Bunge Global SA (BG) Earnings Call Transcript & Summary

Good day, and welcome to Bunge Global Second Quarter 2026 Earnings Release and Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mark Haden, Investor Relations. Please go ahead.

Great, thank you. And thank you all for joining us this morning for our second quarter 2026 earnings call. Before we get started, I want to let you know that we have slides to accompany our discussion. These can be found at the Investor Center on our website at bunge.com under Events and Presentations. Reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well. I'd like to direct you to Slide 2 and remind you that today's presentation includes forward-looking statements that reflect Bunge's current view with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Bunge has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation, and we encourage you to review these factors. On the call this morning are Greg Heckman, Bunge's Chief Executive Officer; and John Neppl, Chief Financial Officer. I'll now turn the call over to Greg.

Thank you, Mark, and good morning, everyone. I want to start by thanking the team for their focus and disciplined execution in what continues to be a highly dynamic operating environment. Across the organization, our people are working together to navigate uncertainty and capture opportunities for our customers and for Bunge, and we delivered another strong quarter. We've talked about the diversification that our larger global platform provides us across crops and geographies. We saw the benefit of that diversification this quarter, particularly in soy and softseed processing. John will go into some more detail on our results in a moment. The broader operating environment continues to evolve, queue political tensions, shifting trade flows and changing weather patterns across key growing regions, are reshaping farmer behavior, crop availability and increasing volatility. As a result, customers at both ends of the value chain are relying on us more than ever to help them navigate risk. This is not new territory for us. We have a long track record of managing market volatility and continuing to deliver for our stakeholders, all while growing our earnings. We can say with confidence that Bunge's business is built for complexity and change. Our integrated global platform, disciplined risk management and operational excellence are designed to keep supply moving to meet demand and serve our customers regardless of how conditions shift. This is what allows us to perform through the cycle. Turning to our outlook. Based on what we can see today, we now expect full year 2026 adjusted EPS in the range of $9.25 to $9.75, which is up from our previous range of $9 to $9.50 we provided on our first quarter call. While forward visibility remains limited given the current macroeconomic and geopolitical environment, the drivers of long-term demand remains strong. And with our global footprint and diversified value chains, we're confident in our ability to execute in any environment. And with that, I'll turn it over to John for a deeper look at our financials and outlook.

Thanks, Greg, and good morning, everyone. Let's turn to the earnings highlights on Slide 5. Our reported second quarter earnings per share was $3.47 compared to $2.61 in the second quarter of 2025. Our reported results included a favorable mark-to-market timing difference of $1.67 per share and an unfavorable impact of $0.20 per share related to Viterra transaction and integration costs. Adjusted EPS was $2 in the second quarter versus $1.31 in the prior year. Adjusted segment earnings before interest and taxes, or EBIT, was $796 million in the quarter versus $373 million last year. In the Soybean Processing and Refining segment, higher results were primarily driven by the North and South American value chains. In North America, stronger processing performance in the U.S. was partially offset by lower refining results. In South America, high results reflect improvements in Argentina processing refining and Brazil processing. Within the destination value chain, stronger processing results in Asia more than offset lower processing results in Europe and a lower distribution performance. Results from global soybean oil merchandising activities were lower than last year. Processing volumes increased in both South and North America as well as in Europe with the largest increase driven by the company's greater production capacity in Argentina. Higher merchandise volumes reflected the combined company's expanded soybean origination footprint. In Softseed Processing and Refining segment, the results increased across all regions, reflecting a more favorable market environment and strong execution. In North America and Argentina, stronger processing results were the primary drivers of improved performance while refining results were modestly higher in both regions. In Europe, stronger processing results more than offset lower refining and biodiesel performance. Results from global softseed oils merchandising activities were slightly higher than last year. Higher soft seed process volumes primarily reflected the combined company's increased production capacity in Argentina, Canada and Europe. And higher merchandise volumes were driven by the company's expanded global softseed origination footprint. For the Tropical Oils and Specialty Ingredients segment, higher results in Europe and Asia were partially offset by lower results in North America. Results from global tropical oils merchandising activities were slightly higher than last year. In the Grain Merchandising and Milling segment, higher results in ocean freight, commercial services global cotton and wheat milling were partially offset by lower results in global grain merchandising and sugar. Higher volumes primarily reflected the company's expanded grain handling footprint and capabilities. Prior year results included corn milling, which was divested in 2025. The increase in corporate expenses was primarily driven by the addition of Viterra. The year-over-year comparison was also impacted by timing of performance-based compensation. Higher other results were largely related to our captive insurance program and [ Monkey Ventures ]. Net interest expense of $154 million was up in the quarter compared to last year, reflecting our expanded footprint in merchandising activities with the addition of Viterra, partially offset by lower average net interest rates. Let's turn to Slide 6, which shows our adjusted EPS and EBIT trends over the past 4 years in the trailing 12 months. After a challenging 2025, the trend is beginning to reverse, reflecting improved market conditions and the early benefits of synergy capture from our combination of Viterra. Slide 7 details our capital allocation. Year-to-date, we generated approximately $1.3 billion of adjusted funds from operations. After allocating $238 million to sustaining CapEx, which includes maintenance and environmental health and safety, we had approximately $1.1 billion of discretionary cash flow available. We paid $275 million in dividends to shareholders, invested $541 million in growth in productivity related CapEx, invested $105 million in the first quarter to acquire IFF's soybean processing concentrate business and repurchased approximately $250 million in Bunge shares completing the $2 billion commitment related to the Viterra transaction. This resulted in a net use of $117 million. Moving to Slide 8. At quarter end, net debt exceeded readily marketable inventory or RMI by $1 billion. Our adjusted leverage ratio, which reflects our adjusted net debt to adjusted EBITDA was 1.9x at the end of the second quarter. Slide 9 highlights our liquidity position, which remains strong. At the end of the second quarter, we had committed credit facilities of approximately $9.7 billion, of which approximately $8.8 billion was unused and available. We also had approximately $2.4 billion of our $3 billion commercial paper program available, providing ample liquidity to manage our ongoing needs. Please turn to Slide 10. For the trailing 12 months, adjusted ROIC was 8.4% and ROIC was 6.8%, both exceeding their respective cost of capital. Adjusted for construction and progress in our large multiyear projects, in excess cash on our balance sheet, our adjusted ROIC would increase to 9.3% and ROIC to 7.2%. Moving to Slide 11. For the trailing 12 months, we produced discretionary cash flow of approximately $1.7 billion and a cash return on equity of 10.8% compared to our cost of equity of 7.2%. Please turn to Slide 12 and our 2026 outlook. Taking into account Q2 results, the current margin and macro environment and forward curves, we now expect full year 2026 adjusted EPS in the range of $9.25 to $9.75, which is up from our previous range of $9 to $9.50. As Greg mentioned in his remarks, the environment remains complex with significant uncertainty in certain regions, particularly in the fourth quarter. For the full year compared to our previous outlook, Soybean Processing and Refining segment results are forecasted to be higher. Softseed Processing and Refining segment results are forecasted to be slightly higher. Tropical Oils and Specialty Ingredients results are forecasted to be unchanged. Grain Merchandising and Milling segment results were forecasted to be lower and corporate and other results are expected to be unchanged. Additionally, we continue to expect for 2026 an adjusted annual effective tax rate in the range of 22% to 26%. And interest expense in the range of $620 million to $660 million, capital expenditures in the range of $1.5 billion to $1.7 billion and depreciation and amortization of approximately $975 million all unchanged from our previous outlook. With that, I'll turn things back over to Greg for some closing comments.

Thanks, John. Before turning to Q&A, I want to offer a few closing thoughts. The strategy and priorities we outlined earlier this year at Investor Day, hold true today. And our second quarter results are another proof point that we're delivering on our commitments. I spoke earlier about the benefits of our diversification. That breadth provides greater balance and resilience across a range of market environments and gives us the capabilities to perform through the cycle. At the same time, we're advancing our key initiatives. Viterra cost synergies continue to run ahead of plan, and we're making tangible progress on the network and commercial opportunities we identified. As John mentioned, we completed our $2 billion share repurchase program related to the Viterra transaction. Our in-flight capital projects remain on track. At our Destrehan, Louisiana facility, we're in the final stages of bringing 2 meaningful investments online, a new barge unloader and a new multi-seed processing plant, both of which we expect to be operational in the coming months. We're also advancing strategic partnerships to expand our relationships in renewable fuels. In Brazil, we recently signed a supply agreement with a [ sell-in Mabel's ] renewable energy company to provide certified soybean oil feedstock for production of SAF in renewable diesel. We also entered into a partnership with Petrobras and Vibra to supply certified Low-LUC CORSIA Brazil feedstock for the production and commercialization of SAF. These agreements strengthen our position as a trusted supplier of sustainable feedstocks and further deepen our participation in the growing renewable fuels value chain. Zooming out, the long-term demand drivers for our business remain strong. Population growth and rising incomes are driving sustained demand for grain and oilseed products. Feedstock demand across our global processing network who network is also benefiting from the constructive RVO in the U.S., along with growing biodiesel blend rates in other countries. Soy and softseed oils are expected to contribute approximately 1/2 of global vegetable oil production growth over the next decade. And that's a meaningful shift as palm supply growth slows. These are durable multiyear tailwinds that reinforce our confidence in the earnings power of this business and our trajectory. The in-flight projects we're bringing online, the integration work underway, the network and commercial synergies, we continue to identify are all additive to a business that already has strong structural demand pulling through it. Our fundamentals are strong. Our strategy continues to deliver and we have the most talented people in the industry. As we look ahead, we remain focused on what matters, serving our customers and delivering value for our stakeholders across food, feed and fuel. And with that, we'll turn to Q&A.

[Operator Instructions] And today's first question comes from Andrew Strelzik with BMO.

Greg, you mentioned in the press release and in the prepared remarks, that the expanded global platform is doing exactly what it was designed to do. Can you elaborate on how the Viterra assets are benefiting Bunge in this environment versus if you didn't have those assets? Any examples you can share would be helpful.

Okay. Thanks, Andrew. Yes, I'd say it starts with the footprint. I mean, the fact that we have the balance in all of the key origins and all of the key destinations and to touch more farmers directly than anyone else for origination is just key. And of course, it's the talented team that we've got that we brought together that is operating that footprint and dealing directly with our customers. If you think about the information network we have now assembled to be able to make decisions as well as to execute the purchase and the sales whether we're helping our farmers get to market, we're helping our end consumers get to market or solving the physical supply challenges in the value chain, we just got more internal liquidity and more optionality to solve those problems than we had before. And that's whether that's originating for ourselves into our processing or whether it's originating for our distribution business and distributing to others, whether that's domestically or export. And then if you think about soy, adding Argentina to that really gave us the global balance that we were missing before in our soy creating operations. And then if you take a quick look at soft, you think about, again, we've added the balance of having Argentine sun crushing to balance Europe. And with some of the challenges you've seen in Europe in the last year, we've really seen the benefit of that as well as the increased origination and merchandising that we have around the softseeds now. And then, of course, the ocean fleet -- the ocean freight fleet, we basically doubled on our flows. And so in times of disruption as we've seen the ability to react and continue to get the origination to the right demand. And the other example, when you look forward, again, when you think about the footprint, if you look at China and Australia continue to improve their relationship. So you may start to see more Australian canola move into China. And then we now have the capability then to make sure that the Canadian canola that was going there that then that works through our processing. So again, we're balancing and able to continue to serve our customers and benefit different parts of our platform.

And maybe, Andrew, just to add there quickly. The other benefit, obviously, is with our stronger credit profile as a combined company, we're borrowing money now at the tightest credit spreads we have in the history of Bunge which gives us a little bit of an edge in terms of -- in the marketplace, given the market generally trades on average interest costs. So to the extent we can borrow money cheaper and access that liquidity gives us a chance to stay in there and do more business than maybe some of our competitors.

Right. Okay. That's super helpful. And just a second question. I think at least in our conversations with investors, people are kind of struggling with the U.S. crush curve we see today, what's justified by fundamentals versus elevated energy markets. Do you think underlying fundamentals support the current margin structure, excluding the higher energy prices? Or how are you thinking about where the curve is today versus fundamentals and maybe where we would be in a more steady-state environment?

Yes, we -- yes, would be the answer. We definitely do. And then we've got clarity around the RVO. We're now seeing that the crush that's been added is here to meet that demand, and we continue to see strong meal demand globally and strong corn demand, which tells us that underlying fee demand is there for the economics on the animal protein. So yes, we feel they're justified. And definitely, U.S. and North America is leading the global crush.

Yes. I would just add, Andrew, I think the elevated U.S. crush margins and certainly the -- the energy phenomenon increased energy cost is kind of a global thing. And with the higher crush rates in North America, crush margins in North America, exacerbated a bit by the volatility in energy. But ultimately, when you look at the demand, as Greg pointed out, we have very strong underlying fundamentals.

And the next question comes from Steven Haynes with Morgan Stanley.

I wanted to ask on just on the crush outlook also maybe [indiscernible] when you're putting the guide together just generally and you're using the curve, is there a -- are you using the crepes of yesterday? Or like what date, I guess, time period are you kind of marking for the current period? And then secondly, I think LatAm margins have kind of come down significantly over the last month or so. So what have you kind of assumed on that side of it as well?

Yes, I can start, Greg. I mean we use this current of information as we get. I mean, obviously, this morning, we couldn't do it. But it's fairly current. So the outlook that we have today would reflect largely what the curves are today. We're still looking at it a few weeks ahead of time. I mean we're constantly looking at our forecast, but we take a hard look obviously heading in the call here and try to get as current of information as we can. So we feel like it largely reflects still today how we feel versus when we put the forecast in internally.

And I'd just add, right, where you can see board crush in some of the markets, we still have to have some judgment in the physical crush in the cash. And so it does take some judgment, but we are as current as we can be and it feels like it's in the right place right now.

Got it. Okay. And then maybe as a separate follow-up on Glencore, [ lockup ] period [indiscernible], how are you all thinking about how that situation may evolve in the coming weeks, months or however long it may take to play out in one way or another?

Yes. Look, Glencore has been a great partner, and you might remember that the one thing that they liked about getting equity in this deal is with their business, they understand the commercial synergies of the combination, and they know that it takes a while to mine all those and get those and they wanted to be part of that value creation. And John and I talk to them often on a number of issues. And they're -- they quote them, they're in no hurry and they won't surprise us. And so they're great partners.

And the next question is from Manav Gupta with UBS.

I am going to take you back to Slide 30 of your Analyst Day. I understand it might not be open. But with my questions related to that, you obviously gave us a very good update on Destrehan, can you also give us an update on the remaining 3 projects which you have indicated could add about $1.30 to 2030 EPS? And my second quick follow-up question, which is again on this slide is at the time of the Analyst Day, you had identified cost synergies and network and commercial synergies, but there was a bar on top, which has upside potential of Viterra synergies. If you could talk about that also.

Yes, I'll start with the project. So of course, in Destrehan, we have 2 projects underway. One is the crush plant that sits in the JV with Chevron. And we expect right here at the end of Q3 for that to be up online, give or take a few weeks. Then the other one is our barge unloader and load out capability in the terminal that we've expanded or doubled the size of that one should be up and running in August, sometime in August, hopefully, that's the plan. The other big -- a couple of other big U.S. projects. One is our Morristown SPC plant, which is now running, certainly not up to full scale yet. It takes time for that to happen. But we are now producing product in Morristown. So we're happy with that and excited about to see how that thing goes. But again, it takes a little bit of time from a commissioning standpoint, customer qualification, everything else, but we like the momentum there. And then down in Avondale, which is in the Gulf as well, we expanded our refining -- refined tropical oils platform down there, and that's going to be up and running in the next month or so. But other big project is Weston, the big specialty and refined plant in Netherlands. That one is still slated for end of Q1 of 2027. So things are really coming online right now. I think over the next few quarters, we'll start to see the benefits of that certainly. And then Weston, of course, will be into 2027 before we start seeing that running at a meaningful rate, but we're pretty excited about it. From a cost synergy standpoint, I think the -- I'll focus on the cost side and Greg can comment on the commercial side. But on the cost synergies, we're happy with progress there. As you may recall, we increased our cost target from $250 million to $350 million and we're continuing to push hard on areas of opportunity, and we're going to try to get it done sooner if possible. But we feel good about the timing and progress there as we move forward, and we'll certainly keep you updated.

And when you think about the upside synergies, some of what we were referring to there, some of it is just about the time for the teams to get some repetition of running the system together through a season as we bring the footprint optimization together on how we're running the combined network and that we're running the right assets at the right times. And then how we're growing with customers strategically and how we're growing our direct origination with our farmer customers and how we're growing our direct distribution with our consuming customers. And I will just tell you, being able to bring corn to some of the customers that we had, the majority of their meal business, but we didn't have the same corn footprint before on origination, we're able to just have different conversations because we've got a complete portfolio grains oilseeds and oils and wheat, barley, derm, the softseeds to serve these different customers' needs. We're just having different conversations with the customers, much more strategic conversations and really able to grow those relationships. And I think long term, you see the benefit of that.

And the next question comes from Derrick Whitfield with Texas Capital.

I want to start first on the policy side regarding expected CSA updates within 45Z policy, how are you viewing the impact you can have on your U.S. business? Meaning with the right incentives in place, could you see a meaningful shift in killing cover crop in fertilizer practices.

Yes, I'll take that, and Greg can jump in. Look, I think for us, we've been working with a lot of producers in this area hoping that climate smart ag practices become part of 45Z on a permanent basis. So we've been, as you know, we focused on winter can always a cover crop, we've been testing a number of other novel seeds. We've been working very closely with farmers, primarily on the seed side and with overall farming practices is we believe, long term, that's going to make sense economically for the farmer and also incent the right sort of behavior in terms of ag practices. So we're working on it under the assumption that it becomes a part of 45Z. If it doesn't, I think we're still -- it still makes sense a lot of what we're doing, especially providing farmers alternatives for another cash crop and we're pretty excited about the feedback we've gotten. We continue to increase acres and have gotten very positive feedback so far on how things are progressing.

I would just add and remember, we believe in that strong enough that the crush plant we're adding [indiscernible] has the ability to do sauce. It's a switch plant, which would also allow to do other cover crops. As well, we announced the 2 projects in Brazil. So it's not just a U.S. issue as well as the conversations we're having with energy companies in Europe and that are definitely interested in some of these cover crops and things and what they can mean especially around SAF for the long term.

Great. And then maybe shifting to the geopolitical environment. Are you guys seeing any early time impacts due to the lack of fertilizer access in South America?

A little, but I think the coming season is going to be the key one to watch here on the Brazilian farmer. They've had good application rates in the past. But it could maybe have some impact us next year on safrinha, we want to watch that close. Australia, you saw them switching some from wheat to canola already. But the concern overall now isn't nitrogen, which has kind of corrected itself on price. It's a little bit more around phosphates. So that's the one we'll be watching closely. In Argentina, if it persists, that long term, they may not make the investment, and so could you'd want to watch yields closely there.

The next question comes from Tom Palmer with JPMorgan.

I wanted to maybe start with an update just kind of on your visibility for the second half and how it influenced your guidance. As discussed earlier, you typically guide based on curves. I think previously, you had discussed a rough second half split of kind of 45% in 3Q, 55% in 4Q. So is this still a reasonable outlook? And then maybe you could frame kind of how much visibility you have as we look out here in terms of different regions of the world on the crush curve?