Vegan-Burger Bet Boosts Earnings at Agribusiness Giant Bunge

(Bloomberg) -- Bunge Ltd. earnings surged in the second quarter as an investment in Beyond Meat Inc. helped cushion the 201-year-old firm from a tough environment for agribusiness. Shares rose.

Nearly half of Bunge's better-than-expected earnings came from its investment arm's stake in the faux-meat company. Beyond Meat has soared 680% since its May initial public offering as part of the plant-protein craze.

Bunge, which got in before the IPO, holds 979,556 shares, or a 1.63% stake, according to a Beyond Meat filing. With a sprawling network that moves food around the world, Bunge has a market value of $8.3 billion, which is now overshadowed by startup Beyond's $12 billion.

“We haven't discussed ventures often, but it's an important vehicle as the competitive landscape and consumer preferences drive change and as technology continues to accelerate innovation and transparency in our industry,” Chief Executive Officer Greg Heckman said Wednesday on a conference call with analysts.

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The White Plains, New York-based firm also booked a $70 million mark-to-market adjustment in its soy crush operations, although those gains are expected to reverse as it executes contracts. Crush margins decreased toward the end of the second quarter, it said.

In grains, Bunge's South American operations benefited from lower costs and more favorable logistics, more than offsetting results in North America that were hit by extreme weather and the U.S.-China trade dispute. Sales missed estimates, although the firm kept its view on consolidated results.

Adjusted earnings of $1.45 per share, smashed the 34-cent average analyst estimate. Beyond Meat contributed 71 cents and the soy-crush benefit accounted for 37 cents, according to Morgan Stanley and Citigroup Inc.

A year ago, the company had a net loss of 20 cents after being caught wrong-footed on soy contracts that anticipated a speedy resolution to the trade war. Since then, Bunge has made a series of changes, from appointing Heckman as CEO to shuffling management and changing its operating model away from a regional structure.

“We continue to think that new Bunge management is doing a good job of navigating the business through a challenging environment,” David Driscoll, an analyst at Citigroup, said in a note to clients.

Results excluding non-core benefits “were modestly better than anticipated for the second quarter in a row and mark a divergence from 2018, which was filled with significant earnings disappointment,” Driscoll said.

Bunge shares were up 4% at 11:01 a.m. in New York on Wednesday, heading for the biggest gain since early June.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net;Isis Almeida in Chicago at ialmeida3@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Reg Gale

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