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Bunge (BG) Sells 35 US Grain Elevators to Zan-Noh Grain

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Bunge Limited BG recently completed the previously announced sale of 35 U.S. interior elevators to Zen-Noh Grain Corporation, as part of its portfolio optimization drive. This move will help Bunge to operate more efficiently and invest in other areas with higher returns, while reducing costs and strengthening balance sheet.

The company had announced in April last year that it had entered into an agreement to sell the interior grain elevators in exchange for cash proceeds of $300 million. Per the company’s SEC filing, as of Dec 31, 2020, it had 143 commodity storage facilities globally, which are located close to agricultural production areas or export locations.

Even though the sale will reduce its global storage facility network, Bunge assured that through certain supply agreements, it will be able to access a larger and stronger origination and distribution network through Zen-Noh to better serve American farmers and global export customers. Bunge will retain ownership in grain export terminals in Destrehan, LA, which it is expanding, and EGT, its joint venture in the Pacific Northwest. The company is reinforcing its strong presence in the soybean processing business and milling operations.

Over the past few years, Bunge has been optimizing its portfolio and selling assets that are no longer core to its business or have been underperforming. In sync with its plan, the company formed a joint venture (BP Bunge Bioenergia) with BP p.l.c BP that combined their Brazilian bioenergy and sugarcane ethanol businesses. BP Bunge Bioenergy is now the second largest operator by effective crushing capacity in the Brazilian bioethanol market. Bunge has sold its Brazilian margarine and mayonnaise assets. The company announced the aforementioned sale of the 35 U.S. grain elevators and the divestiture of idled grain facilities in Eastern Europe and a number of other smaller transactions. These changes have simplified its business, while improving returns and enabling the company to focus on its core strengths and markets.

The company reported first-quarter 2021 adjusted earnings per share of $3.13, indicating a whopping improvement of 244% year over year. This was courtesy of improved results in its Agribusiness driven by strong performance in Processing and Merchandising. Refined and Specialty Oils delivered excellent results on the back of tightening global supplies and improved demand, and the company’s continued focus on customers and innovation. Bunge during the first quarter earnings call, also increased the full-year adjusted earnings per share guidance to around $7.50 citing strong first-quarter results and positive market trends. The company’s ongoing efforts to manage costs will help drive margins.

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Shares of Bunge have gained 85% in the past year compared with the industry’s rally of 67.3%.

Zacks Rank & Other Key Picks

Bunge currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the basic materials space are Nucor Corporation NUE and Olin Corporation OLN, both of which currently flaunt a Zacks Rank #1.

Nucor has a projected earnings growth rate of around 386.2% for the current year. The company’s shares have soared 138% in a year.

Olin has an expected earnings growth rate of around 506.7% for the current year. The company’s shares have skyrocketed 291% in the past year.


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Bunge Limited (BG) : Free Stock Analysis Report

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