By MATEUSZ PERKOWSKI
A major global distributor and processor of grains and oilseeds is blaming last year's drought on a sharp drop in profit margins during its most recent fiscal quarter.
Bunge, based in White Plains, N.Y., has reported a net income of $110 million during the second quarter of 2013, down nearly 60 percent from the same period last year.
"It's clear success has to be defined by stronger financial performance," said Soren Schroder, the firm's CEO, during a conference with analysts.
The company saw strong profits and revenues from its Brazilian operations but was hampered by the lower volumes of corn, soybeans and canola produced in the U.S. last year, according to a filing with the U.S. Securities and Exchange Commission.
"Brazil outperformed but North America and Europe weren't able to compensate," Schroder said.
Bunge's most recent financial report is the first since Schroder took the helm in June, when he replaced the firm's previous CEO, Alberto Weisser. Schroder previously headed the firm's North American division.
To improve profits, the company plans to cut its $1 billion capital expenditure budget in 2013 by $200 million and focus on projects with a shorter payback, said Drew Burke, Bunge's chief financial officer.
Increased crop production in North American this autumn should also improve the company's profitability and overall sales, said Schroder.
"Overall agribusiness volumes should be up for the last half of this year," he said. "The Northern hemisphere, and the U.S. in particular, should experience a significant uptick in exports for sure."
The firm's agribusiness segment, which handles crop storage, processing and distribution, is the largest contributor to its earnings. Other divisions include sugar and bioenergy, food and ingredients, and fertilizers.
Bunge has 208 commodity storage facilities throughout the world, as well as 52 oilseed processing plants and 66 merchandising and distribution offices, according to an SEC filing.