refining premiums, but now we're making assumptions they'll be down certainly.

[Manav Gupta, Executive Director at UBS Group]

Thank you for a detailed response. I'll turn it over.

[Operator]

The next question comes from Heather Jones with Heather Jones Research. Please proceed.

[Heather Jones, Founder at Heather Jones Research]

Thanks for the question. I guess I want to start with So given that the fact that South America should be better next year as far as on take or pay and Argentina, I'm just wondering what is the offset that you all are expecting that to be softer in 2025?

[Gregory Heckman, CEO at Bunge]

You were breaking up a little bit during the beginning, Heather. If I got the question right, it was as we see South America better, what are the offsets globally?

[Heather Jones, Founder at Heather Jones Research]

Yes, in merchandising specifically.

[Gregory Heckman, CEO at Bunge]

Oh, in merchandising specifically?

[Gregory Heckman, CEO at Bunge]

Yes, I think if you look and John can rest even versus the model, merchandising is in pretty conservative and I think it reflects what we're seeing as a more balanced supply and demand situation globally really across grains and oilseeds. And as we've talked about, that is always the toughest to be able to predict from a timing and size of the magnitude of the opportunities. It would be hard to imagine that the situation will be more complex than we're dealing with right now and we expect things to kind of get more clear in the second half. The watch out on merchandising versus the opportunity really is it does make it tougher for our suppliers, the farmers as well as the consumers to plan in these uncertain times. So they may draw back and be a little bit more spot here in the first quarter, first couple of quarters.

[John Neppl, Chief Financial Officer at Bunge]

And I'd maybe just add, Heather, that it's built in year over year right now is in ocean freight and really driven primarily by lower flat price now versus a year ago. But those markets can get very dynamic depending on trade flows. As government policy gets more clear and trade flows could be impacted, that certainly may provide us some opportunity on the ocean freight side.

[Gregory Heckman, CEO at Bunge]

One supply and demand probably is that most of the watch probably is corn. That one's probably the tightest. And so if we did have some weather problems in corn production, that's one of the ones that could contribute to merchandising as we need to work to solve some problems globally.

[Heather Jones, Founder at Heather Jones Research]

Okay. And then I don't know how much you all can speak to this, but I just wanted to ask broadly, your thinking on the Vaterra acquisition, given the '45 degree model makes granola basically uncompetitive coming into The U. S. Or at least not eligible at this time for a credit. And just the potential for export tax for tariffs on Canada, just like broadly, how are you thinking about that acquisition now versus maybe a year ago?

[Heather Jones, Founder at Heather Jones Research]

And are you maybe able to offset some of those new negatives with greater synergies or greater share repo or just how are you all thinking about those puts and takes?

[Gregory Heckman, CEO at Bunge]

I'd say that, one, it hasn't all played out exactly what how the biofuels policy is going to work out. But remember, canola is very favored by the food industry as well as the canola meal has been very favored by the dairy industry. So that market will continue to go to a lot of the traditional demand.

[John Neppl, Chief Financial Officer at Bunge]

You can imagine, obviously, we're watching what happens between The U. S. And Canada except that could impact canola flows in the near term, but that would last forever. And this is a long term game. So clearly, we'll be poised to deal with whatever we need to deal with in the near term.

[John Neppl, Chief Financial Officer at Bunge]

But I think the long term policy gets more clear, one thing is the market will adjust to that. And I think with the combination with Viterra, we should be in a better position globally to deal with whatever disruption might be created from the government policy or trade flows changes.

[Heather Jones, Founder at Heather Jones Research]

Okay, perfect. Thank you so much.

[John Neppl, Chief Financial Officer at Bunge]

Thank you.

[Operator]

And our next question comes from Tom Palmer with Citi. Please proceed.

[Tom Palmer, Senior Equity Research Analyst at Citi]

Good morning and thanks for the question. I wanted to maybe just start off kind of framing the earnings guidance for '25 relative to the $8.5 mid cycle outlook. I know it's a few years it was laid out in 'twenty two. I appreciate interest expense is higher, but share count is lower. So I guess just looking at like the segment profit pieces, could we maybe walk through expectations relative to that mid cycle outlook?

[John Neppl, Chief Financial Officer at Bunge]

Sure, Tom. I'll take that and Greg you can jump in if any other thoughts. But just a reminder, we put that together. Our most recent refresh was in the middle of twenty twenty two, which of course seems like an eternity from now. But overall, how we're thinking about it.

[John Neppl, Chief Financial Officer at Bunge]

On the processing side, margins are pretty steady versus what we had assumed back in the mid cycle, but volume is down based on our our original model really driven by three factors. One is Ukraine has obviously been impacted with the war and so pretty much lower volume levels there than we anticipated. We sold our Russia business since that point in time and then we're doing less tolling in South America. So volume is down in processing, but margins fairly steady. On merchandising side, we assume lower volatility going forward.

[John Neppl, Chief Financial Officer at Bunge]

We had modeled about $100,000,000 a quarter in our baseline and looking at the next year, we're thinking somewhere in the $50,000,000 to $75,000,000 per quarter range. So obviously, that can change pretty quickly depending on what happens in the markets, but that's how we have it in now. Net interest expense higher and really driven by interest rates and more debt and I'll get to the offsets in a second. And then on the sugar side, of course, we sold sugar and we had that built into the model. But offsetting the higher interest in sugar impact is more share buybacks.

[John Neppl, Chief Financial Officer at Bunge]

And we originally in the model just assumed that pay down with any excess cash, but of course we've allocated a lot of that to share repurchases. So the repurchases have principally offset the loss of sugar earnings and the higher interest cost. And then we do have some higher costs than what we had anticipated at the time really driven by growth initiatives and adding some capability, invested some money in technology really to drive efficiency in the future. And frankly, inflation over the last couple of years is higher than what we expected in our original model. And then finally, on the favorable side to all that is on RSO, Refining Specialty Oil side, margins have been better than what we would have modeled in terms of at the time assuming more of a baseline on the Specialty side we performed better, but also refining premiums have stayed better than what we had anticipated in the mid cycle.

[John Neppl, Chief Financial Officer at Bunge]

So that kind of wraps up the overall.

[Gregory Heckman, CEO at Bunge]

Probably just for mentioning, Lloyd was mentioning the calendarization of 25% right now. So first half, second half at 40%, sixty % and then Q1 versus Q2 on the first half would be 40%, sixty %. Thank you. That was actually my next question.

[Tom Palmer, Senior Equity Research Analyst at Citi]

Maybe I'll just sneak one in quickly. Just on Zatera, I guess, what's kind of the plan once it closes in terms of communication? Is the idea to update guidance just on the next earnings cycle? Would it be more proactive than that? And just any kind of initial thoughts on how we might maybe think about Vaterra's swinging earnings?

[Tom Palmer, Senior Equity Research Analyst at Citi]

Thanks.

[John Neppl, Chief Financial Officer at Bunge]

Yes, I think, Tom, our plan right now is to update on the Q1 call. Obviously, it depends on timing of close because we have a lot of work to do getting the commercial teams together and looking at the future. We focused all of our time and attention on integration and getting through regulatory. And of course given the fact that we're not one company and the commercial teams are limited in communication, really limited to integration discussions and not what can we do together going forward. So we're looking forward to getting those teams together to talk about future what we can do together.

[John Neppl, Chief Financial Officer at Bunge]

And clearly, our first order of business will be taking a recast of how we feel about the balance of '25 post close and then we'll share that as soon as we can. In the meantime, we're excited about it. We know we're in a very cyclical business. The environment is different than it was when we signed the deal, but this is about the long term. And we're just as excited today as the day we signed the deal.

[John Neppl, Chief Financial Officer at Bunge]

And knowing the long run as we've had a chance to spend more time with their teams, we're really excited about what we can do together, especially in a world that seems to be more politically uncertain and whether volatility and all the things that should play well into our model, it's going to give us that much more ability to manage.

[Tom Palmer, Senior Equity Research Analyst at Citi]

Great. Thanks for such detailed answers guys.

[John Neppl, Chief Financial Officer at Bunge]

Yes. You bet.

[Operator]

The next question is from Stephen Haynes with Morgan Stanley. Please proceed.

[Steven Haynes, Vice President, Equity Research at Morgan Stanley]

Hey, good morning. Thanks for taking my question. I wanted to ask on the Vitera regulatory process. You mentioned some constructive comments with Chinese regulators. I was hoping

[Steven Haynes, Vice President, Equity Research at Morgan Stanley]

if maybe you could provide a

[Steven Haynes, Vice President, Equity Research at Morgan Stanley]

bit more color here on those discussions. And then is it also, I guess, fair to assume that any back and forth between The U. S. And China on tariffs hasn't changed anything with those discussions? Thank you.

[Gregory Heckman, CEO at Bunge]

Yes. We no, I'd say we've had very productive discussions with the Chinese authorities and we can continue to respond to the questions and work through the process and we feel we're getting to the later stages of that. And then as far as some of the external factors that are going on in the world, the one thing, Fungi, with our global footprint as well as Viterra with their global footprint, we both had very good relationships with the China market, with our counterparties in China, with the regulatory authorities. And these are decade long relationships. And it's very important, right, to be able to connect that important demand in China with the farmers, right?

[Gregory Heckman, CEO at Bunge]

And that's what we do. That's vitally important to help farmers be successful and to be profitable and continue to grow, as well as it's important to China for their growing demand that we can connect them to all the different origins around the world. So those are long term relationships and trust that's been built and we'll just work through the process. We've seen a lot of different cycles and a lot of different situations in the world and relationships over those decades and expect to in the coming decades, which is why we're so excited about putting these two companies together.

[Steven Haynes, Vice President, Equity Research at Morgan Stanley]

Understood. Thank you very much.

[Operator]

The next question comes from Salvator Tiano with Bank of America. Please proceed.

[Salvator Tiano, Analyst at Bank of America]

Thank you very much. Firstly, I want to talk a little bit in more detail about the financial implications of the acquisitions that you're close to completing. So firstly on Vitera, previously you had said that it most likely would be dilutive on year one. And I want to see if you can put a finer point given that at this point we're close to the completion and also if we have line of sight to year two or year three whether this will be at this point dilutive or accretive. And on CJ Select, I think numbers that have been floated previously, we're talking about perhaps $60,000,000 EBIT contribution, which would be $0.3 EPS accretion on a full year basis.

[Salvator Tiano, Analyst at Bank of America]

Is this still the case?

[John Neppl, Chief Financial Officer at Bunge]

I'll start with Viterra. We out of the gate it was going to be neutral to slightly positive on a pro form a basis after in consideration capturing first year synergies and share buybacks. Of course, we've done a bit of the share buybacks. We have $800,000,000 remaining on that program. But I think, look, it's difficult to assess exactly how it will have an impact first year because we haven't gotten together to put a forecast together for 2025.

[John Neppl, Chief Financial Officer at Bunge]

But again, we will provide that clarity as soon as we can on 2025. And then really an outlook beyond there, we're going to have to spend some time together and understand how the businesses will work together and where how quickly we can capture the commercial synergies. I think on the cost synergy side, we feel very good about the cadence that we have, but it will take time to get through the commercial side. So more to come on that. I think it's just going to it's a big company.

[John Neppl, Chief Financial Officer at Bunge]

It's a lot of work. We'll provide that clarity as soon as we can. With respect to CJ Selecta, our general assumptions are largely intact on that. It's about a $600,000,000 acquisition and we expect mid teen returns on that business. And so that there holds long term certainly we believe that's a great acquisition.

[John Neppl, Chief Financial Officer at Bunge]

And while any given quarter, year S and Ds can drive margins, we definitely believe that it's going to be a very good acquisition over the long

[Salvator Tiano, Analyst at Bank of America]

Perfect. Thank you very much. And also I wanted to check a little bit on the capital allocation. So obviously you are being more aggressive with buybacks and offsetting the the dilution from the sale of the sugar JV. How should we think a little bit about that for this year?

[Salvator Tiano, Analyst at Bank of America]

And on CapEx, I think previously you had mentioned around $2,000,000,000 for 2025. So clearly it's trending lower and is this just finding efficiencies taking off some projects of the books or just pushing being pushed back to 2026?

[John Neppl, Chief Financial Officer at Bunge]

Yes. So with respect to share buyback, as I mentioned, we have $800,000,000 dollars left on our commitment relative to Itera. The original commitment was doing that within eighteen months of close and certainly that can come sooner, if it makes sense. And as we look at other sources and uses of cash, we're always looking at buybacks as an option for any excess cash that we're generating. With respect to the CapEx estimate, we're nearly at 1.92 and now we're down 1.5 to 1.7 driven really by kind of fifty-fifty between some timing pushing into early twenty six and to cancel or our decision to forego some projects that we had on the slate that we decided not to pursue.

[John Neppl, Chief Financial Officer at Bunge]

So kind of a mix between the two. So overall, I think $1,500,000 to $1,700,000 we feel like is a pretty good estimate for next year, down $200,000,000 to $300,000,000 from our original forecast.

[Salvator Tiano, Analyst at Bank of America]

Great. Thank you very much.

[Operator]

The next question is from Prorin Sharma with Stephens. Please proceed.

[Pooran Sharma, Managing Director at Stephens Inc]

Thanks for the question. Just wanted to hop on and get a sense of the take or pay. Just want to get some granularity here. You said you're expecting better results out of South America because you won't see as much of an impact. I'm just wondering in 2024, did you see was the impact kind of centered around the first half or the second half or was it split evenly throughout the year?

[Gregory Heckman, CEO at Bunge]

Yes. First, I'd say it was a total industry impact that fortunately affected margins not only in Origination and Crush, but in our exporting as well. And it was really something the industry struggled with all year. Okay. They've accelerated a little in Q4 as the end of the year definitely approached and we felt it across our system in beans and corn, but definitely in our global corn business as well.

[Pooran Sharma, Managing Director at Stephens Inc]

Got it. Appreciate the color there. Guess on the follow-up, just want to get a sense of potential trade scenarios. I know the situation is fluid now, but just looking at past history, last time around, Fungi South America business, at least the fundamentals were much better because it looks like flows shifted over from China to South America. So just want to get your sense on the setup this time around.

[Pooran Sharma, Managing Director at Stephens Inc]

If you do get tariffs in place, do you expect to see as much of a benefit in your South America business? If you could just help me understand the puts and takes there.

[Gregory Heckman, CEO at Bunge]

Yes. One thing that I would point out as you think about it versus the challenges in the trade war in 2018, BUNGIE is a very different company. The way we operate the global platform and the way that we've changed our operating model, I think we're much better positioned to react more quickly to the challenges and or opportunities. And we've made some improvements in the platform, right, in our asset platform. So we've got more capabilities from that standpoint as well.

[Gregory Heckman, CEO at Bunge]

So that's the differentiation I would draw from 'eighteen to today and what we'll be dealing with here in 2025. And the other, we're a little bit battle tested when you think about some of the things that we've been challenged with, whether it's African swine fever or geopolitical regional situations, COVID. So and teams performed very well through all of those. So I think we're in much better position from a capabilities and from a platform for the challenges that are in front of us.

[John Neppl, Chief Financial Officer at Bunge]

I might just add that obviously we're used to supplying China out of both North And South America depending on the time of year. Harvest in The U. S, we supply a lot of beans out of The U. S. And then that shifts to Brazil or South America later in the year.

[John Neppl, Chief Financial Officer at Bunge]

And so we're very much in dynamic than we're used to. And so if trade policy affects trade flows, we'll be able to adjust to that accordingly given our experience and obviously working China as Greg you pointed out earlier for decades.

[Gregory Heckman, CEO at Bunge]

Look, our goal ultimately, right, is to connect those demand markets with the farmers and send the appropriate signals,

[Pooran Sharma, Managing Director at Stephens Inc]

Got it. Appreciate the color guys.

[Operator]

The next question comes from Ben Theurer with Barclays. Please proceed.

[Benjamin Theurer, Analyst at Barclays Capital]

Good morning, Greg, John. So just wanted to follow-up on one of the questions that's related to what Tom had in terms of like the baseline and kind of like tie that back into from what obviously you've shared already during the call, but I remember back roughly two point five years ago, you also presented some of the impact that you're expecting from A, growth CapEx and B, M and A versus share repurchases. So I think we've discussed the M and A and share repurchase piece around it. But could you maybe also elaborate just given the increased CapEx that you've been seeing and what you've been putting out already last year for this year and then that probably even going to carry over into first half twenty twenty six. What do you expect from that in terms of contribution as to your let's just assume it's still the same baseline?

[Benjamin Theurer, Analyst at Barclays Capital]

What would that be? What's that incremental earnings that you think that can come out of that CapEx as you roll over into then the second half of twenty twenty six and then beyond then 2027 in a more normalized CapEx cycle, but with those assets being produced?

[John Neppl, Chief Financial Officer at Bunge]

Sure. So our baseline assumption as we built our go forward model was really built around CapEx and M and A, small amount of M and A, mostly large CapEx. And those projects are largely on track. Timing has been a little affected by weather and labor availability on a couple of them, but largely intact with our long term game plan. And obviously, what the environment is like when those projects finish will impact maybe the near term economics of those projects.

[John Neppl, Chief Financial Officer at Bunge]

But and then PJ Selected, for example, is one of those projects that we had had on our radar screen back when we built the model and that hopefully will close here soon. So I feel like we're largely on track on the growth side with what we modeled. And we had anticipated that impacting about $2.5 So we were expecting about $11 baseline, all else being equal, we're in a baseline from $8.5 to $11 Now obviously what the environment is going to be like at the end of twenty twenty six when we largely expect these projects to be wrapped up, anyone's guess at this point, but assuming a mid cycle or relatively mid cycle environment at that point, that's what we would expect our baseline to have reset to.

[Benjamin Theurer, Analyst at Barclays Capital]

Okay, perfect. And then just real quick as it relates to like the cadence how to think about share buybacks. I mean, obviously, you've done about $1,100,000,000 now as of December. So that means there's still around about $900,000,000 missing, which is within the Baiterra deal. Is that still more likely now to happen post transaction close?

[Benjamin Theurer, Analyst at Barclays Capital]

Or would you continue to buy shares even ahead of it just given the liquidity you have right now post the Sugar closure?

[John Neppl, Chief Financial Officer at Bunge]

Yes. So we have $800,000,000 left. And while we haven't made any specific decision on when, but certainly it will be opportunistic we'll get it done. But the cadence haven't really settled on when, but certainly we will if it makes sense to do it sooner, we'll do it sooner. But if we have other reasons not to do it right away, we'll consider that, but we'll get it done for sure.

[Benjamin Theurer, Analyst at Barclays Capital]

Okay, perfect. Thank you. I'll leave it to you.

[Operator]

Our next question comes from Tami Zakaria with JPMorgan. Please proceed.

[Tami Zakaria, Executive Director at JP Morgan]

Hi, good morning. Thank you so much. So my question is on the disaster aid package for farmers that was U. S. Farmers that was announced in December.

[Tami Zakaria, Executive Director at JP Morgan]

I think they're getting assistance per acre for both corn and soybeans. So do you see any potential benefits of any of this for any of your segments benefiting from this as the year progresses?

[Gregory Heckman, CEO at Bunge]

I think it's a kind of a small impact to us overall. What I think the upside and what's good is that farmers will have what they need to make the investment in this next crop in the seed and the inputs to plant the right crops and have the right productivity. So it's good that they've got that funding and I think that support is positive and that should be good for production.

[Tami Zakaria, Executive Director at JP Morgan]

Got it. That's helpful. And I wanted to follow-up on that tariff question from earlier. I know it's still fluid, but there's a narrative that increased exports of more ag commodities out of The U. S.

[Tami Zakaria, Executive Director at JP Morgan]

Into some of the trading partners like China could be a negotiating tactic under the current administration. So given your footprint, how would that impact your outlook if let's say China promises to buy more from The U. S. Maybe at the expense of South America?

[Gregory Heckman, CEO at Bunge]

Yes. One thing, we're very glad that we have a very balanced global footprint. So whether that's on the merch side or on the crushing the oilseed processing side, we've been able to balance a number of situations the last few years to continue to perform. It may create regional trade offs like in The U. S.

[Gregory Heckman, CEO at Bunge]

Where that would benefit export and it may be slightly more challenging to crush, but then we would try to adjust elsewhere in our global system to respond to that.

[Tami Zakaria, Executive Director at JP Morgan]

Got it. Thank you. That's helpful.

[Operator]

And our next question comes from Derrick Whitfield with Texas Capital. Please proceed.

[Derrick Whitfield, Managing Director at Texas Capital]

Good morning and thanks for taking my questions. Starting with refining, we've seen the spread between RBD, SBO and crude SBO collapse to absorb below levels with the understanding that the majority of refiners are buying crude versus refined, where should this market settle out once demand returns as I can't imagine refining costs are less than $0.02 per pound?

[Gregory Heckman, CEO at Bunge]

I guess I'd start by saying, we all along said that as the pretreatment got built in renewable diesel, we expected to see some of the margin move from the refined into the crude. We've definitely seen that, so the crude will carry a bigger piece on the crush. We've got a little bit different footprint with our global specialty oils business. We've got a very good customer base that we've continued to help manage their challenges and grow with. We've got a nice balance between the QSR as well as the CPG and the Food at Home.

[Gregory Heckman, CEO at Bunge]

So our account mix has been favorable as we've seen some of the changes with the consumer. And then some of our specialty business on the oil side benefited from the tight cocoa butter supply, as well as you remember we added a plant at Avondale and as we ramp that up in our capabilities here in North America on specialty oils. So kind of all that rolls into when you see what our refined overages are, we've probably got a little bit different package or portfolio than what someone who might just be a North American player.

[John Neppl, Chief Financial Officer at Bunge]

Derek, I'd just add that while the storyline is a lot of it's about energy and crude versus refined oil. The energy sector, we supplied less oil this year not only as a percentage of our total book, but also just in actual volume, we provided less to the energy industry just because demand has been soft with all the uncertainty. So that could be upside in the future if this obviously would be upside in the future if policy gets clarified. And we think demand for soybean oil whether refined or accrued is good. Either way, we want demand for that product.

[John Neppl, Chief Financial Officer at Bunge]

But refining premiums have held in there pretty well. And to Greg's point, it's been very resilient with the demand, the elastic demand from the food industry.

[Gregory Heckman, CEO at Bunge]

And I

[Gregory Heckman, CEO at Bunge]

think it's probably also worth mentioning right there is a big biofuel installed base that exists now. It's in place. So as we work out the RVO and work out 45Z, there's a lot of demand there that could make a difference in a hurry. And we trust that the policy is going to get worked out, right? There's a lot of installed capacity.

[Gregory Heckman, CEO at Bunge]

The money's already been spent. It's available today to run. And those facilities, whether it's traditional biodiesel, renewable diesel or SAF, they're underutilized today. And we get those policy rights. That's also supportive to agriculture at the farm gate.

[Gregory Heckman, CEO at Bunge]

That's supportive to the farmer and we think we're going to get eventually get those dots connected and we hope that will be later here this year. But that installed capacity base is there and as John said, we've got upside on the amount of oil that we can provide when they're ready to go.

[Derrick Whitfield, Managing Director at Texas Capital]

Great. We definitely agree with that assessment as well. And then as my follow-up, I wanted to touch on 45Z. In your view, is there merit from a carbon accounting perspective for canola to have a materially higher CI than SVO when you evaluate ag and processing practices?

[John Neppl, Chief Financial Officer at Bunge]

Look, I'm not a scientist, so it's hard to understand all the math that goes into it. Today, it doesn't have a path. Obviously, the one we're watching more closely is winter canola because we have more program and think that obviously the scores there should be considerably different especially when you think about indirect land use. TBD, the policy did make note that it was spring canola that they had assessed. And so we're hopeful that they'll be reviewing winter canola and treating that differently.

[John Neppl, Chief Financial Officer at Bunge]

Today that's flowing to Europe as there is demand in Europe for winter canola seed and our program here in The U. S. It's growing. But we'll see how things shake out. I mean, there's going to be a lot of conversations certainly, but one thing we do know is that we'll be positioned to support wherever this stuff needs to go and today some of it's Europe.

[John Neppl, Chief Financial Officer at Bunge]

Clearly, 45c came out and it's more favorable to soybean oil. But we do think winter canola has a place as well as some of the other novel crops that we continue to work.

[Gregory Heckman, CEO at Bunge]

And I'd say what's encouraging is that we're seeing the players along the value chain work together with the policymakers to try to get the same set of facts for everyone to work together. So whether it's the energy industry, the processing industry, the farm groups, we are seeing everyone try to engage on the facts and we believe that that will be productive over the long term.

[Derrick Whitfield, Managing Director at Texas Capital]

Perfect. Thanks for your time.

[Operator]

The next question is from Andrew Strelzik with BMO. Please proceed.

[Andrew Strelzik, Restaurant Analyst at BMO Capital Markets]

Hey, good morning. Thanks for taking the questions. I had two questions. The first one, about some of the near term uncertainties that you've been discussing and you have cash crush that looks pretty poor versus a crush curve that gets better throughout the year. What's your degree of confidence or how do you weigh the risk that maybe some of these uncertainties kind of linger beyond the first quarter?

[Andrew Strelzik, Restaurant Analyst at BMO Capital Markets]

Is there a degree of confidence that this will be more confined to the quarter? How do you balance those two in your outlook?

[Gregory Heckman, CEO at Bunge]

I'd say when you look at the calendarization that we put together with delivering the $7.75 right, we talked about that's approximately. So we see scenarios where that's got risk and upside, right? We look at where we're at right now in the cycles of harvest. We've got kind of second quarter. First quarter is going to be pretty tough.

[Gregory Heckman, CEO at Bunge]

Second quarter, we'll start to see some benefits from South America. And then as we get in the second half of the year, of course, from North America crops. So I think that's reflected in that expecting 40% of our earnings in the first half and that's even more reflected when you think about in the first half, we're only expecting of that 40% for 40% of that to be in the first quarter. So that calendarization kind of shows what we expect to roll out. And then the caveat around that being tariffs and possible retaliatory measures.

[Gregory Heckman, CEO at Bunge]

So the point they'll benefit one region and we'll have to manage that from another region. The one thing this does, it makes planning tougher and it may drive not only farmers, but consumers more into the spot, that could make things delay a little bit more. So that will be one of the, I think, factors to watch in 'twenty five.

[John Neppl, Chief Financial Officer at Bunge]

If you would mind just

[John Neppl, Chief Financial Officer at Bunge]

to add that I know we've talked a lot about ovals, but some additional certainty around where things are going to shake out from a renewable standpoint could have a significant impact on demand for soybean oil. Greg pointed out the the assets are there, the capacities are to move. And these plants are significantly they're significant and they're able to take a significant amount of volume soybean oil when they're running and running hard. So that could change the dynamics pretty quickly. But again, policy uncertainty, people are very reluctant to book forward and I think that's reflective of the cash markets is a lot of hand to mouth right now on that side because people aren't don't have enough conviction to fall on the farm.

[Gregory Heckman, CEO at Bunge]

There of course is watch the weather right now looks favorable for Brazil and how the harvest should develop there. Watching it's a little dry in Argentina, so we want to watch that closely. And then remember, meat economics are very good and the animal numbers are out there. Soybean meal priced very well, less competition from wheat and from the mid pros. And so we're at high inclusion rates on the meal side.

[Gregory Heckman, CEO at Bunge]

And then John spoke to the fact about there's a lot of biocapacity out there and regulatory clarity is on the way, we hope there in the second half. And then don't forget globally why we've got a lot of uncertainty in The U. S, right? Brazil's got fuel of the future. They'll be moving up to B15 on their way to B20.

[Gregory Heckman, CEO at Bunge]

Indonesia has talked about going from B35 and on their way to B40. And then Europe has put some more favorable regulation policy in place for SAF and starting to move towards maritime. So there's a lot happening globally on the biofuels continuing to kind of quietly develop demand and investments continue to move forward.

[Andrew Strelzik, Restaurant Analyst at BMO Capital Markets]

Okay. That's super helpful color. I appreciate that. And my other question, I guess I appreciate we just got the 2025 guidance, but I'm trying to think about the earnings trajectory of this business over the next, I don't know, two or three years, next several years. And obviously this year has a lot of disruption, a lot of kind of rebalancing.

[Andrew Strelzik, Restaurant Analyst at BMO Capital Markets]

And then you have everyone can make their own assumption on kind of the pro form a numbers with the tariffs you just selected. But then you have synergies and you have returns on these capital projects and maybe less a lack of visibility going forward. Do you see 2025 as an earnings base maybe on a pro form a basis that you should grow from over the next several years or kind of like a trough ish type of number and maybe help us with if there's any of the building blocks that I left out kind of how you think about the trajectory of the business over the next couple of years? Thanks.

[Gregory Heckman, CEO at Bunge]

Let me start though. The one thing would be yes. And that's because think about we're excited about Viterra and Bunge together. But I'll tell you who's really excited are the teams, right? They're engaged and they're anxious.

[Gregory Heckman, CEO at Bunge]

We continue to be competitors and so the commercial teams have not been able to do that planning. But we're excited about the commercial synergies when we're able to get those teams together and start to do the work as one Bunge here into the future. So from that, that's part of where we are building off of. And then that will also provide the cash for us to continue to invest as we go forward.

[Andrew Strelzik, Restaurant Analyst at BMO Capital Markets]

Great. Thank you very much.

[Operator]

This concludes today's question and answer session. I would now like to turn the conference back over to Greg Heckman for any closing remarks.

[Gregory Heckman, CEO at Bunge]

I'd say thank you very much for joining us today. We appreciate your interest

Participants

Analysts

• Ruth Ann Wisener, Vice President, Investor Relations at Bunge
• Gregory Heckman, CEO at Bunge
• John Neppl, Chief Financial Officer at Bunge
• Manav Gupta, Executive Director at UBS Group
• Heather Jones, Founder at Heather Jones Research
• Tom Palmer, Senior Equity Research Analyst at Citi
• Steven Haynes, Vice President, Equity Research at Morgan Stanley
• Salvator Tiano, Analyst at Bank of America
• Pooran Sharma, Managing Director at Stephens Inc
• Benjamin Theurer, Analyst at Barclays Capital
• Tami Zakaria, Executive Director at JP Morgan
• Derrick Whitfield, Managing Director at Texas Capital
• Andrew Strelzik, Restaurant Analyst at BMO Capital Markets