Bunge's Q1 Results Highlight Sector Challenges, but Full-Year Outlook Remains Intact

Henry RiversWednesday, May 7, 2025 8:41 pm ET
14min read

Bunge Limited (NYSE: BG) reported a sharp decline in first-quarter 2025 earnings and sales, underscoring the ongoing turbulence in global agricultural markets. Despite a 40.5% year-over-year drop in adjusted earnings per share (EPS) and a 13% sales contraction, the company reaffirmed its full-year outlook, signaling confidence in its ability to navigate industry headwinds. The results, however, raise questions about the sustainability of its strategy amid persistent macroeconomic and regulatory pressures.

The company’s adjusted EPS fell to $1.81 in Q1 2025 from $3.04 in the prior-year period—a decline driven by weaker performance across all major segments. Net sales dropped to $11.6 billion, missing Wall Street’s $12.8 billion estimate, as lower volumes and margin compression hit Agribusiness, Refined & Specialty Oils, and Milling operations.

Key Drivers of the Decline
The Agribusiness segment, which accounts for roughly 70% of Bunge’s sales, saw a 16% sales decline to $8.2 billion, reflecting weaker merchandising and processing results. Volumes fell to 18.3 million metric tons from 20.2 million in Q1 2024, with challenges in North America and Argentina offsetting gains in Brazil and Europe. Meanwhile, the Refined & Specialty Oils division—a critical growth engine—reported a 4.6% sales drop to $3.1 billion, as U.S. biofuel policy uncertainty and a more balanced supply-demand environment dampened pricing power.

The Milling segment also struggled, with sales down 2% to $375 million, as South American margins compressed amid competitive pricing. Bunge’s adjusted EBIT plunged to $406 million, a 43% decline from $719 million in Q1 2024, with corporate expenses dropping due to lower performance-based compensation.

Why the Full-Year Outlook Remains Intact
Despite these challenges, Bunge maintained its full-year 2025 adjusted EPS outlook of $7.75, slightly below 2024’s $7.79 but reflecting management’s belief that its strategic moves will stabilize results. CEO Greg Heckman emphasized the company’s agility in managing tariff-driven demand shifts and farmer activity, while also highlighting progress on its pending acquisition of Viterra and divestitures of non-core assets like U.S. corn milling and European margarine businesses.

The company’s liquidity remains robust, with $3.25 billion in cash and equivalents, and it has no commercial paper debt. Management also pointed to long-term tailwinds, including its global footprint, decarbonization initiatives, and digital transformation efforts, which could enhance operational efficiency.

The Bigger Picture: Industry-Wide Struggles
Bunge’s results mirror broader trends in the agricultural commodities sector, where companies face a perfect storm of issues:
- Trade Policy Uncertainties: U.S. biofuel mandates and global tariff fluctuations have disrupted demand timing.
- Supply-Demand Balancing: After years of overproduction in crops like soybeans and wheat, prices remain under pressure.
- Margin Compression: Input costs, including logistics and energy, continue to squeeze profitability.

Bunge’s $13 billion revenue drop year-over-year aligns with peers like Archer Daniels Midland (ADM), which also reported sales declines in Q1 2025. However, Bunge’s decision to divest non-core assets and focus on its integrated supply chain—spanning production, processing, and distribution—could position it better than competitors in the long run.

Conclusion: A Mixed Q1, but a Fight for Survival
Bunge’s first-quarter results are a stark reminder of the challenges facing agribusiness giants. The 40.5% EPS decline and 13% sales drop highlight vulnerabilities in its commodity-dependent model, particularly in regions like North America and South America. Yet the company’s maintained outlook and strategic moves suggest it is preparing for a prolonged period of low margins.

Investors should weigh two key factors:
1. Execution Risks: The pending Viterra acquisition, which could add $14 billion in annual revenue, remains contingent on regulatory approvals. Delays or cost overruns could strain Bunge’s balance sheet.
2. Market Dynamics: If agricultural commodity prices stabilize or improve—particularly in soybeans and wheat—Bunge’s integrated model could generate stronger returns.

For now, the stock’s valuation, trading at 10.5x its 2025 EPS estimate, reflects skepticism about its near-term prospects. However, Bunge’s $3.25 billion cash pile and disciplined asset-light strategy provide a buffer. The company’s ability to sustain its outlook will hinge on whether it can turn around its Agribusiness segment, which contributed $362 million in adjusted segment operating profit, down from $668 million in Q1 2024.

In short, Bunge’s Q1 results are a setback, but not a fatal blow. The company’s long-term prospects depend on executing its strategic pivot while waiting for market conditions to improve—a high-stakes balancing act in a sector where patience is a virtue.