New York’s Bunge soars on its investment in Beyond Meat

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 percent 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 percent 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.
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 favourable logistics, more than offsetting results in North America that were hit by extreme weather and the US-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.