US grains trader Bunge Ltd reported a rise in quarterly profit on Thursday and maintained a forecast for higher full-year earnings, but warned of weakening margins in Brazil and Argentina due to smaller crops and lower prices.
After turning in a 51-percent profit jump in the second quarter, the White Plains, New-York-based company said second-half earnings would be weighted toward the fourth quarter, when crops in the Northern Hemisphere are harvested.
"Overall, we continue to expect to grow earnings in 2016," said Bunge Chief Financial Officer Drew Burke.
"However, in the near term, slow farmer selling in Brazil and Argentina, due to smaller than expected crops and lower prices, are negatively impacting margins. We also expect the mark-to-market gains we benefited from in the second quarter to largely reverse in the third quarter," he said.
Bunge had warned of second-quarter headwinds due to weather-damaged harvests in Brazil and Argentina, home to many of its elevators and processing plants.
Slow farmer crop sales in Brazil dragged down earnings for Bunge's agribusiness unit, its largest revenue driver, in the quarter ended June 30.
The South American crop shortfall, however, has raised demand for shipments from the United States, where rivals Archer Daniels Midland Co and privately held Cargill Inc have a stronger presence.
Farmers in the United States are expecting very large corn and soybean harvests this autumn.
Bunge's shares have fallen about 10 percent so far this year, while shares of Archer Daniels Midland are up nearly 20 percent.
Net income attributable to Bunge rose more than 50 percent to $109 million, or 78 cents per share, for the second quarter ended June 30.
Excluding items, the company earned 79 cents per share.
The company's quarterly net sales fell less than expected, helped by an increase in revenue from its Food and Ingredients business.
Sales at Bunge's edible oil products unit, its second-largest in terms of revenue, rose 2.3 percent to $1.71 billion for the second quarter, driven by demand in Asia, Canada and Europe.