December 7, 2022

Bunge goes from the “correction” phase


ST. LOUIS – After two years of reorganizing, resizing the portfolio and getting the balance sheet where it needs to be – the so-called “fixed” phase – Bunge Ltd. is ready to embark on the “growth” phase, said Gregory A. Heckman, CEO.

The repair phase, Heckman said, was about increasing profits and improving the underlying earning capacity of the business from which to grow. In the growth phase, Bunge focuses on expanding its footprint and building its capacity.

“Now we come to the funny scene, don’t we? Mr. Heckman told attendees at the BMO Capital Markets Growth & ESG Conference held virtually on December 7.

With the right network, the right operating model and the right people, Bunge is now able to “focus maniacally outward,” Heckman said. This next phase for Bunge will mean “pulling all the levers of growth”, he added.

Specifically, Heckman said all options are on the table for growth, including organic projects, brownfield projects, entirely new projects, and mergers and acquisitions of all sizes.

“These are all open to us, and we will let the numbers lead where we should go,” he said.

He said mergers and acquisitions and debottlenecking will materialize faster, while brownfield projects and new facilities will take some time to contribute to profits.

“But if you look at the refined and specialty oils platform… we now have the ability to put aside some of the things that we used to do in raw materials,” he explained. “None of them are tall, but they’re all in our adjacencies, aren’t they?” So lecithins and tocopherols and some of the things that we do in infant nutrition are also working in… senior nutrition and sports nutrition. We continue to shake the ball on all of these things. And as we move forward, these are all good places for organic investments and / or targeted acquisitions. “

On the plant protein side, Bunge serves its customers and is successful with lipids, Heckman said. He also said the company has invested in its Creative Solutions Center to be able to work with not only its lipids but plant proteins as well, and in many cases, it is working with customers to bring these two products together.

“As we work with these clients backwards, a lot of these names you know today on existing GICs and some of those on disruptors and new clients, helping them because they worry about the long term when they see their own demand forecast that they will have enough supply, ”he said.

Mr Heckman said Bunge made minority investments to access the technology and considered larger mergers and acquisitions, although the latter were traded at high prices. The plan, however, is to stay disciplined, he said.

“We think we’ll probably create value there by doing something on the brownfield or new facility side, where it makes sense and grows with those customers over time,” he said. declared. “So the vegetable protein will be longer. We’ll enjoy it in the fat now, we’ll enjoy the vegetable protein chunk later.

Bunge also remains fully committed to his biggest business – providing renewable raw materials, including both products and services, Heckman said.

He said the company is examining all opportunities for its renewable fuels joint venture formed in September with Chevron Corp. As part of the joint venture, Bunge is expected to bring its soybean processing facilities to Destrehan, Louisiana and Cairo, Ill. Chevron, San Ramon, Calif., Is expected to contribute about $ 600 million in cash to the joint venture, which aims to establish a reliable supply chain from farmer to gas station for the two companies. The two companies plan to roughly double the combined capacity of the facilities to 7,000 tonnes per day by the end of 2024.

“We will start to look at a number of opportunities with them and maybe others that might prevent us from developing all of the things that will be important to meet the demand on the renewable diesel and renewable fuels side, and that will expand. cover crops, ”Heckman said. “It could be to build a pretreatment in one of our refineries or somewhere else, to develop the cheapest model to source all these other low CI (carbon intensity) raw materials. Because there will be different flows in the way these work and are mixed with or similar corn oils to take advantage of the logistics of soybean or canola oil. And we believe that these are places where we absolutely have the right to play. And with a partner like Chevron, we’re excited that these things are changing over time.

Moving forward, Heckman said the speed of change and the scale of change seen in the renewable fuels industry is like never before.

“I’m not sure we’ve seen it in our careers before, and we just think, with our footprint and our operating model and our focus in this space, we’re in the best position to take advantage of it, to serve the people. customers on food, feed and fuel, as they are all trying to lower their CI score, and this will get us to work all the way down the value chain, including with our farmer customer at the production level to change practices and to create regenerative agriculture, ”he said.