BMO CAPITAL MARKETS AGRICULTURE & PROTEIN CONFERENCE May 15, 2008

Transcription

1 BMO CAPITAL MARKETS AGRICULTURE & PROTEIN CONFERENCE May 15, 2008

2 Forward Looking Statements Today s presentation includes forward-looking statements that reflect Bunge s current views with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Bunge has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation, and encourages you to review these factors. 2

3 Bunge Today KEY FACTS Employees: ~ 25,000 Facilities: 400+ Countries of Operations: Net Income: $778 million 2007 Total Volume: 137 mmt NORMALIZED SEGMENT EBIT Foods 20% Fertilizer 35% Agribusiness 45% 3

4 Balanced Oilseed Processing Asset Network Asia Soybean 3% South America Soybean Cottonseed 37% 36% North America Soybean Canola 24% Europe Soybean Rapeseed Sunseed 4

5 Integrated, Local Operations Create Competitive Advantages Largest producer and supplier of fertilizers in South America Brazil s only completely vertically integrated fertilizer company Operate 4 of 5 major phosphate mines in Brazil Domestically produced products priced to import parity 25-30% share of retail fertilizer market $40 $60/MT transportation cost advantage for domestic production 5

6 Outstanding, Trusted Consumer Brands Bottled Vegetable Oils Country Brazil Russia Ukraine Poland Romania Hungary Bulgaria Population 190 million 141 million 46 million 39 million 22 million 10 million 7 million Market Share #1 #2 #1 #1 #1 #1 #1 6

7 Demand For Core Products Growing at 5% Per Annum Global Consumption MMT e Soybean Meal Vegetable Oil Source: USDA 7

8 All Agricultural Commodities Are in Tight Supply 40% Global Stocks to Consumption Ratio % 30% Stocks to Use 25% 20% 15% 10% 5% 0% Oilseeds Oils Food Grains Feed Grains Source: USDA 8

9 Global Population Territory size shows the relative proportion of the world's population living there. 9 Map Copyright 2006 SASI Group (University of Sheffield) and Mark Newman (University of Michigan).

10 High Per Capita Incomes Territory size shows the proportion of all people living on PPP US$ a day worldwide that reside there. 10 Map Copyright 2006 SASI Group (University of Sheffield) and Mark Newman (University of Michigan).

11 Faster Improvement in Diets Territory size shows the proportion of all people living on PPP US$ a day worldwide that reside there. 11 Map Copyright 2006 SASI Group (University of Sheffield) and Mark Newman (University of Michigan).

12 Rainfall Levels Territory size shows the proportion of worldwide precipitation that falls there. 12 Map Copyright 2006 SASI Group (University of Sheffield) and Mark Newman (University of Michigan).

13 Brazil s Growing Fertilizer Market 25 CAGR = 6.5% Brazilian Retail Fertilizer Market Volumes MMT Source: ANDA 13

14 Global Supply and Demand Soybean & Meal Imports Soybean Imports Corn Exports 5 Soybean & Meal Exports Corn Exports (38) (44) Wheat Exports (27) (3) 144 Wheat Imports (58) 78 (29) (37) Soybean Meal Imports (8) (13) /07 Source: USDA Soybean & Meal Exports Corn Exports 2017/18 14

15 We Have a Proven Approach Purpose Enhance lives by improving the global agribusiness and food chain Goals The world s best agribusiness and food company Strengthen Core Businesses Expand Into Complementary Value Chains Enhance Efficiency & Customer Focus Leverage Unique Operating Model Culture Organization Values Openness & Trust, Teamwork, Entrepreneurship, Integrity, Citizenship Team 15

16 Our Global Asset Network of Assets and Businesses as of 2001 Fertilizer Agribusiness Food Products 16

17 Our Global Asset Network of Assets and Businesses as of 2008 Fertilizer Agribusiness Food Products 17

18 Nipawin, Canada Canola Crushing/Refining Expansion Increases canola crushing capacity by about 50% to 1,400 mt/day and doubles refining capacity Enhances efficiency of asset network in Canada Serves growing demand for low saturate and trans-fat free products Capable of processing specialty oils, such as HEAR Nipawin 18

19 Expanding Access to Fertilizer Raw Materials: Araxa Mine Previous Capacity Phosphate rock: 830 k mt/year New Capacity Phosphate rock: Phase I: +150 k mt/year (in operation) Phase II: +670 k mt/year Start-up: Phosphate rock: Phase I: in operation since Jun 2007 Phase II: End of 2009 Bunge s Industrial Complex Bunge s Phosphate Mine CBMM s Phosphate Reserve Leased by Bunge 19

20 Expanding Access to Fertilizer Raw Materials : OCP Joint Venture 50/50 Joint venture with OCP Operation located in Jorf Lasfar, Morocco Serves as an additional source of phosphatebased raw materials and intermediate products for Bunge s fertilizer businesses in Brazil and Argentina Capacity = 375k mt/year of P2O5 for production of ~ 625K mt/year of MAP/TSP Start-up: phosphoric acid in 2008 / fertilizers in 2010 Atlantic Ocean Morocco Brazil Main import routes Argentina 20

21 Walter Rau Lebensmittelwerke Acquisition Founded in 1903; privately owned Second largest consumer margarine producer in Germany, Europe s largest market With this step, Bunge Benelux strengthens downstream business, becoming #1 in German private label margarine sector and #2 in the German branded margarine sector Leverages existing Bunge assets and capabilities in the region Hamburg Trading Walter Rau Hilter Walter Rau Kleve Germany Mannheim Crush/Refining Bunge Facilities Kruszwica Margarines Warszawa Margarines Kruszwica crushing/ refining/ bottling & margarines Brzeg Margarines Czech Bruck Crush/Refin. Brück Crush / Refin. Austria Walter Rau facilities Slovakia Hungary Warszawa crushing/ refining/ bottling & margarines Poland Martfu crush/refining & bottling 21

22 Agroindustrial Santa Juliana Sugarcane Mill Acquisition/Expansion Description: Bunge s first sugarcane mill, located in Brazilian state of Minas Gerais Production capacity: 1.6 million metric tons of cane milling capacity, to be expanded to 4 million metric tons in the next several years Located near Sao Paulo state, the largest domestic market Mill is linked to export market via rail to Santos and Vitoria ports Vitória port (800 km) Santos port (600km) 22

23 Start-Up Schedule of Investments Project North America Nipawin, Canada crushing/refining expansion x Hamilton, Canada refining x Council Bluffs, Iowa crushing expansion x Europe Cartagena, Spain crushing/refining x Illiyschevsk, Ukraine crushing x Martfu, Hungary crushing/refining expansion x Voronezh, Russia crushing/refining/bottling x 23

24 Start-Up Schedule of Investments Project South America Araxa, Brazil phosphate rock expansion (Phase I) Santos, Brazil - port terminal (grain & fertilizer facilities) Ponta Grossa, Brazil - wheat mill expansion Suape, Brazil wheat mill Ramallo, Argentina - SSP Santa Juliana, Brazil sugarcane mill expansion (Phase I) Araxa, Brazil - phosphate rock expansion (Phase II) Nova Mutum, Brazil - crushing Asia Tianjin, China - crushing/refining expansion 2007 x x x x x x x x x 24

25 Integration in Key Areas Unlocks Greater Value Analytics Logistics Procurement Energy Risk Management Finance HR Fertilizer Agribusiness Food Products Nutrients Retail Products & Services Grain Origination Oilseed Processing Distribution Food Processing Retail & Consumer 25

26 26 FINANCIAL PERFORMANCE

27 Financial Performance Volumes Millions of metric tons CAGR: 11% Total Segment EBIT US$ millions (1) CAGR: 26% , (2) Net Income US$ millions CAGR: 34% (2) (1) Total segment EBIT is a non-gaap financial measure. A reconciliation to the most directly comparable GAAP measure is included elsewhere in this presentation. (2) Excludes $111 million gain on the sale of the Brazilian soy ingredients business.

28 Strong Shareholder Returns Return on Invested Capital 12% 10% 9% 11% 9% 11% 10% 10% 10% 8% 6% 4% 2% 0% (1) Note: ROIC is defined as the sum of income from continuing operations before income tax and minority interest plus interest expense (for 2003 the $111 million gain on sale of the Brazilian soy ingredients business is subtracted) times the effective tax rate (for 2003 the effective tax rate is less the gain on sale of the Brazilian soy ingredients business) divided by the average total capitalization. ROIC is a non-gaap financial measure. A reconciliation to the most directly comparable GAAP measure is included elsewhere in this presentation. (1) Excludes losses from discontinued operations in 2003 of $7 million.

29 Agricultural Commodity Prices are a Key Driver of Cash Flows Funds from operations $482 $759 $550 $565 $1,152 (before Δ's in working capital) Working capital Δ's $(523) $43 $(168) $(854) $(1,563) Readily marketable inventory Δ's $(351) $604 $(270) $(791) $(1,033) Cash flow from operations $(41) $802 $382 $(289) $(411) Capital expenditures $(304) $(437) $(522) $(503) $(658) 350% 300% 250% Short US soybean crop led to rising global prices Strong SA & NA soybean crops led to decreasing global prices Strong demand Global crop shortages Higher energy prices Increasing biofuels demand 200% 150% 100% 50% J A J O J A J O J A J O J A J O J A J O J A J O J A (1) CBOT nearby month futures contracts; Jan prices indexed to 100% (2) Basket comprises of 65% Soy, 20% Corn and 15% Wheat

30 Bunge Limited Quarter Ended March 31 $ in millions excl. volume & EPS Quarter Ended March 31, %-Δ Volume (000 mt) 31,763 29,712 7% Total segment EBIT (1) $442 $52 750% Net Income $289 $14 1,964% Earnings per Share $2.10 $0.05 4,100% Effective Tax Rate 28% 22% NA 30 (1) Total segment EBIT is a non-gaap financial measure. A reconciliation to the most directly comparable GAAP measure is included elsewhere in this presentation.

31 Bunge Limited Balance Sheet Summary $ in millions March 31, Dec. 31, March 31, Operating Working Capital (1) $6,561 $5,810 $4,343 - Inventories $6,492 $5,924 $3,910 Readily Marketable Inventories $3,589 $3,358 $2,445 Cash Cycle Days (2) Total Debt $4,993 $4,547 $3,903 Shareholders Equity $8,283 $7,945 $5, (1) Current assets (excluding cash and cash equivalents and marketable securities) less Current liabilities (excluding short term debt and current portion of long term debt). (2) 12 month rolling average

32 Managing the Growth of the Business Shareholders Equity Index Net Sales Operating Working Capital Gross Debt As of 3/ base year = 100 Annual average of monthly data 32

33 Bunge Limited Cash Flow Summary $ in millions Quarter Ended March 31, Funds from Operations (before working capital changes) 2008 $ $43 Working Capital Changes $(633) $(225) Cash Flow from Operations $(353) $(182) Capital Expenditures $(148) $(84) 33

34 Financial Liquidity is Strong We have ample liquidity to fund our business requirements as of 3/31/2008 Total Amount Amount US$ millions Maturities availability outstanding available Commercial Paper 2012 $600 $126 $474 Revolving Credit Facilities $3,100 $1,060 $2,040 Total $3,700 $1,186 $2,514 Actions taken in Q Closed on $250 million, 3-year, loan facility from the US Farm Credit System Put in place $650 million, 3-year, new European revolving credit facility syndication in 2008 Actions to be taken later in 2008 Roll-over $1 billion, 364-day, revolving credit facility maturing in Nov-2008 Refinance $500 million Notes maturing in Dec

35 Bunge Limited 2008 Outlook Market fundamentals remain solid Demand for protein meal and oil remains strong Record South American harvests Fertilizer demand should remain strong; we are forecasting 5-7% volume growth for the year Food products segment showing improvement Though not without challenges Strong Brazilian real and higher farm input costs continue to pressure farm economics Higher input costs could pressure margins in fertilizer and edible oils Government policy changes can disrupt trade flows 35

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37 Backup: Non-GAAP Reconciliation Notes Total segment earnings before interest and tax Total segment earnings before interest and tax ( EBIT ) is Bunge s consolidated net income that excludes interest income and expense and income tax attributable to each segment. Total segment EBIT is a non-gaap financial measure and is not intended to replace net income, the most directly comparable GAAP financial measure. Total segment EBIT is an operating performance measure used by Bunge s management to evaluate its segments operating activities. Bunge believes EBIT is a useful measure of its segments operating profitability, since the measure reflects equity in earnings of affiliates and minority interest and excludes income taxes. Income taxes are excluded as management believes they are not material to the operating performance of its segments. Interest income and expense have become less meaningful to the segments operating activities as Bunge is financing more of its working capital with equity rather than debt. In addition, EBIT is a financial measure that is widely used by analysts and investors in Bunge s industries. Total segment EBIT is not a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to net income or any other measure of consolidated operating results under U.S. GAAP. 37

38 Backup: Non-GAAP Reconciliation Below is a reconciliation of total segment EBIT to net income: In millions Total Segment EBIT $311 $423 $592 $823 $546 $624 $1,230 Interest - net (134) (107) (113) (110) (126) (161) (187) Income tax (72) (104) (201) (290) (309) Minority interest share of interest and tax Other (1) (1) Net income $134 $255 $300 $469 $530 $521 $778 (1) 38 (1) Excludes $111 million tax-free gain on the sale of the Brazilian soy ingredients business.

39 Backup: Non-GAAP Reconciliation Below is a reconciliation of total segment EBIT to net income: (In millions) Total segment EBIT Interest income Interest expense Income tax Minority interest share of interest and tax Other (1) Three Months Ended March 31, 2008 $ (98) (117) $ (70) (6) 9 (2) Net income $ 289 $ (1) Includes other amounts not directly attributable to Bunge s operating segments.

40 Backup: Non-GAAP Reconciliation Notes Return on Invested Capital Bunge calculates Return on Invested Capital (ROIC) as net income plus/minus minority interest, income tax (benefit) expense, discontinued operations-loss/gain and interest expense times the effective tax rate divided by the average total capital. Bunge believes that ROIC provides investors with a measure of the return the company generates on the capital invested in its business. ROIC is not a measure of financial performance under generally accepted accounting principles and should not be considered in isolation or as an alternative to net income as an indicator of company performance or as an alternative to cash flows from operating activities as a measure of liquidity. (US$ in millions) FISCAL YEAR ENDED DECEMBER 31, Net income $778 $521 $530 $469 $411 $255 $134 Add back/subtract: Minority interest Income tax (benefit) expense 310 (36) (82) Interest expense Discontinued operations-loss/(gain) 7 (3) (3) Cumulative effect of change in accounting principles 23 (7) Gain on sale of soy ingredients business (111) Operating income before tax $1,587 $825 $750 $1,118 $827 $657 $487 Effective tax rate 26% 0% 0% 32% 33% 22% 26% Operating income after tax $1,174 $825 $750 $760 $554 $512 $360 Shareholders' equity $7,945 $5,668 $4,226 $3,375 $2,377 $1,472 $1,376 Minority interest Total Debt 4,547 3,484 3,146 3,281 3,394 3,403 1,813 Total capital $13,244 $9,561 $7,697 $6,936 $6,325 $5,370 $3,682 Total capital (end of year) $13,244 $9,561 $7,697 $6,936 $6,325 $5,370 $3,682 Total capital (beginning of year) $9,561 $7,697 $6,936 $6,325 $5,370 $3,682 $4,207 Average total capital $11,403 $8,629 $7,317 $6,631 $5,848 $4,526 $3,945 ROIC 10% 10% 10% 11% 9% 11% 9% 40