(Bloomberg) Bunge Ltd (NYSE:BG) a global agricultural-commodity trader, has decided to “significantly scale down” its asset-management unit, including its Climate Change Capital subsidiary, as it seeks to boost returns from core businesses.
Bunge will “focus more on partnerships with industrial and strategic financial investors,” Susan Burns, a spokeswoman for the White Plains, New York-based company, said in an e-mail. “As a consequence, we will no longer require an arm’s length asset-management platform, as any new third-party investments will be managed by our appropriate operating companies on a bespoke basis.”
Bunge plans to close all its regulated activities when the “right opportunity presents itself,” Burns said. The company didn’t respond to a request for information about the size of its asset-management business.
Since Soren Schroder became chief executive officer in June 2013, Bunge has undertaken a review of its companywide portfolio to improve returns, including exploring various options for its sugar-cane unit in Brazil.
Bunge bought London-based Climate Change Capital for an undisclosed amount in 2012. Bunge made the deal to help its financial-services group, which had been a trader of carbon credits and an adviser to other market participants, build a bigger presence in sustainability markets and advisory services.
The process of scaling back Climate Change Capital has already begun. In July 2014, Climate Change Capital announced that the management of its property fund would move to Impax Asset Management Ltd. The fund was set up in 2008 to buy U.K. commercial buildings and work with occupants to improve resource efficiency.
Bunge Equity Analysis
Bunge Ltd (NYSE:BG) opened trading today as $84.44 and is trading in the range of 83.75-84.69 today. Bunge’s current market cap stands at $12.29 billion.
Compared to other peers in the Farm Products sector, Bunge hasn’t performed in terms of quarterly revenue growth year over year at -0.19 vs. the industry average of 0.11. Bunge’s earnings per share is currently at 3.18, which surpasses the sector average of 0.02.
Bunge is currently covered by 14 Wall Street analysts. The mean target price is $90.54 according to First Call. This presents a solid upside to the current price of the equity. The Mean Recommendation sits at 2.6 which is based on 1 Strong Buy, 3 Buy and 9 Hold ratings.
The current quarter EPS consensus estimate is 1.20 with revenue estimates of 13.32B. Sales are expected to drop at a 1.00% rate. Bunge reported actual earnings last quarter of 1.20 which fails to beat the 2.51 consensus estimate, a -52.20% surprise.
Bunge Limited, through its subsidiaries, is engaged in agriculture and food businesses worldwide. It operates through five segments: Agribusiness, Sugar and Bioenergy, Edible Oil Products, Milling Products, and Fertilizer. The Agribusiness segment is involved in the purchase, storage, transport, processing, and sale of agricultural commodities and commodity products, such as oilseeds and grains, primarily soybeans, rapeseed or canola, sunflower seed, wheat, and corn to animal feed manufacturers, wheat and corn millers, other oilseed processors, livestock producers, third party edible oil processing companies, and biodiesel industries. The Sugar and Bioenergy segment produces and sells sugar and ethanol; trades and merchandises sugar; and generates electricity from burning sugarcane bagasse. As of December 31, 2013, this segment had a total installed capacity of approximately 314 megawatts. The Edible Oil Products segment offers packaged and bulk oils, shortenings, margarines, mayonnaise, sauces, pastes, condiments, seasonings, processed tomato products, and other products to baked goods companies, snack food producers, restaurant chains, foodservice distributors, and other food manufacturers, as well as grocery chains, wholesalers, distributors, and other retailers. The Milling Products segment produces and sells various wheat flours and bakery mixes; and corn milling products, primarily dry milled corn meals, flours, and grits, soy-fortified corn meals, corn-soy blend products, and other products, as well as sells packaged rice products.