Bunge Reports Second Quarter 2020 Results
August 4, 2020 - Bunge Limited reported second quarter 2020 results with core agribusiness and food & ingredients businesses generated strong results.
Greg Heckman, Bunge's Chief Executive Officer, commented, "Bunge had an outstanding second quarter, with strong performance across all of our core businesses while maintaining a sharp focus on the safety of our team. Our execution against committed crush capacity and coordination of trade flows was exceptional. We realized the benefit from our risk management decisions in the first half of this year and earned new business with our focus on innovation and our collaborative approach with customers. We generated strong cash flow while being disciplined in our approach to capital allocation, and continued to execute on our key priorities. These results would be strong in any environment, let alone a pandemic, and we couldn't be more proud of the resilience and commitment of our team."
Higher Agribusiness results in the quarter reflected strong execution throughout the value chains, particularly in managing risk, committed crush capacity and global trade flows.
In Oilseeds, higher soy processing results were driven by higher margins in South America, Europe and Asia, partially offset by lower margins in North America. Softseed processing results were higher in all regions.
We carried into the second quarter a mark-to-market balance of approximately $295 million of previously reported timing losses related to forward oilseed processing contracts and hedges against sales to our downstream Edible Oils customers.
As anticipated, approximately $155 million of these timing losses reversed in the second quarter upon executing a portion of these contracts. In addition, as a result of a decrease in global crush margins and the recovery in global vegetable oil prices during the quarter, we benefited from new mark-to-market gains of approximately $145 million. This reduced our carry forward balance on open contracts to a net gain of less than $10 million, which is expected to reverse in the coming quarters.
Higher results in trading and distribution were driven by increased margins and favorable positioning.
Results in Grains improved in most areas of the business. Origination benefited from increased farmer selling in Brazil with the rise of local prices caused by the devaluation of the Brazilian real. North America origination also showed improvement. Higher results in trading and distribution were driven by improved margins and favorable positioning. Ocean Freight also had a strong quarter, driven by excellent execution, as well as approximately $75 million of gains from the reversal of mark-to-market timing primarily related to bunker fuel hedges that negatively impacted the first quarter.