Bunge bet in food to escape the volatility of grain

The American Bunge, one of the biggest agribusiness companies in the world, no longer satisfied only with the grain processing-want to become also a major "player" in ingredients and foods.
The company is searching for businesses that raise the participation of its revenue (before interest and taxes) in these segments for 35%, compared to the current 15%, according to the CEO of the company, Soren Schroder. According to him, the intention is to achieve this goal in the next three to five years.
The plans put the Bunge around other global agribusiness companies seeking new agreements in so far as the number of current transactions remodeling industry. This week, Bayer confirmed an hostile bid by Monsanto, which could create the largest chemical company and the world''s seeds. Also recently, the State-owned ChemChina closed the acquisition of Syngenta Switzerland, while DuPont and Dow hit a fusion-all those businesses still await approval from regulatory authorities.
Bunge''s approach, however, is different from that of its direct competitors. The company tries to reduce its dependence on trading activities and grain processing, their major business areas in sales and profits.
"It is clear the intention of wanting to build a portfolio more balanced and less dependent on agriculture," said Schroeder in an interview at the headquarters of the Bunge, in White Plains, New York. "So this is undoubtedly the way to reduce volatility". According to him, ingredients and food should contribute to higher returns and stable earnings.
Plans to generate more revenue from products with higher added value remain "absolutely intact," said the Executive, even with the difficulties of the company to move forward in the segment in 2015, with the brazilian economy in shambles, which reduced the demand for vegetable oils, for example.
"We still believe that the macroeconomic situation in Brazil will continue to impact negatively the demand in the country," said Brett Wong, an analyst at Piper Jaffray, of Boston. But cost cuts and acquisitions should help [in financial performance of Bunge, added.
Bunge purchased the manufacturer of oils Whole Harvest Foods in October last year and announced an agreement to purchase the controlling stake of the German Walter Rau, also in the segment of vegetable oils, in April this year.
"We need to do more of these acquisitions over the next two years," said Schroder. "Great deals with products of higher added value are not so obvious," he said. So, should focus on smaller transactions Bunge offering production and lower risk guarantees for capital contribution.
The CEO of Bunge also predicts an improvement in global soybean processing environment in the second half of this year and projected improvement in the company''s results as early as 2016, with a smooth recovery from August.