Bunge Ltd (BG), the world's largest oil seed processor, on Tuesday lowered its full year 2008 earnings forecast, citing weaker than expected demand in the fourth quarter due to challenging economic conditions in its end markets. The company also forecast full year 2009 earnings below analysts' current consensus estimate.
The company said it now expects full year 2008 earnings of $1.06 billion or $7.70 per share, compared to its prior guidance of $11.60 to $11.90 per share.
Analysts polled by First Call / Thomson Financial expected the company to earn $10.22 per share for the full year 2008.
The company expects to record an after-tax charge of about $160 million related to counterparty risk in its agribusiness segment.
White Plains, New York-based Bunge noted that weak fourth quarter results were hurt by soft demand for soybean meal and oil due to challenging economic conditions in its end markets and substitutions of other agricultural commodity products.
The company, which is also the largest fertilizer producer and supplier in South America, said farmers were reluctant sellers of crops in expectation of higher prices, while credit constraints affected the Brazilian farm sector and limited sales of fertilizer
Additionally, Bunge said the performance of its fertilizer segment was impacted by foreign exchange losses of about $225 million from the 18% devaluation of the Brazilian real on U.S. dollar-denominated financing of working capital during the fourth quarter.
Jacqualyn Fouse, Chief Financial Officer, said, "In the fourth quarter, demand fell more than we anticipated. Periods of soft demand are typically short lived in our industry, and we expect to see fundamentals improve during 2009."
Bunge forecast full year 2009 earnings in the range of $6.90 to $7.60 per share. Analysts currently expect the company to earn $8.00 per share for the full year 2009.
The company will announce its fourth quarter financial results on February 5.
Only last week, Monsanto Co. (MON), the world's biggest seed producer, reported first quarter profit that more than doubled on higher sales to Latin America. The company also raised its earnings outlook for the full fiscal year.
The world financial crisis has battered Latin American stocks and currencies, as foreign investors dumped local assets to cover losses at home. But Monsanto saw strong sales in Latin America despite tumbling prices for soy exports.
Bunge shares, which have traded in a range of $27.60 to $135.00 over the past year, closed Tuesday's regular trading session at $48.17, down 14 cents and lost an additional $2.93 or 6.08% in after hours trading.
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