Global grain trader Bunge said it would sell 35 of its U.S. grain elevators to rival Zen-Noh Grain. The sale will significantly reduce the number of Bunge grain storage and handling assets in the United States.
Bunge, a world leader in sourcing, processing and supplying oilseed and grain products, announced that it has agreed to sell 35 U.S. interior elevators to Zen-Noh Grain Corporation. The completion of the sale is subject to customary closing conditions, including regulatory approval.
“This transaction will allow Bunge to operate more efficiently and reinvest in higher returning areas of the company while reducing costs and strengthening our balance sheet,” said Greg Heckman, Bunge’s Chief Executive Officer. “Bunge will continue to be an industry leader in the U.S. grain marketplace through global grain trading and distribution with our export terminals in Destrehan, Louisiana, which we are expanding, and EGT, our joint venture in the Pacific Northwest. We will also continue our strong presence in the soybean processing business and milling operations.”
Through certain supply agreements, Bunge will be able to access a larger and stronger origination and distribution network through Zen-Noh to better serve American farmers and global export customers.
In addition to the export terminals in Destrehan and the EGT joint venture, Bunge will retain ownership in Bunge-SCF Grain, Bunge’s joint venture with SCF, and the Bunge elevators in Indiana that directly support Bunge’s soybean processing plant in Morristown.
BUNGE REPORTS LOSS, CUTS 2020 OUTLOOK AS CORONAVIRUS HITS DEMAND
St. Louis, Missouri-headquartered Bunge reported a first-quarter loss and lowered its full-year forecast as the coronavirus crisis hammered demand for fuel and upended global food supply chains, sending shares plunging 11%. It said adjusted loss attributable in the three months ended March 31, was $181 million, compared with a profit of $59 million a year earlier.
Demand for edible oils fell toward the end of the January-to-March period as the crisis shuttered restaurants and suspended travel, while crashing Brazilian ethanol prices and whipsawing currency markets dented Bunge’s outlook for its sugar and bioenergy unit.
“We’re operating at a time of unprecedented volatility, complexity and uncertainty,” Chief Executive Greg Heckman said. “We expect to see a greater impact from COVID-19 in our business in the second quarter, primarily in our edible oils business.”
Bunge forecast a particularly challenging year for its edible oils unit as the pandemic diminishes demand from restaurant and food service customers. Retail demand for oils from at-home chefs would only partly offset the hit, the company said.
The pandemic is the latest hurdle for two-century-old Bunge following a U.S.-China trade war that reordered global grain flows and a years-long grain glut that depressed crop prices and thinned trading margins. Bunge has been cutting costs and shedding non-core assets to weather a prolonged market downturn that made it a takeover target in 2017 and 2018.