2nd UPDATE:Bunge 4Q Profit Surges On Strong Agribusiness Results

Bunge Ltd.'s (BG) fourth-quarter earnings surged as the grain-processing company saw strong profit at its agribusiness division, while the fertilizer unit swung to a modest profit.

The results beat analysts' expectations, as the company became the latest grain merchandiser to show it is positioned to take advantage of tightening global crop supplies.

Tight grain supplies have a potential downside, as Bunge likely will have to pay more for commodities it resells and processes. But grain buyers are forced to turn to Bunge and other large competitors that have storage and transportation networks that allow them to source grain from around the world amid supply disruptions.

"Our team managed volatile markets well and our global asset network enabled us to be responsive to customers in the face of supply disruptions," said Alberto Weisser, Bunge's chairman and chief executive, during a conference call. Bunge was able to respond to a severe drought in the Black Sea region by shipping grain from North and South America, he added.

Agribusiness, Bunge's largest segment, reported earnings nearly sextupled on strong performance in the grain merchandising business, while oilseed processing weakened.

The surge in earnings echoes recent results from competitors such as Archer Daniels Midland Co. (ADM), which last week reported a 29% jump in earnings, led by its agricultural services segment, in which earnings tripled. Privately held Cargill Inc. also reported sharply higher quarterly profit in January.

Yet Bunge's shares fell Thursday, recently down 1% to $69.10. The company, which has had trouble meeting its own guidance in recent years, confirmed it won't issue guidance for this year after hinting at it last fall.

While executives said the company will continue to see strong results in its grain business due to tight global supplies, the remarks weren't as strong as recent commentary from Archer Daniels Midland and Cargill, Jefferies and Co. analyst Jeff Farmer said.

"If you listen to the context, the mosaic tells you (earnings) are going to have to come down," Farmer said.

Bunge's earnings slipped in its sugar and bioenergy unit, driven by lower sugarcane yields in Brazil that limited its ability to produce ethanol and because of mill start-up costs.

A drought in Brazil that decimated its sugarcane crop cost the company about $70 million during the 2010 fiscal year, Chief Financial Officer Drew Burke said. The lower sugarcane supplies increased costs and diminished sugar and ethanol volumes, he added.

The $70 million hit included losses from forward sales of sugar early in the year. Because of the crop shortfall, Bunge was unable to make deliveries later in the year.

Officials said the tight Brazilian sugarcane supplies will persist in 2011. But the outlook for Bunge's sugar operations is expected to improve, driven by Bunge's purchase of five sugar mills from Moema during 2010.

Bunge also saw its edible oils business earnings slide 61% absent prior-year gains from asset sales.

Its fertilizer unit swung to a profit of $1 million from a loss of $174 million a year earlier. The company last year sold off its fertilizer mines and is focusing more now on distribution, a move Weisser said will give more stability to the unit's earnings.

Bunge reported a profit of $301 million, up $11 million from a year earlier. On a per-share basis, which includes preferred dividend impacts, earnings were $1.95 from a year-earlier loss of 21 cents. Excluding write-downs and prior-year gains from asset sales, earnings were $1.99 a share from a loss of 55 cents. Revenue jumped 22% to $12.73 billion.

Analysts polled by Thomson Reuters most recently forecast earnings of $1.59 a share on revenue of $12.1 billion.

-By Ian Berry, Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com

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