U.S. Markets closed

Analyzing Bunge’s Key Projects in Fiscal 2015

Sue Miller

Bunge's 3Q15 Sales Were Down, but Margins Were Up

(Continued from Prior Part)

Completion of Whole Harvest Foods acquisition

Bunge North America, the North American operating segment of Bunge Limited (BG), announced that it purchased Whole Harvest Foods, a leading refiner and packager of expeller-pressed commercial cooking oil, at the beginning of the third quarter. Bunge explained that Whole Harvest patented a refining process that creates a host of minimally processed products that have good taste and texture, a long fry life, and don’t require artificial preservatives. Bunge believes that the company will be a strong addition to its product portfolio.

Whole Harvest Foods makes its products from expeller-pressed canola, cottonseed, and soy oils. The acquisition will provide solutions to both Bunge’s consumer food manufacturer and foodservice customers. It will be an addition to its edible oil segment. The company did not disclose any financial terms related to this acquisition.

Other key projects

Key projects underway include the wheat mill in Rio de Janeiro, a port and crushing project in the Ukraine, and a maintenance rebuild of its port in New Orleans. The company has spent $97 million on acquisitions this year. One of the company’s priorities is to continue to expand its capabilities in the value-added food businesses. To that end, the company acquired Heartland Harvest, a US producer of extruded die cut food pellets, earlier this year.

In the fourth quarter, the company expects to close on the acquisition of Moinho Pacifico, a major wheat mill in Santos, Brazil. This acquisition is expected to contribute to the company’s milling product segment.

G3 Canada is a Winnipeg-based grain handler. The majority of G3 Canada is owned by Bunge and state-owned SALIC (Saudi Agricultural & Livestock Investment Company). In the third quarter, G3 Canada mentioned that it plans to build a lake terminal at the Port of Hamilton with a capacity of 50,000 metric tons. The company plans to spend $38 million to build a grain terminal in Southern Ontario to boost exports from the East Coast. Earlier this year, Bunge and Saudi’s SALIC acquired a 50.1% stake in the former Canadian Wheat Board for $250 million Canadian dollars, and G3 Canada was formed.

Bunge has returned $478 million to shareholders this year through dividends and share buybacks. In the third quarter, the company purchased $100 million worth of shares, bringing the company’s year-to-date total to $300 million.

Bunge’s peers in the food industry also include General Mills (GIS) and Flowers Foods (FLO). The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.8% of its portfolio in CPB. The Victory CEMP US Large Cap High Dividend Volatility Weighted Index ETF (CDL) invests 2.8%, and the iShares U.S. Consumer Goods ETF (IYK) invests 1.6% of its portfolio in GIS.

Browse this series on Market Realist: