The operator welcomes participants to the Bunge Global SA Fourth Quarter 2023 Earnings Release and Conference Call. Ruth Ann Wisener, CEO of Bunge, introduces the presentation and reminds listeners to refer to the slides and reconciliations of non-GAAP measures on the company's website. She also mentions that the presentation includes forward-looking statements and encourages listeners to review the SEC filings for more information. CEO Gregory Heckman discusses the company's strong financial performance and progress on their long term strategy, including the announcement of a pending combination with Viterra.

The company has received shareholder approval for a major transaction and is working towards a successful integration. They have also announced plans for another acquisition and have made progress on regulatory approvals. The company has completed an acquisition and is commissioning new plants to meet rising demand for plant based food and feed ingredients. Investments in existing facilities have led to improved performance and reduced downtime. These investments also align with the company's commitment to sustainability and reducing carbon emissions.

In 2023, Bunge had many accomplishments, including being selected for the S&P 500 and delivering strong financial results. The company returned capital to shareholders and is prepared to navigate any challenges and opportunities in the future. For 2024, the market dynamic is expected to be different and the company predicts an adjusted EPS of approximately $9. Bunge's transformation has made it more equipped to operate in any market environment and the acquisition of Viterra will further improve its global platform. In the fourth quarter of 2023, Bunge's reported earnings per share was $4.18, a significant increase from the previous year.

In the fourth quarter, the company reported positive results, including a mark to market timing difference and a negative impact from acquisition and integration costs. Adjusted EPS was $3.70, and full year EPS was $14.87. Adjusted core segment EBIT was $881 million, with strong results in Agribusiness and refined and specialty oils. Merchandising results were down due to lower volatility. Milling and Corporate and Other also improved from last year. The non-core Sugar and Bioenergy joint venture had lower results due to higher sugar prices and lower ethanol prices.

In the reported quarter, the company's income tax expense increased due to higher pretax income and a change in geographic earnings mix. The adjusted effective income tax rate for the full year was 23%, compared to 17% in the prior year. Net interest expense also increased due to higher interest rates and foreign currency borrowings, but this was offset by currency hedges. The company's EPS and EBIT have shown a strong trend over the past five years. In 2023, the company generated $2.5 billion in adjusted funds from operations, allocated $488 million to sustaining CapEx, and had $2 billion available for discretionary cash flow. The company invested in growth and productivity related CapEx, paid dividends, and repurchased shares, leaving $361 million in retained cash flow for the year. In 2024, the company plans to invest $1.2 to $1.4 billion in CapEx.

The company's sustaining CapEx has increased due to post-pandemic catch up and investments in operational and reliability, leading to reduced unplanned downtime. Discretionary spending has also increased due to ongoing growth projects, resulting in a higher expected spend in 2025. The company's liquidity position is strong, with ample available credit facilities. The adjusted ROIC and cash flow yield are well above the weighted average cost of capital. The company expects adjusted EPS of approximately $9 in 2024, excluding any pending acquisitions. Agribusiness results are forecasted to be slightly lower than last year's record performance due to compressed margins in processing.

The paragraph discusses Bunge's expected full year results, which are anticipated to be down in refine and specialty oils due to increased supply, but up in milling and corporate and other areas. The company also expects lower results in their Sugar and Bioenergy joint venture. They also mention their projected adjusted annual effective tax rate, net interest expense, capital expenditures, and depreciation and amortization for 2024. The company's CEO, Gregory Heckman, shares his closing thoughts on their progress, priorities, and investments, including the pending combination with Viterra and strengthening their digital capabilities to meet future demand.

In the paragraph, the speaker discusses the company's current position and its ability to deliver on its mission. They also mention that there is less visibility into the business looking forward, but the first quarter provides the most clarity. They also mention that having a global platform is helpful, but there is a transition happening as markets become more balanced.

In this paragraph, the speaker discusses the current state of the market and how it is affecting the buying habits of customers. They also mention their focus on maximizing earnings and managing expectations, which they believe will work well in any market environment. They have been working to build their company for the bottom of the cycle, although they hope they never have to experience it.

The speaker discusses the company's mindset in terms of efficiency and adaptability, and emphasizes the importance of controlling what they can in the face of external market factors. They mention their global infrastructure and assets, and their focus on balancing supply and demand for their customers. The speaker also mentions a $9 guidance for 2024 and the potential impact of the Viterra acquisition on this figure.

The speaker discusses the potential impact of the Viterra acquisition in 2024 and states that there will be integration and synergy costs in the first year. They also highlight the differences between their business and Viterra's, which could benefit them in certain market environments. The speaker then mentions the company's previous and ongoing capital expenditures, which have been focused on large, multi-year projects.

The speaker discusses the expected contributions of India and M&A to the company's growth, stating that most of the Indian projects will start contributing in 2026 with a target return of mid-teens. They also mention the planned acquisition of CJ Selecta, which will be accretive upon closing, but is not expected to make a significant contribution until 2026. The company is also looking at smaller bolt-on opportunities for M&A. The speaker is then asked about their remaining buyback plans, and they mention that they had planned to do about half of the $2 billion announced before the close of the Viterra deal.

The company expects to have around $400 million in the first half of the year and is still on track to reach $11 in 2026. They may see some changes in guidance due to visibility challenges, but they are not expecting any major downsides in key areas like processing, merchandising, and refined and specialty oils.

Gregory Heckman discusses the potential factors that could impact the global supply and demand situation for food products. He mentions the potential for weather events and geopolitical factors to cause volatility in the market. On the demand side, he predicts that lower prices will lead to increased demand, as seen historically. He also highlights the developments in the vegetable oil market in North America and Argentina, as well as the role of China in overall demand and stock building. However, current market predictions do not anticipate major disruptions.

Adam Samuelson from Goldman Sachs asks about the expected decline in segment profit for the company, and Gregory Heckman responds by stating that there are three main drivers for the decline: processing, Refined and Specialty oils, and sugar. John Neppl adds that processing is the largest contributor, with a decrease of around 80%, while Refined and Specialty oils and sugar are also expected to decline. Overall, the decline in processing is expected to result in a $15 to $20 per ton decrease in global crush margin.

The company expects soft seed sales to be strong in Europe and North America, but soy sales will be weaker in all regions except for Argentina, which is expected to improve in the second quarter. The curves are inverted in Brazil and the EU, and farmer selling is slower in all regions due to market uncertainty. The company anticipates a better Q4 with new crop in the US, but overall farmer selling will be hesitant until the market settles.

John Neppl, the company's executive vice president and chief financial officer, provided further details on how the company expects its financials to look over the course of the year. He stated that the forecast is expected to be evenly balanced between the first half and second half of the year, with a slight preference towards the first half. He also mentioned that the size of the U.S. crop will play a role in the company's performance, with the fourth quarter potentially being stronger due to a larger crop. However, the company is currently planning for a good growing season in North America and has no reason to expect otherwise.

During a conference call, Salvator Tiano from Bank of America asked about the guidance given by the company. Gregory Heckman, the operator, responded by explaining that they use forward curves to give their outlook and avoid fluctuations based on market forecasts. He also mentioned key factors that could affect the outlook, such as weather, farmer marketing patterns, and demand drivers. These include how quickly demand bounces back for food and feed, as well as the profitability of the animal sector and the sensitivity of the vegetable oil market.

The global production of palm is not increasing as it has in the past, while at the same time, there is a growing demand for biofuels, particularly renewable diesel and SAF. This presents an opportunity for the vegetable oil industry to supply low CI feedstocks and help decarbonize liquid fuels. The market is showing demand for these feedstocks, and it will be important to watch how this affects the crush. In the next 12-18 months, there will be a transition as demand continues to grow and customers focus on driving growth rather than cost savings. In terms of merchandising, it is difficult to forecast, but it is expected to be slightly down in 2024 compared to 2023.

Heckman discusses the demand pull from renewable diesel and notes that it has been a key driver of crush and refined oil in recent years. He mentions that the industry has responded with added capacity to support this demand, but there is still uncertainty about how much of the increased supply will be absorbed. Heckman also mentions the complexity of the market, as it is not just a vegetable oil game, and notes that UCO imports have increased when pipelines were tight. He believes that as the market works to balance itself out, the ongoing rate of imported UCOs and other low CI feedstocks will be a factor in soaking up surpluses.

The speaker discusses the complicated picture of policy changes and market dynamics in the biofuels industry. They mention increased demand, potential policy changes, and the impact of new RD operations on feedstock usage. They also mention the shift from refining margins to crush margins and the uncertainty of how this will play out. The speaker also mentions the company's plans for share repurchases, which are expected to be more balanced in the coming year.

The speaker discusses the progress of the company's acquisition of Viterra and plans to complete it by mid-year. They also mention the success of their refining segment due to better management and the addition of new capabilities in their India and Louisiana refineries. They plan to expand their facilities and continue to meet customer demand.

The company is focused on improving capabilities and flexibility in their food division, with plans for a new facility in Amsterdam. Food remains the primary focus for the company, with sustainability being a key consideration. They are also keeping an eye on discretionary CapEx and potential changes in market conditions, but most of their growth projects are already underway.

The company may choose to prioritize M&A over other investments, but their plans for capital expenditures are largely set for the next few years. The company has been affected by inflation, but recent decreases in energy prices have lowered their variable costs. They believe they are among the most efficient in the industry, with some low-cost production areas in Brazil and Asia. The company has been focused on improving efficiencies in their plants to offset inflation.

The speaker is discussing the current efficiency and profitability of their company, stating that they feel good about where they are. They mention that their margin assumptions for 2024 are better than their baseline, but they see potential downside in merchandising. Overall, they believe their margin structure is similar to their baseline assumptions.

In this paragraph, the speaker discusses the commercial side of the company's operations and how it is expected to perform in the upcoming year. They mention that interest expense and taxes will be higher due to changes in legislation and interest rates. They also note that soy and soft margins will be higher, while merchandising will be lower. The speaker also mentions that the company has increased its share buyback program and exited some markets, which may affect volume. Finally, they mention that the guidance has changed to approximately $9 and discuss potential upside opportunities, which they believe are similar to the risks mentioned earlier.

The speaker discusses various factors that could impact the global markets for commodities, specifically focusing on China's economy and potential changes in demand, weather situations, and supply chain problems. They also mention the influence of Argentina's crop and government policies, as well as the development of biofuels and their impact on the global oil balance. The speaker believes that the next 12-18 months will be interesting as these factors transition and potentially cause volatility in the markets.

Gregory Heckman thanks everyone for attending the conference and reflects on what has changed and what has not changed for their company. He mentions the long-term growth in demand for their products and services and the ongoing focus on continuous improvement. The company's '26 baseline target, pipeline of projects, pending acquisitions, and share purchase commitment remain unchanged. Heckman expresses confidence in the company's direction and thanks the team for their hard work. The conference has now ended.

This summary was generated with AI and may contain some inaccuracies.