New chief moves to make his mark on Bunge
Greg Heckman launches management revamp and portfolio review at agribusiness
The new chief executive of Bunge has moved to put his stamp on the international agribusiness, announcing the exit of three senior managers and bringing in external advisers to review a portion of its portfolio.
Greg Heckman was appointed in April after serving three months as interim chief and six months as a director brought on by activist shareholders Continental Grain company and DE Shaw. He formerly ran Gavilon, a US grain trading house.
On Wednesday, Bunge announced the appointment of Mr Heckman’s former Gavilon colleague John Neppl as chief financial officer. Mr Neppl most recently served as the chief finance officer of Green Plains, a corn ethanol refiner that, like Gavilon, is headquartered in Omaha, Nebraska.
Bunge also revamped management of its flagship agribusiness unit, which buys, processes, ships and sells bulk grains and oilseeds around the world. Previously managed from regions such as South America and North America, it will now be centrally led by three executives: Raul Padilla, president of global operations; Christos Dimopoulos, president of global supply chains; and Brian Zachman, president of global risk management.
Three senior executives, including chief financial officer Thomas Boehlert, will leave the company, Bunge said.
The New York-listed company’s shares have lagged behind the US stock market in recent years, a result of operational mis-steps and slack grain markets. Under pressure from the activists, Bunge created a strategic review committee that includes Mr Heckman to explore options, such as a sale.
Mr Heckman placed options in three categories: active projects, projects in a late stage “where we’ve made a decision about what we’re going to do”, and more complex projects where there “may be a bigger strategic question”, he told analysts while reporting earnings. He said that internal and external personnel were working on active projects, and “those are the ones you’ll hear about first”.
Bunge reported a first-quarter profit because of higher soyabean crushing margins compared with a loss a year before, earning $45m, or 26 cents, a share. Losses last year reflected a $120m charge on derivative contracts used to lock in margins. Shares rose 6.6 per cent to $53.27 early on Wednesday, the biggest one-day percentage gain since January 2018.
The wholesale grain and oilseed industry has been operating in a risky environment. China’s retaliatory tariffs on US soyabeans have redirected trade of the oilseed in which Bunge is the world’s leading processor. The rapid spread of African swine fever in China could lead to the loss of up to 200m pigs, analysts have estimated, depressing demand for soya-based feed in the world’s biggest consumer.
Mr Heckman listed ASF among “a number of unprecedented factors in the market” causing “the largest decline of animal protein supplies in recent memory”. He said the situation should benefit Bunge in the long term but would not estimate the timing or magnitude of the impact.
His comments were more measured than rival oilseeds processor Archer Daniels Midland, which last month provided a positive outlook for soya crushing margins later this year as meat producers ramped up efforts to supply China. For the full year, Bunge said its agribusiness division was likely to deliver lower results compared with 2018.
US soyabean prices this week dropped to a decade low after the White House threatened to increase tariffs on Chinese goods amid tense trade negotiations, suggesting that China’s tariffs could continue.
Bunge said that soyabean processing margins for the year would depend partly on resolution of US-China trade talks. “Even if you knew the timing, you’d need to know the content of what the outcome is going to be,” Mr Heckman said.