Bunge Global SA (BG) 2015 Q4 法說會逐字稿

Welcome to the fourth-quarter 2015 Bunge earnings conference call. My name is Vanessa, and I'll be your operator for today's call.

(Operator instructions)

Please note that this conference is being recorded. And I will now turn the call over to Mr. Mark Haden, Director of Investor Relations. Sir, you may begin.

Thank you, Vanessa; and thank you, everyone, for joining us this morning. Before we get started I want to inform you that we have prepared a slide presentation to accompany our discussion. It can be found in the Investors section of our website at bunge.com under Investor Presentations.

Reconciliations of non-GAAP measures disclosed verbally on this conference call to the most directly comparable GAAP financial measure are posted on our website in the Investors section.

I would like to direct you to slide 2 and remind you that today's presentation includes forward-looking statements that reflect Bunge's current views with respect to future events, financial performance, and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Bunge has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation. It encourages you to review these factors.

Participating on the call this morning are Soren Schroder, Chief Executive Officer; and Drew Burke, Chief Financial Officer. I'll now turn the call over to Soren.

Thank you, Mark and welcome to everybody.

In 2015, the Bunge team achieved important milestones. Record agribusiness EBIT, driven by strong results in Brazil and good risk management. Approximately $125 million in savings from performance improvement initiatives in all segments. Positive EBIT and free cash flow in sugar cane billing, which all contributed to a fourth quarter trailing ROIC of 10% in agribusiness and food, and an EVA of $152 million for Bunge Limited as a whole. With a strong foundation and the right focus, we expect to achieve modest earnings growth in 2016 and ROIC well in excess of WACC for our core agribusiness and food operations.

Some of the challenges we faced in 2015 will continue, and we are focused on improvement. We had a record year in Bunge Brazil, but economic contraction led to significantly reduced volumes and margins in our food business. It will take time for the economy to normalize, so we are restructuring and reducing costs. Our performance improvement programs in food and ingredients are generating real results, and we are convinced that the segment overall will see improved run rates as 2016 progresses.

With a larger share of global ag trade flowing from South America where we have strong position, the US trade export industry is likely to remain under pressure, and we are therefore taking steps to make our footprint more efficient and flexible. In China, we've made important improvement in 2015, but in general, crop margins remain weak despite strong demand growth. We are focused on improving efficiency, expanding our downstream activities, and being very disciplined on how we manage capacity.

There are also several positive market signals that play well to Bunge's strengths. Global demand for our core agribusiness products continues to grow; and South America, Bunge's largest region, will lead the market with big crops, large export flows, and good margins. Our food business will continue to grow in North America, Europe, and Asia, benefiting from leaner operations, consumer driven innovation, and tighter working relationships with key customers. In sugar, we're entering a period of declining stocks in the Brazilian industry. After several years of struggles, it's unlikely to respond with quick supply increases. So the outlook for sugar markets is constructive. We continue to improve our cost base in milling and the value of our footprint will eventually reflect these better fundamentals.

Near term, it's a mixed environment, but Bunge has structural advantages and clear path forward to perform well in 2016 and realize our full earnings potential going forward. First, we have an outstanding team that has proven its ability to manage the variety of market environments. Second, we're focused on the right things: standing for safety; driving best in class operations; enhancing our winning footprint; and achieving the right balance of businesses. Third, our strong balance sheet will enable us to move quickly when opportunities arise, and if the past is any precedent, they will. Finally, while margins are currently under pressure in some regions, global soy crush fundamentals are positive looking forward, and this is our biggest business.

Last year, global soy demand grew by 7%, and cross-utilization rates will continue to improve. We have paced our capacity increase as well, and will benefit due to our well-balanced and highly efficient footprint as industry and fundamentals improve. Global trade in grains and oilseeds also continue to grow, and as we return to more normal conditions in Brazil, foods and US grains, and we get the full benefit from our improvement programs across all segments, we see a clear line of sight to a $8.50 per share earnings power in the coming years.

We're guided by a clear strategy and a disciplined approach to capital allocation. CapEx is likely to grow in 2016 from the low levels of 2015. The accumulated CapEx for agribusiness and food in the 2015 to 2017 period will (inaudible) the $2.1 billion we had previously advised. We bought $100 million of our shares in January, and we expect that share buybacks will continue to be an ongoing part of our balanced approach.

Bunge is a safer, better performing and better balanced company today than we were a year ago. We have a strong foundation and the right focus, and I'm confident that we will continue to make great progress in 2016.

I would now like to turn it over to Drew for the financial highlights.

Let's turn to page 4 in the earnings highlights. Even with the challenging market conditions Soren discussed, our total adjusted segment EBIT for the year was $1.229 billion, and higher than the prior year's $1.206 billion. Agribusiness adjusted EBIT was a new record at $1.054 billion and is 18% higher than the prior year's $895 million, as both oilseeds and grains achieved increased results. This performance was driven by the strength of our soy processing in South American franchises. Soybean processing volumes increased 8% while grain volumes declined. Food and ingredients adjusted EBIT declined from $301 million in 2014 to $192 million in 2015, primarily reflecting difficult market conditions in Brazil and Eastern Europe. Sugar and Bioenergy had a loss of $22 million versus a loss of $35 million in the prior year. Importantly, our sugar milling business achieved positive EBIT and generated positive cash flow.

Our 2015 adjusted earnings per share was $4.83 versus $4.10 in 2014. In the quarter, our total adjusted segment EBIT was $337 million versus $397 million in the prior year. We reported $43 million of certain gains and charges in the quarter, primarily related to the impairment of an equity investment in a freight shipping company in Europe and goodwill impairment and restructuring charges in our Brazilian food business. Agribusiness adjusted segment EBIT for the quarter was $268 million versus $319 million in the prior year. Oilseed results were $185 million versus $197 million in the prior year. Soy processing results were higher in South America, Europe, and China.

US results and margins declined from last year's record as anticipated competition from Argentina pressured margins. Softseed margins in Europe remained under pressure from a combination of farmer retention of crops and excess rapeseed processing capacity. Grains adjusted EBIT declined from $122 million in 2014 to $83 million in 2015 due to lower margins and volumes in the United States, both by slow farmer selling and increased export competition.

Our ports and services operations performed well, benefiting from increased grain exports out of South America and the Black Sea. And food and ingredients adjusted EBIT declined from $83 million in 2014 to $46 million in 2015. While EBIT increased from the third quarter, the fourth quarter performance was lower than expected, as the recovery in the Brazilian market was slower than anticipated. Both our wheat milling and oil business had volumes and margins below prior year. Our North American and European food profits were in line with prior year as our performance improvement and customer focus efforts offset difficult market conditions and currency effects in Eastern Europe and a weaker peso in Mexico.

Our sugar segment had an adjusted EBIT of $10 million versus a loss of $21 million in the prior-year quarter. For the full year, sugar milling was both EBIT and cash flow positive, reflecting improvements in our agricultural and industrial operations and improved market conditions. Capital demand remains strong, and sugar and ethanol pricing have improved. Our Brazilian renewable oils joint venture incurred losses in the quarter and full year, as did our sugar and trading and merchandising operations, which faced challenging market conditions and aggressive competition. Our diluted adjusted earnings per share from continuing operations for the quarter was $1.49 versus $1.12 in the prior year.

Let's turn to page 5 and our return on invested capital. One of our leading objectives over the last years has been to increase our return on invested capital to a level above our weighted average cost of capital. As the chart shows, we made significant and consistent improvement over the last three years. While we have had some tailwinds from lower agricultural prices and currency, we have benefited from our disciplined approach to capital allocation, strong working capital management and increasing results. For total Bunge, our return on invested capital for 2015 was 8.3%, 1.3 points above our cost of capital. For our core agribusiness and food business, our 2015 return on invested capital is 10% and 3% over our WACC.

Let's turn to page 6 and our cash flow highlights. Our liquidity position remains strong. Cash provided by operating activities was $610 million, comprising $1.2 billion of funds from operations and an outflow of $593 million related to an increase in working capital. The increased working capital was primarily related to grain origination activities in South America. Additionally, we had $4.3 billion of financing available under our committed credit lines at December 31, 2015.

Let's turn to page 7 and our capital allocation process. Our first priority is to maintain a strong balance sheet with an investment grade credit rating. We are pleased that we're now rated the equivalent of BBB stable by all the agencies. We have been disciplined in allocating our capital to the activities that will maximize long-term value for our shareholders. In 2015, we returned $549 million to shareholders through dividends and share repurchases. We have purchased $600 million of shares in 2014 and 2015 combined, and have purchased an additional $100 million in the first part of 2016. Our M&A transactions totaled $392 million in 2015, primarily focused on foods, through the acquisition of a wheat milling business in Brazil and a smaller transaction in the United States that increased our value-added capacity. Our CapEx was a relatively modest $649 million, as we both deferred and reduced spending.

Let's turn to page 8 and the outlook. While the market environment was difficult in some of our businesses, we expect to achieve modest earnings growth and provide a return on investment well above our cost of capital for our core agribusiness and food operations.

In agribusiness, markets are well supplied, but demand remains strong. The USDA is projecting growth and consumption of 7% for soybean meal and 5% for soy oil. Soybean crush margins will be down from the recent highs, but still provide reasonable returns. South American results should be strong. Brazil will benefit from large crops, strong domestic meal demand, and a competitive global cost structure following the decline in the value of the real. Given the new government's policies and the peso devaluation, Argentina should significantly increase volumes. Near-term, US margins and export volumes will be under pressure from South American competition, but the new harvest should bring improvement. While demand in China is strong, margins remain under pressure as excess crushing capacity exists.

Softseed margins are likely to be mixed. Canadian canola margins should improve from 2015, but will remain below historical levels. Sunseed margins should improve with the new harvest, while rapeseed margins remain pressured due to weak biodiesel demand and overcapacity. In grains, South America should perform well, given the size of the crops, good farmer economics, our advantage footprint and cost position. Our US grains business should improve with new crops later in the year, but will remain under pressure from South American competition.

Moving to page 9. We are expecting foods to perform better in 2016, but not reach the levels achieved in 2014. Our oil business should perform better as markets stabilize and our cost improvement efforts yield results. Our milling businesses will benefit from the integration and contributions of our new acquisitions and the continued commitment to cost reduction and operational efficiency. In fertilizer, improved farmer profitability in Argentina and the change in export taxes on grains should encourage farmers to increase their purchases of crop inputs. Our sugar business is expected to grow both earnings and free cash flow. This is a most favorable environment we have had in a long time. Sugar prices are hedged at attractive levels; ethanol demand and pricing is favorable. Following the decline in the real, Brazil is once again the lowest-cost global sugar producer, and our costs will be lower as we see the benefits of our agricultural and industrial productivity program. As always, sugar results will be stronger in the second half of the year following the crop cycle.

While the markets will be tough in 2016, our underlying business model and continued commitment to operational excellence should allow us to continue to achieve earnings growth above cost of capital returns. We expect our results to be more weighted to the second half of the year as harvests arrive, food results achieve sequential improvement, and sugar follows the normal crop cycle.

We will now turn it back to Vanessa to take your questions.

Thank you.

(Operator Instructions)

We have our first question from David Driscoll, Citi Research. Please go ahead.

Good morning, guys. This is Cornell in with a few questions for David.

Hi, Cornell.

First, I just want to start out with a quick question on the guidance. In the prepared comments, you mentioned modest earnings growth for 2016. So, is that putting 2016 earnings in the range of [5 to 525]?

Cornell, we don't give guidance, as you know, so you can interpret that as you like. We have a strong business. We have fundamentals that are, in some parts of the world, very positive. South America clearly has the potential to deliver another very strong year for us. US is a big challenged for the next couple of quarters.

Improvement in softseeds in Canada and Europe should be in the horizon the second half of the year. Food business, we believe, will improve sequentially as we go through the year, and sugar has some upside as Drew mentioned.

There is reason to believe that our earnings could grow or will grow from 2015 levels. But exactly how much, at this point, it is difficult to say. It's early in the year, but the potential is there for another good year for us.

But by saying modest, you're basically saying, look we can have some growth, but it's hard to see anything double digits or greater. Is that a fair way to interpret it?

I wouldn't say -- the double digits is not impossible. It's not impossible. It's early in the year, Cornell, and we don't want to get too far ahead of ourselves.

But we have the potential. We have the footprint to have a very good year under the right circumstances, and many of the elements are in place. As I mentioned, South America clearly being the one.

Okay and then following up on that and going one year out, I know you've, in the past, communicated a target of $8.50 for 2017. Is that target still in play, or given your comments of possibly modest growth this year, do you think that 2017 objective may be too high at this point?

The $8.50, as I mentioned in my opening remarks, we believe is absolutely the potential of our current business platform and footprint. We can get there. The question is timing.

At this point, as we indicated also in the third-quarter call, 2017 will probably be a little bit too aggressive. So, it will be a bit beyond that, but the potential for agribusiness to get to the $1.4 billion and for foods to get to $400 million over a reasonable period of time here is absolutely there. And I think I described some of the elements that will make that happen.

The belief that our soy crush footprint, in particular, will continue to gain in value over time. The fact that our food businesses in Brazil, in particular, will return to more normal conditions, and that US grain will as well. Plus we have, as you know, several improvement programs across all the segments that deliver real results every quarter.

So, we can get to the $8.50 a share, but it will be extended beyond 2017. And exactly what they date that will be is just too difficult to predict that at the moment. We are committed to the number.

Okay, great. And then one last question, if I may. And it's focusing on the oilseed processing markets.

Given that we've heard very little news of any new meaningful capacity being built globally, why do you think the market got so out of balance so quickly between the third quarter and the fourth quarter in soy crush. And then, when you look at Argentina, how much new soy crush do you estimate has become available out of Argentina?

I think, in general, it's fair to say that the market has probably overreacted a bit on the downside in terms of global margins, and as a result of the Argentine, let's say freeing up of Argentina, as you mentioned correctly, global soy crush utilization rates continue to go up year-over-year. Last year was a big year for growth in soybean crushing globally, both in the US, but everywhere in the world.

And we can see how that continues over the next several years and that is one of the reason for our optimism in our earnings power. Because there is very little new capacity coming on stream, so the fundamentals are good medium-term. Short-term the freeing up of whatever 12 million to 15 million tons of soybeans that have been trapped in Argentina for a while has led to a first quarter Argentine crush that I think will be an all-time record.

And that avalanche of export meal and oil is what has put this very sudden pressure on crushing margins, particularly in the US, which last year supplied most of the world trade in that period. I think as we get into the second and third quarter, that will all normalize. And certainly the second half of the year, I think we will be back to healthier soy margins, in general.

In South America, they're pretty good in any event. It's really in the US that you felt the impact of this. So we're optimistic about long-term crush margins and utilization rates, and we think the second half of the year, maybe even starting in the second quarter, will be better than what we're seeing now.

Okay. Sounds good. Thank you.

And thank you. Our next question comes from Ann Duignan, JPMorgan.

Hi. Good morning.

Good morning.

Can we focus on Argentina again? Can you talk a little bit more about your outlook for Argentina's role in global exports, not just of meal, but also of wheat and corn, and what net impact could that have on Brazil and on your operations in Brazil?

Okay.

In terms of crush, it's clear that Argentina is back in style. First quarter crush will be extremely strong. Second and third quarter crush will be up a little bit, but in reality Argentina ran at capacity or close to it, even the last couple of years, despite the difficult economic conditions. So, I think most of the impact in Argentina we will be feeling early on. Beyond that, it's probably more about margin improvement relative to where we've been the last couple of years. So we think that soy crush in Argentina for us will be very good this year.

The impacts in the system of that is probably going to be more negative to the US than it is Brazil. Brazil still looks like it's going to be a very favorable crushing season. Strong domestic demand, and a lot of the beans have already been bought and priced for crush. So I think Argentina and Brazil combined will be a very strong season in crush.

And then the US will pick up, I believe, again in the second half or the fourth quarter as demands switches back there. So it's really a first-half effect, but it's mostly a positive one for us.

In terms of grains, the Argentine corn crop this year is a little bit less than it was last year, but with no export quotas, now, it will flow freely, and we believe that our share of those exports will grow, so that's a positive. And as we get into the second part of the year and the new crop wheat, we believe there will be a significant expansion of wheat production in Argentina coming into the fourth quarter really, the Nov/December period. And that will benefit both our operations in Argentina, but also our wheat milling business in Brazil, which will be back being 100% supplied, most likely by Argentine wheat flowing into Brazil, and as an extension of that argument, our new port and milling operation in Santos will be a direct beneficiary of that.

So overall, the Argentine freeing up, so to speak, we believe is a positive for us.

And thank you. Our next question comes from Adam Samuelson, Goldman Sachs.

Yes. Thanks. Good morning, everyone.

I want to come back to this idea of the $8.50 EPS target, which if I'm recalling correctly, was still completely ex sugar items, so comparable to the way you presented your returns ex sugar in the last couple of years.

You had basically flat NOPAT for three years, and your invested capital has gone down about $3.5 billion, largely on currency, because net income after dividends and repurchases has been modestly positive, I believe.

And so you're talking about, medium-term, an expectation of $500 million or so of EBIT improvement in the agribusiness and food and ingredients businesses. I presume you're not expecting significant incremental capital investments into those businesses in large quantities. The dollar would seem to be expected to stay strong. And so under that math, your return on invested capital to get to an $8.50 EPS target would expand something on the order of 400 basis points, or something on the order of 14%.

Does that math makes sense? And if so, why should we have confidence that that's actually going to happen?

Well the math that you just made makes sense to the extent that working capital stays where it is, but we are now at rather low commodity prices relative to where we've been the last 4 or 5 years, so chances that prices will be higher over that period will probably be bigger than they'll be lower.

But your math is correct, roughly the EBIT bridge from where we are now to where we think we can get is between $400 million and $500 million worth of EBIT. A lot of it is rooted in what I mentioned earlier. The value of our soy crush franchise. We've got 37 million tons of soy capacity globally, plus softseeds, but let's just stick with soy for the moment. A $4 or $5 improvement in margins over the next two or three years is absolutely in the cards.

We've got a food business in Brazil, which has really struggled this past year, but has the potential to deliver probably on the order of magnitude $100 million more than it does today. And we've got improvement programs across all the segments, but let's exclude sugar for the moment, but ag and food that are delivering in excess of $100 million a year.

US grain, this past year, was an exception relative to history, so we get back CapEx in more normal conditions. It is not difficult to make that bridge of $400 million or $500 million worth of EBIT with everything else remaining, more or less, as it is.

So we're convinced that that is in the cards. The question is timing. We gave this 2017 as an indication back last year in 2014, and that's turning out to be a little bit too aggressive, or too early for a lot of reasons. Thins have changed a lot in the meantime. But, the portfolio and the business itself can deliver those earnings, and we're convinced that will be the case over the next years.

If I could squeeze in one follow-up on sugar. Clearly, you've talked about a better outlook for the sugar business in 2016. The initial data points would support that.

Any way of banding how big of an impact that could actually be? You said the milling business was EBIT positive in the year, though you're still negative in the segment from the trading and the JVs. But, banding the earnings improvement expected from the milling in aggregate in 2016 would be helpful.

Yes, I would say between $30 million and $50 million is probably the right spread of improvement relative to where the milling business is going to end up this year. It's still early in the season, and we are growing the cane and it will be all about crushing it when we get into peak season.

The sugar pricing and the hedges we put on, including the forward real are at very attractive levels, so it's really about execution now, and the ethanol market in Brazil continues to be very favorable. So the conditions really are there for 2016 to be a very good year for milling.

It's all about execution, but we've improved on that as well. So we believe that there is some reasonable upside in the sugar segment for this coming year, certainly compared to last.

All right. Thank you very much.

Thanks.

Thank you. Our next question comes from Vincent Andrews, Morgan Stanley.

Hi, this is Neel Kumar calling in for Vincent. I was wondering if you could maybe talk a little bit about how working capital is expected to trend in 2016, and also will there be a reversal in the secured advances to suppliers line item? And why did receivables spike?

Okay, let me try to get them one at a time.

How working capital will play out in the next year probably has a quite a bit to do about our grain business and the structure of the market. As the market moves more, we are likely to carry a little bit more grain, and if margins come back into that business, we'll build inventories a little bit.

So, it's not a number we project in advance. It's a number where we react to the market and are opportunities to do profitable business at the right returns and we let our volumes follow. Right now, we would expect some increase, but not a large increase, but it is a very dynamic number that moves along as we go through the cycle.

The advances to farmers naturally reverse themselves at the appropriate timing. In the latter half of the year, the Brazilian farmer came to market and sold forward quite a bit of the 2016 crop, and we were a buyer of that crop, so that's what you're seeing there in inventories.

And in receivables, it's just a matter of timing. There's nothing in particular in our receivable numbers that I would call special or different or permanent.

Great. Thanks.

And thank you.

(Operator instructions)

Our next question comes from Farha Aslam, Stephens.

Hi, good morning.

Hi, Farha.

I have a question on your milling business, your wheat milling. Usually that business is pretty stable. It's being impacted near-term by the Brazilian wheat situation. How long should we expect that impact to last? And what can we look for the business to deliver in 2016?

The variance in results in 2015 really was mostly in Brazil. And it was related to the dramatic slowdown in consumer offtake, particularly in the food service segment in Brazil. So, while we were able to hold margins constant in local currency, the loss of volume and the resulting dollar margin is what created the negative variance in milling.

We are working very hard to integrate our new assets, so the Pacifico acquisition we made back in November will allow us to rationalize our footprint in the Sao Paulo region. That's a major move towards gaining better efficiency.

With the freeing up of Argentine wheat now that will flow into Brazil, that's another benefit. And then mid-year, we will have our new mill in Rio come into place. We'll take the old one down, which will bring another level of efficiency.

Brazil will definitely increase results in milling next year compared to 2015. And I would suspect the impact overall to be somewhere around 30 million to 40 million across the milling platform, in general, relative to this past year. But it won't be all in the first quarter. It will come sequentially. I would say skewed more towards the second and third quarter.

We also have the rebuild of our mill and Rio with this shift. So that will get much more efficient and much more productive, and that benefit will really show up in 2017, not so much in 2016.

Okay. And then, we've gone through sugar and milling so far, in terms of outlook 2016 versus 2015. Can I just ask for a little bit more color on edible oils? You'd said that you expect it to be better than 2015, but not quite up to 2016 levels. Any thoughts on the cadence of the recovery, et cetera, and how we can think about that?

The majority of the improvement will also come from Brazil. That's where we had the biggest variance this past year in both margarines and bottled oil. It's likely to be skewed toward the second half of the year.

We're not really assuming that Brazil as a country will improve much throughout 2016, so it's really our own efforts to improve operations, reduce cost, more efficient go-to-market strategies and so forth that will get us there. So figure that the improvement will be more towards the third or the fourth quarter than the beginning of the year.

We're still in the middle of a significant restructuring of that business in Brazil, making it fit for a longer period or a more prolonged period of economic challenges. So, I think you should put it in as an improvement that comes in the third and the fourth quarter.

Brilliant. And on fertilizer, are volumes outflowing normally in Argentina given that we now have the devaluation?

Yes. I think fertilizer in Argentina really represents, it's a small business relative to the rest of Bunge, but it's a nice upside for us this year as the Argentine farm economy normalizes. Over the last couple of years, fertilizer application in Argentina has really fallen off a cliff, and has been as low as it's ever been.

So, we believe there's big growth in fertilizer application as we go through the year, and especially as we get into the fourth quarter or the third and fourth quarter as farmers buy fertilizer for their wheat and their corn crops. So fertilizer could be a nice, modest, but nonetheless a nice upside for our business in Argentina.

As you know, it is very closely linked with our agribusiness operations. Origination and fertilizer are closely linked, so it will be a very nice add-on to what is promising to be a good year in Argentina in any event.

Great, and my final question is on sugar. Any strategic move on sugar that we should anticipate this year? How are you thinking about sugar longer term in your portfolio?

Our view hasn't changed. It's still focused on reducing exposure to the milling piece of the segment, but doing it in a very disciplined way. As we've been able to prove our ability to run those assets well over the last couple of years with all the improvements that we've made in reducing costs and improving efficiencies, and now entering, what looks to be, the beginning of a very positive cycle in sugar globally.

We think this year will be the year where the value of assets will become better reflected. And so we will take our time and be disciplined and continue to do what we do even better. And over the next year or so, I'm sure there will be an appreciation for the asset base we've got in Brazil, and then we'll take a look. So, our long-term ambition of reducing exposure is intact, but the timing, at the moment, frankly feels like it's on our side to get better value out of it.

That's helpful. Thank you.

And thank you. On next question comes from Ken Zaslow, Bank of Montreal

Hey, good morning everyone.

Morning, Ken.

Soren, in your opening comments, you said that you think Bunge has structural advantages and your team possesses, or is positioned, or has shown that you've been able to go through different environments. It seems like from the last couple of years of results, I'm not sure if I would say that has proven out as much as what you're saying.

So, my first question is how do you get to the point that you have illustrated these structural advantages, and that your team is positioned to go through a lot of environments? And then a follow-up to that is, do you think you are actually optimizing your asset base?

Okay. Well, we just posted a record result in agribusiness. The result, the best ever and returns well above everything we've ever achieved, so we achieved those results in a disciplined way, and they were really all about optimizing the asset base.

We made the absolute most of our crushing assets and our grain origination assets in Brazil last year. We got a nice piece of the Argentine improvement towards the end of the year. And in the US, our soy crush operations had a record year, as well. The parts of the equation that we really couldn't control was the decline in US grain exports in the fourth quarter. I think that's an industry wide phenomenon, and the fact that softseed crush in Canada and Europe was a real headwind for us in agribusiness. So we overcame all that and still delivered a record result.

I think that proves the we've got a team and an approach in place that can handle adversity. And in food and ingredients, it was a disappointing year in many ways. But I think the problems we faced in Brazil with the economy, which was really the majority of the variance, masked a lot of improvements that are being made elsewhere in Mexico, in the US, and in Europe.

And I'm convinced that as we normalize a bit, all of those things will come to bear. So, I actually believe that we are able to. We have demonstrated that we can navigate through difficult environments, and that we've got a process and a team that is capable of continuing to do so.

Okay, so my question is, there seems to then be a disconnect between the market and how you feel, so are there options, bigger opportunities in terms of asset changes, or anything like that to better optimize your value to the market?

I'm not sure exactly what you mean. Can you go a little deeper on that?

Besides the sale of the sugar asset, the market obviously may not agree 100% with what you're saying versus how you're optimizing your assets, right? Because your trading close to book value. So there's a disconnect.

So my question is, is there a process to which that you review to see if there is a way to maximize the shareholder value relative to how you think about it. Is there an option for you to do something more than just selling the sugar asset? Is there something like break up the divisions, sell divisions, do something to create the value that you see that the market may not fully appreciate?

Well, sugar, let's keep that separate from the discussion, because that's not really, I think, what you're addressing. Our agribusiness and food integrated business, I believe, is delivering good results.

We had a positive EVA that was significant this past year, a big jump from any of the previous years. When you look at the value of our crushing footprint globally, as I mentioned in my introductory remarks, it is the conviction that those assets, and managed as a global whole, can continue to drive earnings growth and continue to improve returns. That gives us confidence towards the $8.50 a share.

That's a big, big piece of it. That is a global footprint. You can't break it up. You wouldn't want to break it up. The vast majority of it is performing well above cost of capital.

There are always pieces that you can improve. China, as I mentioned, is one area that we will have to continue to focus on getting improvements on. But, the rest of our crushing footprint, South America, US, Southern Europe soy is super strong and delivering results.

So, our food businesses are, in many parts of the world, linked to our agribusiness both through the soy crush and refining chain and also, through the grain origination chain and really cannot be looked at in isolation, either. And also there, we feel we have significant upside earnings potential. So, I think it's a matter of giving us a little bit more time to prove this out.

At the moment we've entered a period in the cycle that is not particularly easy, but despite that, we still feel that we can grow earnings, and looking beyond the next year or so we can grow earnings by quite a bit. So I don't know why we would consider any of the things you're suggesting. We feel very confident about what we've got and our ability to grow earnings and continue with very strong returns, and I think we've proven it.

Ken, I would just add that we are always reviewing our portfolio. If you take a look at Canada last year where we took our assets and combined them into the G3 partnership with the former Canadian Wheat Board, and our farmers and SALIC or our partners. That was an example where we had an asset that we didn't feel we could maximize in its current state, and we went ahead and did a transaction that restructured it in a way that we think will provide a lot more value over the long-term.

I think the transaction in Brazil, where we went ahead and acquired Pacifico was a way to strengthen our wheat milling platform and make that stronger for the long-term. So we are very open and continuously going through our asset base and what we have and what fits and what needs to be strengthened and, frankly what doesn't fit. So, it is a continuous process that we've been doing if you look over the last couple of years.

Last question is, in 2016 you called modest growth, there's obviously debate if it's 7% or 15% or whatever, but the reality is to go from 2015 number to $8.50, it's over a 67% increase. There has to be a year in which you have a hockey stick-type of growth.

The question is, is there an environment we have to wish for for that? Is there an asset change? Is there an execution? Is there a people change?

What is it that gets you away from the modest growth, and say, look we are re-establishing our earnings platform? I'll leave it there.

2017, I think we've said, is not likely to be the year. It could happen, but it is not likely. It's a bit further out than that.

I think it is the conviction that as the market grows into the existing overcapacity in global crush, and last year was a 7% reduction in overcapacity just by demand growth alone, and that continues over the next three or four years. There's a point within the not-too-distant future where soy crush margins, more or less, on a global scale will have to be at such levels that the industry will have to reinvest. And that comes at higher margins than what we have had, on average, for the last couple of years. And so, I think it's a gradual process.

Maybe it can be exaggerated one year with specific circumstances or dislocation, but I think it's a three-year process for our asset-base, the biggest part of Bunge will continuously appreciate in value as margins do. So that's one big chunk of the earnings growth. And it's likely to come not in one big chunk at one time, but more spread out over the next three years.

In food and ingredients, it is really getting on the other side of the Brazilian challenge, and we're working very hard on that. We believe we can get that solved within 2016, and that we can get back on growth in earnings in food starting in the latter half of 2016 and into 2017.

So, I believe it is more of a gradual improvement, but it is going to be a big one. When you look at it from where we ended 2015, to say, some number, $8.50 X years into the future but not too distant. A lot of good things have to happen, but we believe that they're rooted in fundamentals and will happen.

Okay. Just mathematically it has to be above modest growth at one point, so I appreciate it.

And thank you. It seems we have no further questions at this time. I will now turn the call back over to Mr. Mark Haden for closing remarks.

Thank you, Vanessa, and thank everyone for joining us today.

And thank you, ladies and gentlemen. This concludes today's conference. We thank you for participating, and you may now disconnect.