Bunge's new chief challenges status quo in first months on job


By Tom Polansek

CHICAGO, Oct 25 (Reuters) - Soren Schroder is shaking upBunge Ltd five months after taking the helm of the195-year-old agricultural trading house.

After vowing in February that he would make no majorstrategy changes when he became chief executive, the company'sfirst new leader in 14 years has said that financial resultsmust improve and chopped capital expenditure plans.

On Thursday, Schroder told a quarterly earnings call thatthe status quo was unacceptable for Bunge's loss-makingBrazilian sugar milling business and that he will exploreoptions, including a sale, for the business.

Schroder, 52, also has ramped up discussions about sharerepurchases to the delight of investors who have watched asBunge shares have failed to keep pace with those of rival ArcherDaniels Midland Co. Bunge shares are up 13 percent sofar this year, compared to gains of nearly 46 percent for ADM.

Analysts say the changes are promising signs for Bunge, oneof the world's top oilseed processors and a major agriculturalforce in South America. Global grain companies need aggressivemanagement amid intense competition to feed fast-developingcountries like China, they said.

Bunge has launched a "strategic shift toward a focus onreturns and returning capital to shareholders," BMO CapitalMarkets analyst Ken Zaslow said on Friday.

"There are initial signs that new CEO Soren Schroder appearsboth more inclined and more capable of returning cash toshareholders," Zaslow said.

Schroder, who studied economics at Connecticut College, took over from Alberto Weisser, 58, as CEO on June 1. Weissertransformed Bunge into one of the world's largest agriculturaltrading houses from a regional operator over 14 years as CEO andwill serve as executive chairman through the end of the year.

Schroder's annual base salary is $1 million, compared to$1.2 million for Weisser. Like Weisser, he is eligible forsubstantial bonuses.

A former employee of rival Cargill, Schroder joined Bunge in2000 and led the company's North America operations for threeyears before becoming CEO.


Schroder, in an interview after Bunge reported third-quarterearnings on Thursday, said the company was making a team effortto improve results.

Bunge reported revenue during the quarter slipped to $14.7billion from $16.5 billion a year earlier, and came in belowanalysts' average forecast of $16.9 billion, according toThomson Reuters I/B/E/S.

"The team is looking at the business very seriously, iscommitted to driving returns," Schroder told Reuters. "We'rebeing very frank about what's working and what's not."

Schroder cut capital expenditure plans for 2014 to $900million after reducing plans for 2013 by 16 percent to $1billion. He said the company would postpone projects, such asexpanding oilseed processing in China, with the goal of "buyingtime to grow into our own capacity."

North America and Brazil remain two areas of focus forgrowth because acquisitions would be "natural add-ons" toBunge's food and ingredients business in the regions, Schrodersaid. In North America, Bunge is open to adding rice, wheat andcorn mills, he said.

Bunge on Wednesday said it struck a deal to buy Grupo Altexwheat mills in Mexico for an undisclosed amount.


Bunge Chief Financial Officer Drew Burke told analysts onThursday that share repurchasing was "very much on our agenda,"although no specific new program has been announced.

Bunge initiated a $700 million program to buy back shares in2010. The company expanded the program to $950 million in 2012and extended its duration indefinitely. It has used about $450million of the $950 million so far.

"There's been a lot of talk about return of capital andprobably more than the last several years combined," said AriGendason, managing principal for Arlon Group, a New York-basedfirm that invests in agricultural commodities and owns Bungeshares.

Schroder "has the benefit of knowing the culture and thepeople and the operations but also saying I'm going to put myown mark on this as CEO," Gendason said.

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