Bunge Global S.A. (BG) Q3 2014 Earnings Report, Transcript and Summary

Welcome to the Q3 2014 Bunge Earnings Conference Call. My name is Vanessa, and I will 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'd 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 and 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 good morning and welcome to everybody. Third quarter results were fair, and Bunge is in a strong position to meet or exceed our full year combined return target of 1.5 points of our cost of capital in agribusiness and food & ingredients. We managed risk well during a quarter that saw a transition from extreme global tightness to record crops in North America and Europe. Falling commodity prices reduced farmer selling, especially in Brazil. The new crop marketing has been running at less than half the usual pace. In Argentina, farmers are using their crops as an inflation and foreign exchange hedge, and this is unlikely to change before early next year. Lower prices, coupled with expanding crush margins, resulted in a temporary $80 million mark-to-market hedge loss, on fully arched positions in our crush and distribution businesses. Adjusting for these impacts, Q3 was about a $265 million quarter for agribusiness, which is reasonable performance considering the market conditions.; Agribusiness is in a good position to achieve record fourth quarter and a solid full year and to deliver improved year-over-year return on invested capital. Much of the mark-to-market impacts should reverse to income during the quarter, and market conditions in the Northern Hemisphere are positive. World trade is strong, especially for oilseed and proteins, resulting in very favorable crush and export margins and capacity utilizations. The U.S. is the most competitive origin, and record grain and rapeseed crops in Europe are creating a favorable margin and capacity outlook in that region as well. So we're optimistic for good results in the next quarters, with both crush and export terminals, including Longview and Nikolayev expected to operate at capacity. During the quarter, our new crush refining complex in Altona, Manitoba came on stream as did Bunbury, our first port in Australia. Those will also be important contributors in the coming months. The outlook in agribusiness extending into 2015 will remain structurally favorable. While opportunities for major dislocations could be reduced, we see many opportunities from strong trade flows, high capacity utilization and potential improvement on both industrial cost and logistics. In food & ingredients, milling had a very good quarter in Brazil, Mexico and the U.S., with volumes up slightly and margins steady. The integration of our mills in Mexico is progressing well. In edible oils, we are making good advances with both the commercial and operational excellence programs, especially in the U.S. and Brazil. But unfortunately, some of those improvements were offset by additional logistics cost and very tight oil supplies in the U.S. and margin compression in the Ukraine. We are confident that we will show nice improvement in both oils and milling during Q4, and that we'll finish the year with record EBIT and strong returns. Our objective remains to grow this share of food & ingredients to at least 35% of Bunge's EBIT over the coming years. And we're convinced we can do so through a combination of internal improvements and bolt-on M&A. Our sugar segment delivered a solid performance in both milling and trading & merchandising. While we crushed 400,000 tons less than planned because of rain delays, our cost containment program and higher ethanol and power prices more than compensated. Our global trading & merchandising team performed well during the quarter, skillfully arbitraging Brazil and Thai sugars to keep estimations. With the Brazilian election behind us, we expect to see attention back on the energy sector with some favorable adjustments likely. We anticipate a modest price increase in gasoline and possibly a reintroduction of the CIDE tax by the end of the year. We expect to crush about 20 million tons of cane this year and to finish breakeven to positive EBIT, with all CapEx funded from operations. The market environment and the election in Brazil have complicated efforts to reach a conclusion to the strategic review of our sugarcane milling operations, but our intent is unchanged and we'll continue to look at a full range of options. We have to unlock appropriate returns from the approximately $2 billion net operating assets in the milling business and we will. We have improved the business. It is modestly profitable and self-funding, and we have a strong and dedicated team working to improve it further. We'll keep you posted on our progress on all fronts. We're also making solid progress in the performance improvement programs in food & ingredients and agribusiness. For example, we have reduced our cash cycle by 5 days compared to last year. We expect CapEx for 2014 to fall just short of $900 million, and we have repurchased $300 million of our own shares year-to-date. Our approach to capital allocation is unchanged. We'll continuously evaluate the best use of funds from operations, with a priority on ensuring a BBB balance sheet. The outlook is very good and our global teams are focused on ending the year on a strong note, reaching a return of 1.5 points above WACC or more in the combined agri and food businesses and to prepare for an even better 2015. Now I'll turn the call over to Drew, who will take you through the financial performance and outlook.

Thank you, Soren. Let's turn to Slide 4 and the earnings highlights. Bunge's third quarter total segment EBIT, adjusted for certain gains and charges, was $316 million versus $388 million in the prior year. In agribusiness, adjusted EBIT was $186 million versus $318 million in 2013. There were 2 primary drivers of the lower year-over-year performance. The first was very slow farmer selling, driven by the significant drop in commodity prices during the quarter. As a result, our grain origination results were lower than last year, especially in South America. In Brazil, we experienced the lowest level of forward selling of new crop in years. In past years, we have seen about 30% of the new soybean price -- crop price, whereas today, that level is about 10%. Farmers typically price a portion of their crops as they begin planting to lock in a portion of their profits. In Argentina, farmers are holding soybeans as a hedge against inflation and currency devaluation. Unless there were to be a sizable price or currency movement, we do not expect a pickup in farmer selling activity in either Brazil or Argentina into early next year. The other driver of the third quarter variance with last year was approximately $80 million of mark-to-market losses related to hedge forward crush positions and inventories for product shipments in our distribution business. We expect approximately $60 million in mark-to-market reversals in the fourth quarter and additional reversals in the first quarter of 2015. Our risk management strategies in both grains and oilseeds worked well during the quarter. In our oilseed processing business, we managed the complicated crop transition in North America well. Crushing margins were higher year-over-year in most geographies. Volumes were impacted by reduced soybean supply, especially in Argentina where farmers were holding beans, and in the United States, where old crop beans were scarce and new crop beans weren't yet available due to the weather-delayed harvest. China crushing continued to be a challenge compared to the previous years, but conditions improved as we entered the fourth quarter. On a year-to-date basis, agribusiness adjusted EBIT was $576 million versus $662 million last year. The primary drivers of the difference were lower results in China processing, which has been impacted by excess supply; our grains business, which had a slow start to the year and saw a slow farmer selling in the third quarter; and the mark-to-market impacts. Oilseed processing results outside of Asia have been higher year-over-year due to strong margins. In edible oils, contributions from our performance improvement initiatives and higher results in Brazil were more than offset by lower results in North America and in Ukraine. Brazil benefited from improved margins in most parts of the business, reflecting our efforts to manage value and improve our relationships with key accounts. In North America, results were impacted by railcar availability in Canada and incremental logistics costs in the United States as raw material supply ran low during the transition to the new soybean crop, requiring us to transfer product between facilities to meet demand. In Ukraine, results were negatively impacted by the significant devaluation of the Ukrainian hryvnia versus the U.S. dollar during the quarter. In our milling segment, higher results in the quarter reflected improved performance in our Brazilian wheat milling operations, which benefited from improved margins and production yields and our recently acquired wheat mills in Mexico. The integration of these mills continues to progress well with synergies tracking to expectations. We have made improvements to the cost structure through reducing energy consumption, broadening raw material sourcing and streamlining the organizational structure. Results in our corn and rice milling businesses were comparable to last year. On a year-to-date basis, adjusted EBIT for food & ingredients was $218 million versus $196 million in the prior year. The increased performance primarily reflects the strength of our wheat milling businesses, our new mills in Mexico and our cost savings initiatives. In sugar & bioenergy, all businesses in the segment performed well, generating higher results in the third quarter. In sugarcane milling improved Brazilian ethanol prices increased energy sales, and savings from our cost containment initiatives more than compensated for lower milling volumes due to wet weather. Also contributed to higher milling results were mark-to-market gains related to hedges on forward sugar sales of approximately $12 million and gains on foreign currency hedges. Higher margins in our global trading & merchandising business more than offset lower volumes. Results in our biofuels business were higher than last year, primarily due to the contribution from our new corn wet milling joint venture in Argentina. On a year-to-date basis, sugar & bioenergy had an EBIT loss of $14 million and is below last year as improved performance at our industrial crushing and biofuels businesses was more than offset by lower results in our trading & merchandising business, which had a strong first 9 months last year and a slow start to this year. Fertilizer segment EBIT of $12 million was down slightly from $15 million in 2013. Year-to-date earnings of $29 million are slightly higher than last year. Adjusted earnings per share of continuing operations was $1.31 this quarter compared to $1.89 last year. On a year-to-date basis, adjusted earnings per share is $3 versus $3.76 in the prior year. During the quarter, there were 3 significant tax developments we would like to inform you about: first, we were able to complete the implementation of our tax planning strategies and realized the related benefits. This brings our year-to-date tax rate to 22%, which is slightly lower than our projected fourth quarter, full year and longer-term rate of approximately 23%. Second, we participated in a tax amnesty program in Brazil, where we saw claims that we had previously recorded as a liability. These claims were settled at a discount and we recorded a gain of $35 million, of which $29 million is in discontinued operations and $6 million is in continuing operations. And lastly, On October 16, Brazil Supreme Federal Court ruled that certain state ICMS tax credits related to staple foods, including soy oil, margarine, mayonnaise and wheat flours, are unconstitutional. These products and our imports are acquired at a certain ICMS tax rate and sold at a lower rate. Taxpayers have historically taken a tax credit for the difference. Like other food industries companies, Bunge is involved in several administrative and judicial disputes with the Brazilian states regarding these tax credits, but these cases have been on hold pending the outcome of the October 16 case. Our overall amount and dispute, combined with potential additional disputes, is approximately BRL 400 million. The October 16 ruling involved another company but may become precedent in cases involving other taxpayers, including Bunge. The court has not yet published its full opinions in the case, but publication is expected within the next 30 to 60 days. If our analysis, with the assistance of our legal advisers, leads us to the conclusion that it is probable our positions will not prevail, we will, at that time, take a charge to earnings of the amount considered probable up to the BRL 400 million total exposure. We do not consider the impact of this issue going forward to be material to Bunge's ongoing operations. Let's turn to Slide 5 in our return on invested capital. This chart shows our trailing 4-quarter average return on invested capital adjusted for certain gains and charges. For the first 3 quarters of 2014 included in this calculation, we have used our full year forecasted tax rate of 23%, which includes the realization of the $53 million in tax benefits resulting from our tax planning strategies. The returns are shown for Bunge Limited and for Bunge Limited excluding our sugar & bioenergy segment, which contains our sugar milling operation, which is under strategic review. As you can see by the chart, Bunge Limited's return of 6.6% has improved from the end of last year. However, it is still below our cost of capital of 7%. Looking at the company, excluding our sugar & bioenergy segment, focusing on our combined core agribusiness and food segments, the return on invested capital improves to 8.4%, which is also higher than the end of last year. Looking forward, we expect to finish 2014 with a return on invested capital for the total company at about our cost of capital of 7%. And excluding our sugar & bioenergy segment, we are forecasting that we should at least attain 1.5 points over cost of capital or 8.5%, and that we'll achieve our target of 2 points over WACC in 2015. Let's turn to Slide 6 and the cash flow highlights. For the 9 months ended September 30, cash provided by operations was approximately $1.1 billion compared to cash provided by operations of about $900 million last year. The year-over-year improvement largely reflects lower inventories due to the drop in commodity prices, slow farmer selling and our strict management of working capital. At the end of the quarter, we had approximately $5 billion in committed credit lines, of which $4.4 billion were unused and available. We repurchased $100 million of shares in the quarter for a total year-to-date amount of repurchases of $300 million. Our capital expenditures were $515 million, and as Soren mentioned earlier, we expect that our year end spend will come in just below our target of $900 million. Let's turn to Slide 7 and the outlook. We expect to have a strong fourth quarter. In agribusiness, record U.S. farmers, in combination with extremely slow farmer selling in South America and strong demand from the livestock sector, have driven U.S. crush margins to historically strong levels. Along with large soft seed and grain crops in Europe, this will allow our crushing and export facilities in the Northern Hemisphere to operate at high run rates with good margins. We also expect about $60 million in mark-to-market reversals in the fourth quarter and looking further out, additional reversals in the first quarter of 2015. Turning to Slide 8. In food & ingredients, we expect another record year. The fourth quarter is the seasonally strong holiday period when demand for flours, vegetable oils, margarines and shortenings increases. We've also had additional contributions from our performance improvement initiatives in our new wheat mills in Mexico. In sugar & bioenergy, we expect breakeven full year segment EBIT and we are continuing to manage the business to be free cash flow neutral. We have sufficient cane to crush, approximately 20 million tons. However, at the end of September, we were about 75% through the harvest, so weather remains an important factor in the length of the processing season. We expect our fourth quarter and 2014 full year tax rate to be approximately 23%, which is in line with our long-term range of 22% to 24%. That concludes our prepared remarks. We will now open the call for your questions.

[Operator Instructions] And our first question comes from Ann Duignan with JPMorgan. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Can you talk a little bit about the comments you made about the U.S. crush margins being particularly strong? I mean, I don't think any of us really expect those to be sustained at current levels, given -- probably driven by the lack of supply. And then can you also talk about the impact of the record harvest and whenever it is harvested, the capacity issues with rail and how you're getting around all of that? So 2 questions on the U.S., please.

Okay, Ann. Well, crush margins in the U.S., we actually believe will remain very favorable into next year. How far into next year? It remains to be seen, but certainly through the first quarter. It's a combination of really strong domestic demand on one side, livestock margins are positive and meat production is expanding again. On the other side, it's a function of exports. The U.S. has been the cheapest origin for meal exports supplying the world trade really for several months now, and you can see that in the export sales reports. We are well ahead of last year and probably in a record -- at a record projection. So capacity -- demand for U.S. crushing capacity is real, and it'll stay with us for quite a while. The board crush moves that you might be referring to that we've seen in the last couple of days, they may not be an indication of how it will be in January or February. But we still expect that margins in the U.S. for the next 6 months to be well above historical averages and probably the best we've seen in many years. So that's on that front. And so far as the large harvest and how it will come to market, it is true that it's been a bit of a delayed harvest, and farmers, so far, are not active sellers. We're buying what we need to run our plants and our programs, but it's a cautious seller, no doubt, and the delays in harvest has exacerbated that. Rail issues are very spotty. I think in general, it's true that the North American rail infrastructure is under a lot of strain to meet demand from all sectors, not just the agricultural sector, with demand across all the sectors being higher year-on-year. So people see the system strain for the next several months. And the railroads have all been trying to catch up on capacity really since the end of last year. Some had more success than others. We don't believe that it will have material negative impact on our business. Our export flows, especially to the West Coast, are running normally. We are seeing occasional disruptions at some of our crush plants but nothing super serious. But it is a risk factor for the industry for the next several months, no doubt. So far, though, I would say it's manageable. Ann P. Duignan - JP Morgan Chase & Co, Research Division: And just as a follow-up, do you think that the rail car capacity issue is the bigger risk to the industry than the lack of barge capacity down to Mississippi? I'm just curious to which one kind of you're more worried about.

I think the biggest concern is on the rail side. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Okay. And then just as a quick follow-up on Brazil. Can you just talk about post-elections? You've made mention what might happen on the sugar & bioenergy side. But just in general, where you think the pluses and minuses are now that we are post the election in Brazil.

Well, as -- I think agriculture in Brazil, and Brazil as a whole, we feel very good about long term, irrespective of who would have won the election. It's got a bright future. We're already planting what is likely to be another record soybean crop next year. You probably will see some reductions in corn acreage, but soybean growth year-on-year is going to be significant, as much as 10 million tons of production. So the expansion of agriculture in Brazil, in soy at least, is intact and will continue, so we feel all good about that. We are in a good position, as you know, to help facilitate those crops to market, new port facilities and so forth that we'll be able to tap into next year. I think the biggest issue really is around the fuel policy in Brazil. That relates directly to our sugar milling business, of course, and believe that there's an opportunity now for the government to refocus on energy and do the right thing, which would be to align international prices with domestic prices in Brazil and get ethanol prices into a reasonable start. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Okay. But they didn't do that in the last regime. So what's the probability of them doing it now?

Yes, as I mentioned earlier, we believe that there's a very fair chance that by the end of the year, we will have a modest increase in gasoline prices, and there is a lot of discussion around the CIDE tax coming back. I guess I believe more in a modest increase in the gasoline price. And I think that, that is very likely even with the current government. What is also likely to happen is that the 27.5% blend rate for anhydrous ethanol is very close to being implemented, in our opinion. So that's another positive that should come into ethanol sometime between now and the end of the year. So I think by the -- by first quarter or certainly by the time we get into the new crop milling season in Brazil, we will have an improved ethanol pricing picture.

Our next question is from Adam Samuelson with Goldman Sachs.

Maybe first in agribusiness and a little bit on some of the challenges in the quarter and how the expectations for recovery in 4Q. I think going back to last quarter, there was expectation for some strong volume growth in the second half in agribusiness, actually and to that down year-over-year. And just wondering, how did that shape up relative to your own expectations? And key areas, are they just Brazil and Argentinian exports, or was it crush volumes and kind of how sharp of a rebound are you expecting in the fourth quarter?

We should see a significant pickup in volume in the fourth quarter as the Northern Hemisphere crops come to market. And we're already seeing that U.S. exports should be very strong. Exports out of the Black Sea should be very strong compared to last year. There should be a nice recovery year-on-year in the fourth quarter, and certainty from Q3. So I feel very good about that. Relative to our expectations going into Q3, we knew that farmer selling, particularly in Brazil and in Argentina, would be a challenge. Q3 is typically the quarter where most Brazilian -- many Brazilian farmers log in a nice chunk of their new crop profitability. And that did just not -- that didn't happen this year. We expect that probably 10% of the crop isn't priced relative to what's a normal rate of 30% to 35%. So it's a significant drop from where we were, and I think it probably ended up being a little bit lower than what we had expected. But we did make mention, I believe, in the last call, that we felt that results would be heavily weighted to Q4, and that'll turn out to be true.

Okay. That's helpful.

Adam, the U.S. harvest came in a little bit later than we had originally predicted due to weather reasons. So I would say, the volumes were a little bit softer, but mainly, the crop is there. It's just a matter of time of when it's going to be released into the market now, whether or not those volumes will get moved.

And is that a situation that can actually -- you can see some of that actually move into the first quarter at this point, just given how weighted actually it has shaped up to be?

Yes, I think the U.S. will have a very strong export season well into the first quarter. And what we do know is that the Brazilian soybean planting, are probably a good 10 days late, maybe even a little bit less -- a little bit more. So the new crop soybean availability in Brazil will be delayed a bit compared to last year. So the U.S. should really have a very, very strong export season that goes well into Q1. So I think you're right.

Okay, that's helpful. And then thinking about -- in sugar, and I know the elections probably put some people's strategic thinking on the sector on hold, given some of the policy uncertainties. But I mean, it's been nearly a year now that the strategic review has been ongoing. Can you help frame for us the range of kind of options that are being contemplated? Is it kind of a mill-by-mill review or selling part of -- selling our JV part of the business or the entire -- is there still opportunity to sell the entire portfolio as one piece? And just help frame for us the kind of the range of the likelihood of different options.

I'd say all options are open. The full range of options are still open. We've explored many opportunities over the last months as we've gone through the review, but have not found any of them to represent fair value to Bunge's shareholders. So we'll continue to look for a way. In the meantime, as you can tell from our results, we are very focused on making the business as good as it can be. So very, very pleased with the progress we are making with the business. And our team in Brazil is doing a stellar job in making it as good as possible. But we're continuing to look at a full range of options to put us in a better position and to unlock, as I mentioned earlier, the return potential of the $2 billion we have tied up in the business. We have to make that return. And so our intent and our focus is unchanged.

Okay. And is there -- on that point, just as we think about timing, I mean, it has been a year. How long can we really contemplate this business being under strategic review before you kind of make the decision look we can't find a party that extract the value that we are happy with, and then you'd recommit to running the business as part of Bunge and driving organic earnings improvement that way?

I can't really give you any timing on this. It is our number one priority. We're looking at it every day. At the same time, we're making sure that we run the business as efficiently as we possibly can. So it is on our to-do list every day, so to speak, but I can't really give you any timing.

Our next question comes from David Driscoll with Citi Research.

This is Cornell Burnette with a few questions for David. Looking at sugar, sugar ethanol still seems to be the outlook for about breakeven profitability this year. Just wondering about, going forward, can this business become profitable? It seems right now, ethanol prices in Brazil are still pretty weak, and at the same time, Brazilian ethanol seems uncompetitive relative to U.S. corn ethanol on the global markets. So in that context, I mean, does it just come down to maybe, as you've mentioned earlier, the blend rate moving to 27.5%. Is that what we really need maybe to turn things positive in terms of profitability for you and the industry as we move into 2015?

The blend rate will help, no doubt, but it's not enough. We do need a move-up in gasoline prices in Brazil to make the ethanol business more sustainably profitable. A 6% to 10% increase is what's been discussed, that will be about right. Sugar, by itself, if you look at the forward sugar curve and the real is at a point where it is profitable to produce sugar. So we need a little help in the ethanol to put the business into a more structurally profitable position. Power prices has been a nice improvement year-over-year, and we expect that energy prices, electricity prices in Brazil going into next year also to be better than historical, maybe not as high as this year but favorable. So I think there are a number of things that should make you think that next year could be a reasonable year. But in all likelihood, not meeting our return expectations and feel falling a little short of cost of capital, and that's why we continue to look at our full range of options. But next year could be a better year even.

Okay, great. And then turning it back to agribusiness and particularly soy crushing. I mean, I think it's pretty evident that obviously the fourth quarter is going to be great and the same with the first quarter in terms of margins. But just kind of talk a little bit more about some of the more medium to longer-term dynamics. When we turn over from that U.S. crop and move into South America in the middle of next year, can you just talk about what you're seeing generally in the market in terms of demand from the livestock sector and how you expect that to trend throughout 2015? And what that means to margins for the whole year and not just maybe looking at North America early in the year?

Okay. I mean, overall, demand for proteins and oilseeds is going to be up nicely compared to this year, another 5% or so. So global demand growth and global trade in the proteins and oilseeds, soybeans in particular, will be up nicely year-over-year. And a lot of that was linked to China where we believe that growth will continue. So the underlying fundamentals of demand are strong. Domestic demand and the U.S., domestic demand in Brazil is very strong. The livestock sector in Brazil is doing very well. Exports of meat are up. So really, across sort of the Americas, the economics in soya are going to be favorable, extending into -- as far into 2015 as we can see at the moment. So when we switch supply from North America to South America sometime in March and April next year, I think we will continue to see very strong demand pulled out of those origins, with nice export elevations and margins, a good crushing environment in Brazil and at that time, in all likelihood, also in Argentina. The Argentine farmer is planting another large soybean crop, and that will come to market on top of the 10 million tons of soybeans that it is likely to carry into next year. So South America should be in a very good position starting in March, April next year. And in the U.S., the big difference to the last couple of years is that we will have ample soybeans left to crush at nice levels of capacity throughout the summer, whereas the last 2 or 3 years, we have been constrained by soybean availability, as you know. So overall, I believe the soybean crushing and export environment, both in the U.S. export season and crushing season in the South American one, is very favorable all through 2015.

Our next question comes from Tim Tiberio with Miller Tabak. Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division: Drew, you seem like you're pretty confident that you can recover the $60 million in the fourth quarter. I just thought it may be helpful to just give us some sense of maybe the bend of price movement that would be needed in the physical markets, in soy mill or underlying soybean cost basis in the fourth quarter. Or is this as such that you basically have locked this in, and regardless of whether we see it 5% or 10% move in the physical markets, you'll still be able to recover it?

It is the second, Tim. What we're talking about is that positions are fully locked in. If there's variability in how much of the $60 million we'll recover, it could be timing in the case of the executing some of the distribution contracts. But that would only be a timing difference to the $60 million. But we don't need any price movement to achieve those results. They're locked in, we just have to execute on the shipments or the crush. Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division: It's very helpful. And Soren, you mentioned that you're open now to a full range of optionality around the strategic review of the sugar assets. Does that imply that you would also, on the right situation, even be open to looking at scaling the business even further if there's an opportunity to take advantage of distressed assets? Or am I reading that incorrectly?

We are not open to that. We are not open to increasing exposure to the business, no. Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division: Okay. And one last question. In the third quarter, was the biodiesel trends much of an impact on the oilseed margins? I know biodiesel margins have not been as positive, at least in the U.S., as last year. Is that a meaningful impact to your business currently, Drew?

No, I don't think you can call it a meaningful impact. It is true that biodiesel margins, because there is no longer the dollar tax credit, have been marginal at best. But most plans are still running. And I think we have forecasted roughly 1.3 billion gallons of production this year, which is about unchanged, a little bit more than last. So demand is there, but it is not with the same profit as it was in the previous year. And whether or not there will be a retroactive tax credit, I don't know. Some people are speculating that there is. But I don't think that there's been any meaningful impact to our business from the current environment in biodiesel.

Our next question is from Kenneth Zaslow with BMO Capital Markets.

My first question is how -- what would be the case to which 2015 agribusiness would not be at a record level?

Record level in terms of EBIT [indiscernible]?

Why wouldn't it be at a record level in 2015?

Well, we believe that Q4 is going to be a record quarter, so let's start with that. How much beyond that, we'll have to see when we get there. But we do believe that Q4 will be a record quarter for agribusiness and possibly also a record Q4 for Bunge.

Yes, I think Ken, to try to give a little color, we don't give guidance, and part of the reason we don't is there's a lot of crops to be grown. And exactly, the environment in the following year is unknown at the moment. But I think we have said that we expect to be 2% over the cost of capital in our core agribusiness and foods businesses next year, and that would imply continued growth in the performance in those businesses. And we're sitting at near-record levels at the moment. So I think we are optimistic about '15, but we don't want to get overly specific because there's a lot of crops to be growing and weather to get through, et cetera.

Okay. Can you talk about the cadence to which the farmers are selling in the U.S. and then in South America? Because it seems like, actually, if the cadence were exactly what I think it is, this could actually be optimal for Bunge's operating profit for fourth quarter, first quarter and then second quarter. Can you just talk about the cadence?

Do you mean by cadence, the pace?

Yes, because it seems like the U.S. farmer was going to start selling the South American farmer's holding, but then we'll sell in the first quarter, so your facilities in the U.S. will be nicely optimized in the fourth quarter. Then as things kind of keep on going, then you're going to layer on the South American farmer selling. And it just seems like you're set up for a lot of good quarters. Am I missing something in the way to which the farmers are going to be selling?

I think you're generally -- generally speaking, you're on the right track. Whatever we have not bought in advance in South America, we will obviously buy when we get there. So there is a lot more grain to be bought, soybeans in particular, in Brazil and Argentina as we start the early part of 2015. So what we didn't buy in the third quarter, we'll buy then. And you're right that between now and certainly, the end of the first quarter, the U.S. farmer will be supplying the world market predominantly with both corn and soybeans and soybean products. So there should be a nice continuation of, let's say, income from -- in agribusiness in particular, but food & ingredients as well from now until -- into the harvest in South America.

Okay. My next question is, are you, by any chance, caught short at all in the soybean meal side? Because obviously, soybean meal prices have gone hyperbolic. You have not sold slower than not being able to make that commitment? Are you -- we're not expecting any issues in the next quarter or something related to the soybean meal movement, are we?

We don't comment on our trading positions. But I can tell you that to my knowledge, there's no issue particularly pertaining to the move in soybean meal futures in October. We obviously do put margins on our crushing business ahead of time to some extent, but we've averaged into margins in a very good way during the month of October for Q4, and we'll execute those with a nice profit as we close the year. So don't expect any nasty surprises.

Okay. And my very final question is in terms of the outlook for vegetable oil, soybean oil, can you talk about the likelihood of the dollar biodiesel tax credit and the higher diesel -- biodiesel mandate? And does that create a catalyst or an opportunity for vegetable oil prices to move higher or is it a non-issue?

I cannot comment on the probability of the dollar tax credit coming back retroactively. I mean, this happened before and I know there's speculation that it could happen again, but I don't have any particular insight to that. I do believe, though, that biodiesel demand in the U.S., in Brazil and in Europe will remain very steady. The one place where there's a little weakness in biodiesel is in Argentina at the moment because energy prices have come down so quickly. But in general, biodiesel demand should remain strong through next year.

Our next question is from Robert Moskow with Crédit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: I think I'm going to try to take a shot at answering Ken Zaslow's first question. So I guess the thing you mentioned about farmers not selling in Brazil, I mean, we've all been there before. What are the chances that, that might continue outside the first quarter into second quarter and into third quarter? Certainly, that's happened before. And then is there any additional pressure on Brazilian farmers or even U.S. farmers too, that there hasn't been in the past so that, that's not going to happen, so they do have to sell and we won't have repeats that we've had in prior years.

Yes, I'm not sure what you guys are referring to. But I do believe that certainly, starting in the second quarter next year, the Brazilian crop will come to market. And whatever has not been sold in advance will be sold then. The same thing is true in Argentina. So the lack of forward selling that we've experienced so far to us means there's more margin realization as we get there. So it's a shift in earnings, we'll be pushing off margin a few quarters ahead of ourselves, but it will come at the time when we get here. With a 90 million ton-plus soybean crop in Brazil, I'm not so concerned that farmers will not be willing sellers for at least a nice portion of it. It is, in all likelihood, weather permitting, going to be another record. Robert Moskow - Crédit Suisse AG, Research Division: But if they hold back on selling because they think they can get a higher price and higher than the price that's in the market today, isn't that the issue that they can -- they have the balance sheet to hold back?

I think it is true, in general, that because of profitability in the farm sector over the last several years, more farmers than perhaps historically are able to hold back their crop and market it as they see fit. But all farmers, even large industrial ones, have cash flow needs. And so a portion of the crop will come to market, I believe, no matter what. And you're probably talking about a 5% or 10% difference to historical that could be in question. But a large part of the Brazilian and Argentine new crop will come to market between March and June, I think, is very clear to me.

Our next question is from Diane Geissler with CLSA.

I wanted to ask about the food & ingredients segment, which -- it seems to be the target for you to build over the coming years. And to the extent that, that may include some M&A activity on downstream businesses, what impact, if any, sort of a lack of monetization on the sugar business might have on that strategy here in the near term? Maybe if you could give a little bit more color about how you expect to build that business that would be great.

Yes, I think as we explained in the second quarter call, we do have ambitious targets for this segment over the next couple of years. And the growth, really, is a mix between internal improvements, roughly 50% relating to costs and commercial excellence and the programs that we have put in place that you'll see hitting the bottom line certainly in Q4. And the other half is from bolt-on M&A. We have enough capacity to execute on that over the next several months without having to do something with sugar. So our strategy to grow the food & ingredients piece meaningfully over the next 6 to 12 months is not dependent on that.

Okay. And to the extent that you hang out your sugar on just due to lack of finding a buyer for it, how does that affect the percentages in terms of the size of that business versus the overall portfolio?

I think we can reach the 35% that we have targeted and mentioned as our goal without having to do something with sugar. But we will look at our sugar business independently of the food strategy. So I hope that answers it.

Yes, I think, Diane, when we look out, we see a model that's 65% agribusiness, 35% food when we gave you those numbers on a longer-term basis. If sugar was there, that would be an additional and then you would adjust both the agribusiness and food percentages.

[Operator Instructions] And I see we have no further questions at this time. I will now turn the call back over to Mark Haden for closing remarks.

Great. Thank you, Vanessa, and thank you, everyone, for joining us today. And as a reminder, we will be hosting our Investor Day in New York City on December 10 and the event will also be webcasted. Thanks.