filings.toolsItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Second Quarter 2024 Overview
You should refer to "Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting Operating Results" in our Annual Report on Form 10-K for the year ended December 31, 2023, for a discussion of key factors affecting operating results in each of our business segments. In addition, you should refer to "Item 9A, Controls and Procedures" in our Annual Report on Form 10-K for the year ended December 31, 2023, and to "Item 4, Controls and Procedures" in this Quarterly Report on Form 10-Q for the period ended June 30, 2024, for a discussion of our internal controls over financial reporting.
Non-U.S. GAAP Financial Measures
Total segment earnings before interest and taxes ("EBIT") is an operating performance measure used by Bunge’s management to evaluate segment operating activities. Bunge also uses Core Segment EBIT, Non-core Segment EBIT, Corporate and Other EBIT, and Total Segment EBIT to evaluate segment operating performance of Bunge’s Core reportable segments, Non-core reportable segments, and Total reportable segments together with Corporate and Other. Core Segment EBIT is the aggregate of the EBIT of each of Bunge’s Agribusiness, Refined and Specialty Oils, and Milling segments. Non-core Segment EBIT is the EBIT of Bunge’s Sugar & Bioenergy segment. Total Segment EBIT is the aggregate of the EBIT of Bunge’s Core and Non-core reportable segments, together with Corporate and Other. Bunge’s management believes Core Segment EBIT, Non-core Segment EBIT, Corporate and Other EBIT and Total Segment EBIT are useful measures of operating profitability since the measures allow for an evaluation of the performance of its segments without regard to financing methods or capital structure. In addition, EBIT is a financial measure that is widely used by analysts and investors in Bunge’s industry. Total Segment EBIT is a non-U.S. GAAP financial measure and is not intended to replace Net income attributable to Bunge, the most directly comparable U.S. GAAP financial measure. Further, Total Segment EBIT excludes EBIT attributable to noncontrolling interests and 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. See the reconciliation of Net income attributable to Bunge to Total Segment EBIT below.
Executive Summary
Net Income (Loss) Attributable to Bunge - For the three months ended June 30, 2024, Net income attributable to Bunge was $70 million, a decrease of $552 million compared to $622 million, for the three months ended June 30, 2023. For the six months ended June 30, 2024, Net income attributable to Bunge was $314 million, a decrease of $940 million, compared to $1,254 million for the six months ended June 30, 2023. The decrease for the three and six months ended June 30, 2024, was primarily due to lower Segment EBIT in our Core and Non-core segments, as further discussed in the Segment Overview & Results of Operations section below, partially offset by lower income tax expense as discussed further below.
Earnings Per Share - Diluted - For the three months ended June 30, 2024, Net income attributable to Bunge shareholders - diluted, was $0.48 per share, a decrease of $3.61 per share, compared to income of $4.09 per share for the three months ended June 30, 2023. For the six months ended June 30, 2024, Net income attributable to Bunge shareholders - diluted, was $2.17 per share, a decrease of $6.07 per share, compared to income of $8.24 per share for the six months ended June 30, 2023.
EBIT - For the three months ended June 30, 2024, Total Segment EBIT was $185 million, a decrease of $727 million compared to Total Segment EBIT of $912 million for the three months ended June 30, 2023. For the six months ended June 30, 2024, Total Segment EBIT was $618 million, a decrease of $1,180 million compared to Total Segment EBIT of $1,798 million for the six months ended June 30, 2023. The decrease in Total Segment EBIT for the three and six months ended June 30, 2024, was primarily due to lower Segment EBIT in our Core and Non-core segments, resulting from lower gross margins, as further discussed in the Segment Overview & Results of Operations section below.
Income Tax (Expense) Benefit - Income tax expense was $30 million for the three months ended June 30, 2024 compared to $198 million for the three months ended June 30, 2023. Income tax expense was $147 million for the six months ended June 30, 2024 compared to $381 million for the six months ended June 30, 2023. The decrease for the three and six months ended June 30, 2024 was primarily due to lower pre-tax income in 2024, partially offset by unfavorable discrete tax adjustments in 2024.
Liquidity and Capital Resources – At June 30, 2024, working capital, which equals Total current assets less Total current liabilities, was $7,846 million, a decrease of $1,063 million, compared to working capital of $8,909 million at
June 30, 2023, and a decrease of $817 million, compared to working capital of $8,663 million at December 31, 2023. The decrease in working capital at June 30, 2024, compared to June 30, 2023, was primarily due to lower Inventories balances, Trade accounts receivables, net and Other current assets, partially offset by lower Trade accounts payable balances, all of which were primarily driven by lower commodity prices. The decrease in working capital at June 30, 2024, compared to December 31, 2023, was primarily due to lower Cash and cash equivalents and Trade accounts receivable balances, partially offset by higher Inventories balances as described within the Liquidity and Capital Resources section below.
Segment Overview & Results of Operations
Our operations are organized, managed and classified into four reportable segments based upon their similar economic characteristics, nature of products and services offered, production processes, types and classes of customer, and distribution methods. We further organize these reportable segments into Core operations and Non-core operations. Core operations comprise our Agribusiness, Refined and Specialty Oils, and Milling segments. Non-core operations comprise our Sugar & Bioenergy segment, which itself primarily comprises the Company’s 50% interest in the net earnings of BP Bunge Bioenergia, a joint venture with BP p.l.c. See Note 2 - Acquisitions and Dispositions for details regarding Bunge's planned disposition of its 50% interest in BP Bunge Bioenergia.
Our remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified as Corporate and Other. Corporate and Other includes salaries and overhead for corporate functions that are not allocated to our individual reportable segments because the operating performance of each reportable segment is evaluated by the Company's chief operating decision maker exclusive of these items, as well as certain other activities including Bunge Ventures, the Company's captive insurance activities, and trade receivables securitization program, as well as certain income tax assets and liabilities.
A reconciliation of Net income (loss) attributable to Bunge to Total Segment EBIT follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (US$ in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net income (loss) attributable to Bunge | $ | 70 | $ | 622 | $ | 314 | $ | 1,254 | |||||||||||||||
| Interest income | (37) | (40) | (79) | (83) | |||||||||||||||||||
| Interest expense | 123 | 129 | 231 | 241 | |||||||||||||||||||
| Income tax expense (benefit) | 30 | 198 | 147 | 381 | |||||||||||||||||||
| Noncontrolling interests' share of interest and tax | (1) | 3 | 5 | 5 | |||||||||||||||||||
| Total Segment EBIT | $ | 185 | $ | 912 | $ | 618 | $ | 1,798 | |||||||||||||||
| Agribusiness Segment EBIT | 138 | 785 | 416 | 1,490 | |||||||||||||||||||
| Refined and Specialty Oils Segment EBIT | 185 | 217 | 411 | 450 | |||||||||||||||||||
| Milling Segment EBIT | 38 | 14 | 71 | 23 | |||||||||||||||||||
| Core Segment EBIT | 361 | 1,016 | 898 | 1,963 | |||||||||||||||||||
| Corporate and Other EBIT | (155) | (155) | (283) | (235) | |||||||||||||||||||
| Sugar and Bioenergy Segment EBIT | (21) | 51 | 3 | 70 | |||||||||||||||||||
| Non-core Segment EBIT | (21) | 51 | 3 | 70 | |||||||||||||||||||
| Total Segment EBIT | $ | 185 | $ | 912 | $ | 618 | $ | 1,798 |
Core Segments
Agribusiness Segment
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (US$ in millions, except volumes) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
| Volumes (in thousand metric tons) | 20,579 | 18,257 | 13 | % | 40,771 | 36,643 | 11 | % | |||||||||||||||||||||||||||
| Net sales | $ | 9,657 | $ | 10,875 | (11) | % | $ | 19,397 | $ | 21,727 | (11) | % | |||||||||||||||||||||||
| Cost of goods sold | (9,368) | (9,878) | (5) | % | (18,654) | (19,922) | (6) | % | |||||||||||||||||||||||||||
| Gross profit | 289 | 997 | (71) | % | 743 | 1,805 | (59) | % | |||||||||||||||||||||||||||
| Selling, general and administrative expense | (150) | (151) | (1) | % | (305) | (283) | 8 | % | |||||||||||||||||||||||||||
| Foreign exchange (losses) gains – net | (39) | (64) | 39 | % | (101) | (25) | 304 | % | |||||||||||||||||||||||||||
| EBIT attributable to noncontrolling interests | 7 | 1 | 600 | % | 10 | (20) | 150 | % | |||||||||||||||||||||||||||
| Other income (expense) – net | 56 | 7 | 700 | % | 109 | 18 | 506 | % | |||||||||||||||||||||||||||
| Income (loss) from affiliates | (25) | (5) | 400 | % | (40) | (5) | 700 | % | |||||||||||||||||||||||||||
| Total Agribusiness Segment EBIT | $ | 138 | $ | 785 | (82) | % | $ | 416 | $ | 1,490 | (72) | % |
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Agribusiness segment Net sales decreased 11%, to $9,657 million for the three months ended June 30, 2024. The net decrease was primarily due to the following:
*•*In Processing, Net sales decreased 15%, primarily due to lower average sales prices experienced in all regions for our global soybean oilseed processing businesses as well as our Europe softseed businesses, driven by relative price
stabilization as a result of supply and demand rebalancing. The above decreases were slightly offset by higher volumes primarily driven from increased activity in our Europe softseed business at our Ukrainian facilities.
- In Merchandising, Net sales increased 1%, primarily due to an increase in volumes, due to fewer supply constraints compared to the prior period in our global corn, wheat, and oils businesses. This increase was partially offset by lower average sales prices in our global corn, wheat, and oils businesses.
Cost of goods sold decreased 5%, to $9,368 million for the three months ended June 30, 2024. The net decrease was primarily due to the following:
-
In Processing, Cost of goods sold decreased 10%, primarily due to lower Net sales. The decrease was partially offset by unfavorable mark-to-market results in the current period as well as the lack of mark-to-market gains from the recovery of inventory in Ukraine recognized in the prior period.
-
In Merchandising, Cost of goods sold increased 9%, primarily due to unfavorable mark-to-market results as well as by higher sales volumes as described in Net sales above.
Other income (expense) - net was income of $56 million for the three months ended June 30, 2024, compared to income of $7 million for the three months ended June 30, 2023. The increase was primarily in our Processing business, due to gains in Argentina related to foreign currency positioning.
Segment EBIT decreased 82%, to $138 million for the three months ended June 30, 2024. The net decrease was primarily due to the following:
-
In Processing, a decrease of 79% was primarily due to lower Gross profit, driven by lower margins in our global soybean oilseed processing businesses, partially offset by an increase in other income as highlighted above.
-
In Merchandising, a decrease of 92% was primarily due to lower Gross profit, driven by decreased results across all of our businesses.
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Agribusiness segment Net sales decreased 11%, to $19,397 million for the six months ended June 30, 2024. The net decrease was primarily due to the following:
*•*In Processing, Net sales decreased 13%, primarily due to lower average sales prices experienced in all regions for our global soybean oilseed processing businesses as well as our Europe softseed businesses, driven by relative price stabilization as a result of supply and demand rebalancing, in addition to lower volumes in our global soybean oilseed processing businesses. The above decreases were slightly offset by higher volumes in our Europe softseed business primarily driven from increased activity at our Ukrainian facilities.
- In Merchandising, Net sales decreased 3%, primarily due to lower average sales prices in our global corn, wheat, and oil businesses. The decrease was partially offset by an increase in volumes, primarily due to fewer supply constraints compared to the prior period in our global corn, wheat, and oils businesses.
Cost of goods sold decreased 6% to $18,654 million for the six months ended June 30, 2024. The net decrease was primarily due to the following:
-
In Processing, Cost of goods sold decreased 8%, primarily due to lower Net sales. The decrease was partially offset by unfavorable mark-to-market results in the current period as well as the lack of mark-to-market gains from the recovery of inventory in Ukraine recognized in the prior period.
-
In Merchandising, Cost of goods sold decreased 1%, primarily due to lower Net sales, as further described above.
Foreign exchange (losses) gains - net decreased 304% to a loss of $101 million for the six months ended June 30, 2024. The net loss in the current year was the result of losses in our Processing business, primarily due to the impact of a stronger U.S. dollar on U.S. dollar-denominated loans payable in non-U.S. dollar functional currency operations.
Other income (expense) - net was income of $109 million for the six months ended June 30, 2024 compared to income of $18 million for the six months ended June 30, 2023. The increase was primarily due to gains in Argentina related to foreign currency positioning.
Segment EBIT decreased 72% to $416 million for the six months ended June 30, 2024. The net increase was primarily due to the following:
*•*In Processing, a decrease of 75% was primarily due to lower Gross profit, driven by lower margins in our global soybean oilseed processing businesses as well as lower foreign exchange results as described above, partially offset by an increase in Other income (expense) - net as highlighted above.
- In Merchandising, a decrease of 57% was primarily due lower Gross profit, driven by lower results in our global corn and global wheat businesses.
Refined and Specialty Oils Segment
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (US$ in millions, except volumes) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
| Volumes (in thousand metric tons) | 2,300 | 2,212 | 4 | % | 4,495 | 4,358 | 3 | % | |||||||||||||||||||||||||||
| Net sales | $ | 3,121 | $ | 3,601 | (13) | % | $ | 6,361 | $ | 7,489 | (15) | % | |||||||||||||||||||||||
| Cost of goods sold | (2,806) | (3,268) | (14) | % | (5,687) | (6,814) | (17) | % | |||||||||||||||||||||||||||
| Gross profit | 315 | 333 | (5) | % | 674 | 675 | — | % | |||||||||||||||||||||||||||
| Selling, general and administrative expense | (100) | (98) | 2 | % | (200) | (193) | 4 | % | |||||||||||||||||||||||||||
| Foreign exchange (losses) gains – net | (2) | 5 | (140) | % | (13) | 10 | (230) | % | |||||||||||||||||||||||||||
| EBIT attributable to noncontrolling interests | (12) | (7) | 71 | % | (18) | (11) | 64 | % | |||||||||||||||||||||||||||
| Other income (expense) – net | (16) | (16) | — | % | (32) | (31) | 3 | % | |||||||||||||||||||||||||||
| Income (loss) from affiliates | — | — | — | % | — | — | — | % | |||||||||||||||||||||||||||
| Total Refined and Specialty Oils Segment EBIT | $ | 185 | $ | 217 | (15) | % | $ | 411 | $ | 450 | (9) | % |
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Refined and Specialty Oils segment Net sales decreased 13%, to $3,121 million for the three months ended June 30, 2024. The decrease was primarily due to lower sales prices in all regions, driven by relative price stabilization and increased supply, partially offset by increased volumes due to expanded capacity at our Avondale refinery.
Cost of goods sold decreased 14%, to $2,806 million for the three months ended June 30, 2024. The decrease was primarily due to lower prices in all regions, as described for Net sales above, partially offset by unfavorable mark-to-market results.
Segment EBIT decreased 15% to $185 million for the three months ended June 30, 2024. The decrease was primarily due to lower Gross profit driven by lower margins in our soybean oil refining businesses.
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Refined and Specialty Oils segment Net sales decreased 15%, to $6,361 million for the six months ended June 30, 2024. The decrease was primarily due to lower average sales prices in all regions, driven by prices stabilizing and increased supply, partially offset by increased volumes due to expanded capacity at our Avondale refinery.
Cost of goods sold decreased 17%, to $5,687 million for the six months ended June 30, 2024. The decrease in Cost of goods sold was primarily due to lower prices in all regions, as described in Net sales above, in addition to more favorable mark-to-market results.
Segment EBIT decreased 9%, to $411 million for the six months ended June 30, 2024. Although Gross profit remained consistent between periods, the decrease was primarily due to unfavorable Foreign exchange (losses) gains - net, driven by the devaluation of the Egyptian pound in the first quarter of 2024.
Milling Segment
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (US$ in millions, except volumes) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
| Volumes (in thousand metric tons) | 971 | 844 | 15 | % | 1,845 | 1,665 | 11 | % | |||||||||||||||||||||||||||
| Net sales | $ | 401 | $ | 490 | (18) | % | $ | 782 | $ | 1,005 | (22) | % | |||||||||||||||||||||||
| Cost of goods sold | (335) | (450) | (26) | % | (656) | (934) | (30) | % | |||||||||||||||||||||||||||
| Gross profit | 66 | 40 | 65 | % | 126 | 71 | 77 | % | |||||||||||||||||||||||||||
| Selling, general and administrative expense | (24) | (24) | — | % | (49) | (45) | 9 | % | |||||||||||||||||||||||||||
| Foreign exchange (losses) gains – net | (2) | (1) | 100 | % | (2) | (1) | 100 | % | |||||||||||||||||||||||||||
| EBIT attributable to noncontrolling interests | — | 1 | (100) | % | — | 1 | (100) | % | |||||||||||||||||||||||||||
| Other income (expense) – net | (1) | (2) | (50) | % | (3) | (3) | — | % | |||||||||||||||||||||||||||
| Income (loss) from affiliates | (1) | — | (100) | % | (1) | — | (100) | % | |||||||||||||||||||||||||||
| Total Milling Segment EBIT | $ | 38 | $ | 14 | 171 | % | $ | 71 | $ | 23 | 209 | % |
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Milling segment Net sales decreased 18%, to $401 million for the three months ended June 30, 2024. The decrease was primarily due to lower sales prices in both our South American wheat milling and North American corn milling businesses. These decreases were partially offset by an increase in volumes across both regions.
Cost of goods sold decreased 26%, to $335 million for the three months ended June 30, 2024. The decrease was primarily due to lower sales prices, as described for Net sales above, as well as more favorable mark-to-market results.
Segment EBIT increased 171%, to $38 million for the three months ended June 30, 2024. The increase was primarily due to higher Gross profit driven by South America, as described above.
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Milling segment Net sales decreased 22%, to $782 million for the six months ended June 30, 2024. The decrease was primarily due to lower sales prices in both our South American wheat milling and North American corn milling businesses. These decreases were partially offset by an increase in volumes across both regions.
Cost of goods sold decreased 30%, to $656 million for the six months ended June 30, 2024. The decrease was primarily due to lower sales prices, as described for Net sales above, in addition to more favorable mark-to-market results.
Segment EBIT increased 209%, to $71 million for the six months ended June 30, 2024. The increase was primarily due to higher Gross profit driven by South America, as described above.
Corporate and Other
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (US$ in millions) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
| Net sales | $ | 13 | $ | 11 | 18 | % | $ | 26 | $ | 20 | 30 | % | |||||||||||||||||||||||
| Cost of goods sold | (20) | (18) | 11 | % | (31) | (27) | 15 | % | |||||||||||||||||||||||||||
| Gross profit | (7) | (7) | — | % | (5) | (7) | (29) | % | |||||||||||||||||||||||||||
| Selling, general and administrative expense | (174) | (147) | 18 | % | (333) | (252) | 32 | % | |||||||||||||||||||||||||||
| Foreign exchange (losses) gains – net | 6 | (6) | 200 | % | 1 | (1) | 200 | % | |||||||||||||||||||||||||||
| EBIT attributable to noncontrolling interests | 1 | 1 | — | % | 2 | 1 | 100 | % | |||||||||||||||||||||||||||
| Other income (expense) – net | 18 | 21 | (14) | % | 51 | 41 | 24 | % | |||||||||||||||||||||||||||
| Income (loss) from affiliates | 1 | (17) | 106 | % | 1 | (17) | 106 | % | |||||||||||||||||||||||||||
| Total Corporate and Other EBIT | $ | (155) | $ | (155) | — | % | $ | (283) | $ | (235) | (20) | % |
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Corporate and Other EBIT remained flat, a loss of $155 million for both the three months ended June 30, 2024 and June 30, 2023. Although Total Corporate and Other EBIT remained consistent between periods, SG&A expense increased by 18%, primarily driven by increases related to acquisition and integration costs associated with the announced acquisition of Viterra. The company recognized acquisition and integrations costs of $62 million, and $18 million for the three months ended June 30, 2024, and 2023, respectively. The increase described above was offset by impairment charges in the prior year of $16 million, in Income (loss) from affiliates, related to the impairment of a minority investment in Australian Plant Proteins, a start-up manufacturer of novel protein ingredients.
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Segment EBIT decreased 20%, to a loss of $283 million for the six months ended June 30, 2024. The decrease was primarily driven by an increase in SG&A expense resulting from increased acquisition and integration costs associated with the announced acquisition of Viterra. The company recognized acquisition and integrations costs of $123 million, and $18 million for the six months ended June 30, 2024, and 2023, respectively. The increase described above was partially offset by impairment charges in the prior year of $16 million, in Income (loss) from affiliates, related to the impairment of a minority investment in Australian Plant Proteins, a start-up manufacturer of novel protein ingredients.
Non-core Segment
Sugar and Bioenergy Segment
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (US$ in millions) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
| Net sales | $ | 49 | $ | 72 | (32) | % | $ | 92 | $ | 136 | (32) | % | |||||||||||||||||||||||
| Cost of goods sold | (48) | (70) | (31) | % | (90) | (134) | (33) | % | |||||||||||||||||||||||||||
| Gross profit | 1 | 2 | (50) | % | 2 | 2 | — | % | |||||||||||||||||||||||||||
| Selling, general and administrative expense | (1) | — | 100 | % | (1) | — | 100 | % | |||||||||||||||||||||||||||
| Other income (expense) – net | — | 2 | (100) | % | — | 2 | (100) | % | |||||||||||||||||||||||||||
| Income (loss) from affiliates | (21) | 47 | (145) | % | 2 | 66 | (97) | % | |||||||||||||||||||||||||||
| Total Sugar and Bioenergy Segment EBIT | $ | (21) | $ | 51 | (141) | % | $ | 3 | $ | 70 | (96) | % |
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Segment EBIT decreased 141%, to a loss of $21 million for the three months ended June 30, 2024. The decrease was due to less favorable results from our investment in BP Bunge Bioenergia, primarily resulting from the release of a tax valuation allowance in the prior period, higher foreign exchange losses on U.S. dollar denominated debt of BP Bunge Bioenergia in the current period, and lower gross margins compared to the prior year due to lower ethanol prices.
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Segment EBIT decreased 96%, to $3 million for the six months ended June 30, 2024. The decrease was due to less favorable results from our investment in BP Bunge Bioenergia, primarily resulting from the release of a tax valuation allowance in the prior period, as well as higher foreign exchange losses on U.S. dollar denominated debt of BP Bunge Bioenergia in the current period.
Interest - A summary of consolidated interest income and expense follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (US$ in millions) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||||||||||||
| Interest income | $ | 37 | $ | 40 | (8) | % | $ | 79 | $ | 83 | (5) | % | |||||||||||||||||||||||
| Interest expense | (123) | (129) | (5) | % | (231) | (241) | (4) | % |
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Interest income decreased 8%, to $37 million for the three months ended June 30, 2024. Interest expense decreased by 5%, to $123 million for the three months ended June 30, 2024. Interest income and Interest expense are consistent with the prior period as a result of similar debt levels across periods and interest rates remaining substantially flat.
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Interest income decreased 5%, to $79 million for the six months ended June 30, 2024. Interest expense decreased 4%, to $231 million for the six months ended June 30, 2024. Interest income and Interest expense are consistent with the prior period as a result of similar debt levels and interest rates remaining substantially flat.
Liquidity and Capital Resources
Our main financial objectives are to prudently manage financial risks, ensure consistent access to liquidity and minimize cost of capital in order to efficiently finance our business and maintain balance sheet strength. We generally finance our ongoing operations with cash flows generated from operations, issuances of commercial paper, borrowings under various bilateral and syndicated revolving credit facilities, term loans, and proceeds from the issuance of senior notes. Acquisitions and long-lived assets are generally financed with a combination of equity and long-term debt.
Working Capital
| As of | |||||||||||||||||
| (US$ in millions, except current ratio) | June 30, 2024 | June 30, 2023 | December 31, 2023 | ||||||||||||||
| Cash and cash equivalents | $ | 1,161 | $ | 1,330 | $ | 2,602 | |||||||||||
| Trade accounts receivable, net | 2,277 | 2,599 | 2,592 | ||||||||||||||
| Inventories | 8,057 | 8,806 | 7,105 | ||||||||||||||
| Other current assets | 3,957 | 4,465 | 4,051 | ||||||||||||||
| Total current assets | $ | 15,452 | $ | 17,200 | $ | 16,350 | |||||||||||
| Short-term debt | $ | 949 | $ | 667 | $ | 797 | |||||||||||
| Current portion of long-term debt | 5 | 4 | 5 | ||||||||||||||
| Trade accounts payable | 3,429 | 4,248 | 3,664 | ||||||||||||||
| Current operating lease obligations | 300 | 370 | 308 | ||||||||||||||
| Other current liabilities | 2,923 | 3,002 | 2,913 | ||||||||||||||
| Total current liabilities | $ | 7,606 | $ | 8,291 | $ | 7,687 | |||||||||||
| Working capital**(1)** | $ | 7,846 | $ | 8,909 | $ | 8,663 | |||||||||||
| Current ratio**(1)** | 2.03 | 2.07 | 2.13 |
(1) Working capital is defined as Total current assets less Total current liabilities; Current ratio represents Total current assets divided by Total current liabilities.
Working capital was $7,846 million at June 30, 2024, a decrease of $817 million from working capital of $8,663 million at December 31, 2023, and a decrease of $1,063 million from working capital of $8,909 million at June 30, 2023.
Cash and Cash Equivalents - Cash and cash equivalents were $1,161 million at June 30, 2024, a decrease of $1,441 million from $2,602 million at December 31, 2023, and a decrease of $169 million from $1,330 million at June 30, 2023. Cash balances are managed in accordance with our investment policy, the objectives of which are to preserve the principal value of our cash assets, maintain a high degree of liquidity, and deliver competitive returns subject to prevailing market conditions. Cash balances are typically invested in short-term deposits, money market funds, and commercial paper programs with highly-rated institutions and in U.S. government securities. Please refer to the Cash Flows section of this report, below, for details regarding the primary factors giving rise to the change in Cash and cash equivalents during the six months ended June 30, 2024.
Trade accounts receivable, net - Trade accounts receivable, net were $2,277 million at June 30, 2024, a decrease of $315 million from $2,592 million at December 31, 2023, and a decrease of $322 million from $2,599 million at June 30, 2023. The decrease from December 31, 2023 and June 30, 2023, was primarily due to decreased Net sales in the current period driven by factors described in the Segment Overview & Results of Operations above.
Inventories - Inventories were $8,057 million at June 30, 2024, an increase of $952 million from $7,105 million at December 31, 2023, and a decrease of $749 million from $8,806 million at June 30, 2023. The increase from December 31, 2023 was primarily due to increased volumes in conjunction with the timing of the South American harvest, partially offset by lower average commodity prices. The decrease from June 30, 2023, was primarily due to lower average commodity prices partially offset by higher volumes as of June 30, 2024.
RMI comprise agricultural commodity inventories, such as soybeans, soybean meal, soybean oil, palm oil, corn, and wheat that are readily convertible to cash because of their commodity characteristics, widely available markets and international pricing mechanisms. Total RMI reported at fair value was $6,776 million, $5,837 million, and $7,196 million
at June 30, 2024, December 31, 2023, and June 30, 2023, respectively (see Note 5 - Inventories to our condensed consolidated financial statements).
Other current assets - Other current assets were $3,957 million at June 30, 2024, a decrease of $94 million from $4,051 million at December 31, 2023, and a decrease of $508 million from $4,465 million at June 30, 2023. The decrease from December 31, 2023, was primarily due to a decrease in secured advances to suppliers, lower unrealized gains on derivative contracts at fair value and a decrease in prepaid expenses. The decrease was partially offset by an increase in margin deposits and prepaid commodity purchase contracts. The decrease from June 30, 2023, was primarily due to significantly lower unrealized gains on derivative contracts, as well as a decrease in secured advances to suppliers, partially offset by increases in margin deposits, marketable securities and other short-term investments, and prepaid commodity purchase contracts.
Short-term debt - Short-term debt, including the Current portion of long-term debt, was $954 million at June 30, 2024, an increase of $152 million from $802 million at December 31, 2023, and an increase of $283 million from $671 million at June 30, 2023. The higher short-term debt levels at June 30, 2024 compared to December 31, 2023 and June 30, 2023, were due to higher borrowings by Bunge operating companies on local bank lines of credit to meet working capital funding requirements.
Trade accounts payable - Trade accounts payable were $3,429 million at June 30, 2024, a decrease of $235 million from $3,664 million at December 31, 2023, and a decrease of $819 million from $4,248 million at June 30, 2023. The decrease from December 31, 2023 and June 30, 2023 was primarily due to lower average inventory prices during the current period along with depreciation of the Brazilian Real and timing of payments, partially offset by increased inventory volumes in South America as discussed above.
Other current liabilities - Other current liabilities were $2,923 million at June 30, 2024, an increase of $10 million from $2,913 million at December 31, 2023, and a decrease of $79 million from $3,002 million at June 30, 2023. The increase from December 31, 2023, was primarily due to higher accrued dividends (see Note 17 - Equity for further details) and a $103 million refundable deposit received in relation to the planned sale of BP Bunge Bioenergia (see Note 2 - Acquisitions and Dispositions for further details), partially offset by a decrease in accrued liabilities due to variable compensation accrual timing and income taxes payable. The decrease from June 30, 2023, was primarily due to significantly lower unrealized losses on derivative contracts, partially offset by higher accrued dividends and a refundable deposit received in relation to the planned sale of BP Bunge Bioenergia as discussed above.
Debt
As highlighted in Note 13 - Debt and discussed further below, we utilize a variety of debt financing structures to maintain financial flexibility to meet our various financial objectives.
Revolving Credit Facilities — At June 30, 2024, we had $5,665 million unused and available committed borrowing capacity, comprised of committed revolving credit facilities. The following table summarizes these facilities as of the periods presented:
| (US$ in millions) | Committed Capacity | Incremental Commitments**(2)** | Borrowings Outstanding | |||||||||||||||||||||||||||||
| Revolving Credit Facilities**(1)** | Maturities | June 30, 2024 | June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||
| $1.1 Billion 364-day Revolving Credit Agreement (3) | 2025 | $ | 1,100 | $ | — | $ | — | $ | — | |||||||||||||||||||||||
| $3.2 Billion 5-year Revolving Credit Agreement (3) | 2029 | 1,950 | 1,250 | — | — | |||||||||||||||||||||||||||
| $3.5 Billion 3-year Revolving Facility Agreement (3) | 2026 | 1,750 | 1,750 | — | — | |||||||||||||||||||||||||||
| $865 Million 5-year Revolving Credit Agreement | 2026 | 865 | — | — | — | |||||||||||||||||||||||||||
| Total Revolving Credit Facilities | $ | 5,665 | $ | 3,000 | $ | — | $ | — | ||||||||||||||||||||||||
(1)The short-term credit ratings of the commercial paper program require Bunge to keep same day unused committed borrowing capacity under its long-term committed credit facilities in an amount greater or equal to the amount of commercial paper issued and outstanding.
(2)Incremental commitments are available to be drawn on and after the date Bunge completes its acquisition of Viterra, subject to the satisfaction of certain conditions.
(3)See Note 13 - Debt for a description of current period activity related to these facilities.
Short and long-term debt —
| As of | |||||||||||||||||
| US$ in millions | June 30, 2024 | June 30, 2023 | December 31, 2023 | ||||||||||||||
| Short-term debt | $ | 949 | $ | 667 | $ | 797 | |||||||||||
| Long-term debt, including current portion | 4,091 | 4,282 | 4,085 | ||||||||||||||
| Total debt | $ | 5,040 | $ | 4,949 | $ | 4,882 | |||||||||||
| Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | Year Ended December 31, 2023 | |||||||||||||||
| Average total debt outstanding | $ | 5,132 | $ | 5,408 | $ | 5,293 |
Our total debt was $5,040 million at June 30, 2024, an increase of $158 million from $4,882 million at December 31, 2023, and an increase of $91 million from $4,949 million at June 30, 2023. The higher total debt levels at June 30, 2024 compared to December 31, 2023 and June 30, 2023 were primarily due to an increase in short-term bank borrowings as described above.
The following table summarizes additional information on our short-term debt at June 30, 2024.
| (US$ in millions) | Outstanding Balance at June 30, 2024 | Weighted Average Interest Rate at June 30, 2024 | Highest Balance Outstanding During Quarter Ended June 30, 2024 | Average Balance During Quarter Ended June 30, 2024 | Weighted Average Interest Rate During Quarter Ended June 30, 2024 | |||||||||||||||||||||||||||
| Bank borrowings (1) | $ | 949 | 12.20 | % | $ | 1,010 | $ | 947 | 10.08 | % | ||||||||||||||||||||||
| Commercial paper | — | — | % | 853 | 213 | 5.52 | % | |||||||||||||||||||||||||
| Total | $ | 949 | $ | 1,160 |
(1) Includes $376 million of local currency bank borrowings in certain European, South American, and Asia-Pacific countries at a weighted average interest rate of 21.16% as of June 30, 2024.
From time to time, through our financing subsidiaries, we enter into bilateral short-term credit lines as necessary. At June 30, 2024, there were no borrowings outstanding under these bilateral short-term credit lines.
In addition, Bunge's operating companies had $949 million and $797 million in short-term borrowings outstanding from local bank lines of credit at June 30, 2024, and December 31, 2023, respectively, to support working capital requirements.
As described in Note 2 - Acquisitions and Dispositions, Bunge has secured a total of $8.0 billion in Acquisition Financing. For further details on the Acquisition Financing, refer to Note 13 - Debt. Bunge intends to use a portion of the Acquisition Financing to fund the cash portion of the Transaction Consideration and the remainder for repayment of certain indebtedness of Viterra which is expected to be repaid at closing.
Credit Ratings — Bunge’s debt ratings and outlook by major credit rating agencies at June 30, 2024, were as follows:
| Short-term Debt (1) | Long-term Debt | Outlook | ||||||||||||||||||
| Standard & Poor’s | A-2 | BBB+ | Positive | |||||||||||||||||
| Moody’s | P-2 | Baa2 | Review for Upgrade | |||||||||||||||||
| Fitch | F-2 | BBB | Rating Watch Positive |
(1) Short-term debt rating applies only to the commercial paper program with Bunge Limited Finance Corp. as the issuer.
Following the announcement of the Acquisition, all three rating agencies reviewed our credit ratings and published updated credit opinions on us, reflecting their views of the credit profile of the Company both on a current standalone basis, and a pro-forma at closing basis. Based on its review, Standard and Poor's upgraded our credit rating to BBB+ and further placed us on positive outlook for an upgrade to A-. Moody’s kept our credit rating unchanged at Baa2 and placed us on a review for upgrade to Baa1. Fitch kept our credit rating unchanged at BBB and placed us on credit watch positive for an upgrade to BBB+. We expect Standard and Poor's, Moody’s, and Fitch to resolve their positive outlook, review for upgrade and credit watch positive status respectively at or before the closing date of the acquisition, based on a variety of factors including but not limited to our operating performance, our financial position and high certainty that the Acquisition will close.
Our debt agreements do not have any credit rating downgrade triggers that would accelerate maturity of our debt. However, credit rating downgrades would increase borrowing costs under our syndicated credit facilities (a credit rating upgrade, on the other hand, would reduce our borrowing cost) and, depending on their severity, could impede our ability to obtain credit facilities or access the capital markets in the future on competitive terms. A significant increase in our borrowing costs could impair our ability to compete effectively in our business relative to competitors with higher credit ratings.
Our credit facilities and certain senior notes require us to comply with specified financial covenants including minimum current ratio, maximum debt to capitalization ratio and limitations on secured indebtedness. We were in compliance with these covenants as of June 30, 2024.
Equity
Total equity is set forth in the following table:
| (US$ in millions) | June 30, 2024 | December 31, 2023 | ||||||||||||
| Equity: | ||||||||||||||
| Registered shares | $ | 1 | $ | 1 | ||||||||||
| Additional paid-in capital | 5,869 | 5,900 | ||||||||||||
| Retained earnings | 12,005 | 12,077 | ||||||||||||
| Accumulated other comprehensive income (loss) | (6,446) | (6,054) | ||||||||||||
| Treasury shares, at cost | (1,427) | (1,073) | ||||||||||||
| Total Bunge shareholders’ equity | 10,002 | 10,851 | ||||||||||||
| Noncontrolling interest | 982 | 963 | ||||||||||||
| Total equity | $ | 10,984 | $ | 11,814 |
Total Bunge shareholders’ equity was $10,002 million at June 30, 2024, compared to $10,851 million at December 31, 2023, a decrease of $849 million. The decrease was primarily due to $400 million in repurchases of registered shares, $392 million of loss in Other comprehensive income (loss), and $385 million of declared dividends to shareholders, as described in Note 17 - Equity, partially offset by $314 million of Net income (loss) attributable to Bunge.
Share repurchase program - As noted in Note 2 - Acquisitions and Dispositions, on June 12, 2023, Bunge Limited's Board of Directors approved the expansion of an existing $500 million program for the repurchase of Bunge’s issued and outstanding shares. At the time, approximately $300 million of capacity for the repurchase of Bunge shares remained available under the existing program and Bunge Limited's Board of Directors approved the expansion of the program by an additional $1.7 billion, for an aggregate unutilized capacity of $2.0 billion at June 12, 2023. The program continues to have an indefinite term. During the six months ended June 30, 2024, Bunge repurchased 4,376,974 shares for $400 million. As of June 30, 2024, 11,893,950 shares were repurchased for $1.2 billion and $1.0 billion remained outstanding for repurchases under the program.
Cash Flows
| Six Months Ended June 30, | ||||||||||||||
| (US$ in millions) | 2024 | 2023 | ||||||||||||
| Cash provided by (used for) operating activities | $ | (480) | $ | 472 | ||||||||||
| Cash provided by (used for) investing activities | (548) | (384) | ||||||||||||
| Cash provided by (used for) financing activities | (388) | 92 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (6) | 28 | ||||||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | (1,422) | $ | 208 |
Our cash flows from operations vary depending on, among other items, the market prices and timing of purchases and sales of our inventories. Generally, during periods when commodity prices are rising, our Agribusiness operations require increased use of cash to support working capital to acquire inventories and fund daily settlement requirements on exchange traded futures that we use to minimize price risk related to purchases and sales of our inventories.
During the six months ended June 30, 2024, our cash and cash equivalents and restricted cash decreased by $1,422 million, compared to an increase of $208 million during the six months ended June 30, 2023, as further explained below.
Operating: Cash used for operating activities was $480 million for the six months ended June 30, 2024, a decrease of $952 million, compared to cash provided by operating activities of $472 million for the six months ended June 30, 2023. The decrease was primarily driven by lower reported net income and more cash used for working capital funding, driven by increased inventory volumes and the timing of payments, partially offset by lower average inventory prices, during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Certain of our non-U.S. operating subsidiaries are primarily funded with U.S. dollar-denominated debt, while currency risk is hedged with U.S. dollar-denominated assets. The functional currency of our operating subsidiaries is generally the local currency. The financial statements of our subsidiaries are calculated in the functional currency, and when the local currency is the functional currency, translated into U.S. dollars. U.S. dollar-denominated loans are remeasured into their respective functional currencies at exchange rates at the applicable balance sheet date. Also, certain of our U.S. dollar functional operating subsidiaries outside the U.S. are partially funded with local currency borrowings, while the currency risk is hedged with local currency denominated assets. Local currency loans in U.S. dollar functional currency subsidiaries outside the U.S. are remeasured into U.S. dollars at the exchange rate on the applicable balance sheet date. The resulting gain or loss is included in our condensed consolidated statements of income as Foreign exchange (losses) gains – net. For the six months ended June 30, 2024, we recorded a foreign currency loss on our debt of $103 million, and for the six months ended June 30, 2023, we recorded a foreign currency gain on our debt of $174 million, which were included as adjustments to reconcile Net income to Cash provided by (used for) operating activities in the line item Foreign exchange (gain) loss on net debt in our condensed consolidated statements of cash flows. These adjustments are required as the gains and losses are non-cash items that arise from financing activities and therefore will have no impact on cash flows from operations.
Investing: Cash used for investing activities was $548 million for the six months ended June 30, 2024, a decrease of $164 million, compared to cash used for investing activities of $384 million for the six months ended June 30, 2023. The decrease was primarily due to lower proceeds from the disposal of businesses and property, plant and equipment during the six months ended June 30, 2024, as compared to proceeds received on the sale of our Russian oilseed business during the six months ended June 30, 2023, in addition to higher net payments for investments. These decreases were partially offset by higher proceeds from investments in affiliates related to the refundable deposit received for the planned sale of BP Bunge Bioenergia as further explained in Note 2 - Acquisitions and Dispositions.
Financing: Cash used for financing activities was $388 million for the six months ended June 30, 2024, a decrease of $480 million, compared to cash provided by financing activities of $92 million for the six months ended June 30, 2023. During the six months ended June 30, 2024, we received net cash proceeds of short and long-term debt of $191 million, primarily, short-term borrowings from local bank lines, repurchased $400 million of registered shares and paid $191 million in dividends to shareholders. During the six months ended June 30, 2023, we received net cash proceeds of short and long-term debt of $248 million, primarily from draws on long-term loans offset by the repayment of senior notes, and paid $188 million of dividends to shareholders.
Off-Balance Sheet Arrangements
Please refer to Note 15 - Commitments and Contingencies to our condensed consolidated financial statements for details concerning our off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Dividends
We paid a regular quarterly cash dividend distribution of $0.68 per share on June 3, 2024, to shareholders of record on May 20, 2024. On May 15, 2024, shareholders of Bunge Global SA approved a cash dividend distribution in the amount of $2.72 per share, payable in four equal quarterly installments of $0.68 per share beginning in the second quarter of fiscal year 2024 and ending in the first quarter of fiscal year 2025. The $0.68 per share dividend distribution represents a $0.0175, or 3%, increase from the Company's previously approved quarterly cash dividend declared prior to the Redomestication of $0.6625 per share.
Critical Accounting Policies and Estimates
Critical accounting policies are defined as those policies that are significant to our financial condition and results of operations and require management to exercise significant judgment. For a complete discussion of our accounting policies, see Note 1 to our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 22, 2024. For recent accounting pronouncements refer to Note 1 - Basis of Presentation, Principles of Consolidation, And Significant Accounting Policies, to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
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