Bunge Global S.A. (BG) Q1 2015 Earnings Report, Transcript and Summary

Good morning, and welcome to the First Quarter 2015 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 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 to everyone. Bunge is off to a good start in 2015. In Q1, soy crush margins and -- results were strong. Risk management performance was significantly improved over the prior year. We made meaningful progress in our operational improvement programs, and we added important new operations to our business. The trailing 4-quarter return on invested capital in our core Agribusiness and Food segments is now 10.7%, well above our cost of capital. And despite some headwinds in the market, the outlook for the remainder of 2015 is optimistic. We expect the full year results to put us on a comfortable path towards our 2017 EPS target of $8.50 per share. I'll touch on a few highlights in a moment, but let me first comment on our new reporting approach in Agribusiness. We've received quite a bit of input from investors that they would like more insight, and that our Investor Day last year, we announced that we would break out the operations to provide greater transparency. One of our primary objectives was to provide investors with a clear picture of results in our Oilseeds operations. Drew will provide more details, and we hope that this new approach is beneficial to understanding our performance better. Our oilseed operations had a strong quarter. Soy crush performance was particularly strong in the U.S. and in Southern Europe. Strong demand for soy protein, combined with constrained Argentine flows, allowed us to supply both export and domestic markets during the quarter, and crush volumes in these regions rose 7%. We managed margins well and ran our assets at historically high utilization rates. Results in Brazil were also very good but lower than a very strong prior year. Chinese margins have rebounded sharply, which should lead to favorable results over the next quarters in sharp contrast to last year. We, therefore, expect the next months to be solid in soy crush with a smooth shift in profitability from the U.S. and Europe to South America and China. In contrast to soy, margins in softseeds were disappointing. Currency volatility and political instability, combined with significantly lower prices, has led farmers' retention -- to retain crops and, therefore, margin compression. We expect this to last into Q3 while our softseed crops, especially sunseed, should improve the market dynamics. Global oilseed trading and distribution results were excellent, and our risk management teams guided both margins and global flows well. In grains, origination volume was down 5% compared to last year as farmers resisted selling into lower prices in all geographies, although we did experience a nice pickup in Brazil during March as the real weakened and harvest progressed. In general, marketing patterns suggest that we are tracking about 5% behind in farmer pricing compared to normal. And with record crops, this suggests stock building at the farm level and, therefore, deferral of margin. Export volumes in Brazil, U.S. and the Black Sea were strong. And despite the truck strikes in Brazil and political turmoil in the Black Sea, we executed well with all port terminals running smoothly. Ocean freight results were much improved. Overall, the markets are slowly settling into a new lower price range across most crops. With prospects of large harvest in both North America and Europe again this year, the market should encourage growth in consumption and trade with generally modest volatility and fewer dislocations. Margins will be driven by strong demand and higher capacity utilization. In Food & Ingredients, our operational and commercial excellence programs drove improved results with an estimated $20 million P&L impact during the quarter. These programs are a key part of our strategy to increase the share of EBIT generated from Food & Ingredients, and they are especially important in the face of market headwinds. A much stronger U.S. dollar created headwinds in most of our non-U.S. Food businesses where local profits translate into weaker U.S. dollar earnings as currencies depreciate. In Brazil, for example, the real was approximately 25% weaker than a year ago. And in both Central and Eastern Europe, we are facing similar situations. In the first quarter, therefore, while margins expanded in local currency, our U.S. dollar unit margins in edible oils were slightly weaker, and they were stable in wheat milling. When combined with global U.S. dollar costs and the impact from our improvement programs, the net result was a respectable EBIT for the quarter. While we've been able to overcome most of the impacts of the stronger U.S. dollar through performance improvements, it does mean that growth in Food & Ingredients' earnings this year will be slower than we initially anticipated. That said, we expect a big step-up in performance and another record year. In Sugar & Bioenergy, the first quarter underlying results improved by $11 million. During 2014, we reduced our labor force by approximately 25%, and we have improved operations in all our mills, including global logistics, harvesting and planting cost. As a result, our unit cost, assuming a normal crush season, is now at or below market values. The Central-South crop is estimated at 588 million tons. And assuming a normal crushing season, we still expect to be EBIT and cash flow positive by the end of 2015. While we are staying focused on operations, we continue to explore ways to reduce exposure to the sugar milling business. Bunge's strategy calls for applying best-in-class processes throughout our operations, improving our winning footprint and achieving the right balance of commodity and value-added businesses. We made progress in the first quarter on all fronts. Recently, we announced a key addition to our Agribusiness asset network through our joint venture acquisition of Canadian Wheat Board in Canada. And we closed an exciting bolt-on acquisition in Food & Ingredients by adding Heartland Harvest, a company that serves the growing U.S. ag industry in the U.S. and complements our existing corn milling activities. We also repurchased $200 million of shares during the quarter, consistent with our balanced capital allocation strategy. So overall, it was a strong quarter and a solid start to what is expected to be a strong year. I'll now turn it over to Drew for further comments.

Good morning. Let's turn to Slide 4 and the earnings highlights. Our total segment EBIT for the quarter was $373 million versus $75 million in the prior year. Agribusiness, Foods & Ingredients and Sugar & Bioenergy all showed improvement from the prior year. Agribusiness EBIT was 333 -- $330 million versus $79 million in the prior year, with strong increases in both oilseeds and grains. As Soren mentioned earlier, starting this quarter, we are providing EBIT results and volumes separately for our oilseeds and grains businesses. The purpose is to continue to provide more information to investors, so they can have a deeper understanding of where profits are earned. We continue to operate this segment on full value-chain basis to achieve maximum synergies and cost efficiencies. The businesses are interdependent on certain product flows, and our service groups provide services for both grains and oilseeds. We have included the service group's results fully in grains rather than allocating them to each business. This allows a clear picture of oilseeds, which consists of our oilseed processing activity, our oilseeds trading and distribution business and our biodiesel joint ventures. Oilseeds represents about 60% of our permanent assets, consisting primarily of oilseed processing facilities. Grains is comprised of our grain and origination business, primarily corn, wheat, barley, soybeans and softseeds, our global trading and distribution operations, our ports and our logistics and financial activities. Grains represents about 40% of our permanent assets, primarily consisting of grain elevators, transshipment facilities and ports. We are pleased to provide this additional insight into our Agribusiness segment, but it is important to note that these are not independent activities. They operate together in a synergistic manner. A chart detailing the definition of the breakout is in the Appendix of this presentation. Oilseeds' EBIT was $242 million in the quarter versus $79 million in the prior year, led by strong performances in U.S. soy processing and our global oilseed trading and distribution operations. U.S. processing benefited from strong crushing margins, good domestic and export meal demand and the recognition of mark-to-market gains as the losses recorded in the fourth quarter reversed. Brazil performed well, and South American results were in line with prior year. European softseed results were lower due to weak farmer selling. Asian results saw an improvement. The distribution business benefited from higher margins and solid risk management strategies. Their higher volumes primarily result from increased soy processing volumes in the United States, Brazil and Southern Europe. In grains, EBIT was a profit of $88 million versus breakeven in the prior year. Our grains' trading and distribution business performed significantly better as risk management strategies worked well in the quarter and ocean freight costs were lower. Ocean freight results also benefited from gains from the reversal of the majority of the mark-to-market losses incurred in the fourth quarter. Brazilian grain origination results were good but below prior year as farmer selling was low in the early part of the quarter. Foods & Ingredients' EBIT was $72 million versus $54 million in the prior year, led by a strong improvement in edible oils. Milling results were slightly above the prior year. The edible oils improvement was driven by North America and Europe, reflecting higher margins and lowering costs as our improvement initiatives continued to produce results. Results in South America and Asia were in line with prior year. Our results in Brazil and certain Eastern European countries were negatively impacted by weakening currencies versus the U.S. dollar. Milling results were slightly above prior year despite the impact of weakening currencies. Our wheat milling performance was above prior year as both Mexico and Brazil had improved performance. The integration of our Mexico milling acquisitions continues to proceed smoothly. Corn milling was weaker than prior year as lower market demand from the brewer in cereal industries caused a decline in volumes. Sugar & Bioenergy incurred a loss of $23 million versus a loss of $64 million in the prior year. The prior year was impacted by a $30 million -- $31 million loss resulting from temporary mark-to-market losses related to the hedges of forward sugar sales. As a reminder, the first quarter is the inter-harvest period in Brazil when sugarcane mills do not operate for most of the quarter and products are sold out of inventories carried over from the prior year. Our industrial sugar milling results were improved from prior year and in line with our expectations. The improvement primarily results from higher sugar and ethanol prices in local currency. Our productivity improvement programs continue to show positive results. Trading and distribution results were below prior year as lower margins more than offset higher volumes. Results in our biofuel joint ventures were below prior year. Fertilizer results were a loss of $6 million versus a profit of $6 million in the prior year, mainly due to a strike at one of our fertilizer facilities in Argentina. The strike has been resolved. Lower import volume at our Brazilian fertilizer port also impacted results. Our earnings per share for the quarter was $1.58 versus a $0.12 loss in the prior year. Let's turn to Slide 5 in our return on invested capital. For the 12 months ended March 15, our return on invested capital for Bunge Limited, including our Sugar & Bioenergy segment, was 8.8%, which is 1.8 points above our cost of capital. For combined Agribusiness and Foods, the return is 8 point -- is 10.7%, a significant improvement over the 2000 return -- 2014 return of 8.4%. The increased returns reflect several factors. First, and the largest driver of the improvement, was that 2015 first quarter performance was much better than the first quarter of 2014; second, working capital levels have decreased, reflecting our strong focus on optimizing working capital and lower commodity prices; and third, we were able to widen margins in Agribusiness to more than offset the translation impact on earnings while the foreign currency translation impact did lower our asset values. We expect strong returns to continue through the course of the year. Actual returns will be impacted by a number of factors, including crop sizes, commodity prices, market structure and currency movements, so it is difficult to give a precise projection this early in the year. Let's turn to Slide 6 and the cash flow. Our cash provided by operating activities was $300 million -- $308 million, reflecting $173 million funds from operations and $135 million from lower working capital. This compares to an outflow of approximately $1.1 billion in the prior year. While our liquidity position remains strong, at March 31, we had $4.7 billion available under our committed credit line. Let's turn to Slide 7 and our capital allocation process. We continue to follow a disciplined capital allocation process. Our first priority continues to be maintaining metrics consistent with the BBB credit rating. After that, we allocate our funds to capital expenditures, acquisitions, share buybacks and dividends in a manner which provides the highest long-term return to our shareholders. In the first quarter, we repurchased $200 million of Bunge shares, paid dividends of $58 million, acquired the assets of Heartland Harvest for $48 million, consistent with our strategy of increasing the size of our value-added Foods business through bolt-on acquisitions and spent $117 million in capital expenditures. We continue to expect to spend $875 million on capital expenditures in 2015. Let's move to Slide 8 and the outlook. In Agribusiness, South American crops are large, and planting intentions indicate a large Northern Hemisphere crop should follow. Underlying demand is strong as meat producers are doing well overall. The USDA projects 6% growth in soymeal demand. As the South American crop arrives, they should be the main supplier of global export demand. Soy crush margins in Brazil and Argentina are good, and our advantaged logistics slip [ph] into Brazil should benefit from the large volumes. And in China, soy crush margins continue to show improvement. While our outlook for the full year is expected to be favorable, the second quarter may be impacted by weak softseed margins and slow farmer sellings. In Food & Ingredients, we expect to show higher year-on-year results despite the headwind from translating results from countries where the local currency has depreciated. We remain focused on our business improvement initiatives, on the productivity and cost side and in our commercial operations where we continue to focus on expanding our business in higher value-added areas. In Sugar & Bioenergy, we continue to expect to be EBIT and cash flow positive. As a reminder, the business is seasonal, and the profits are primarily earned in the second half of the year. With that, I will now turn the call back to the operator, and we will take your questions.

[Operator Instructions] And our first question comes from Ann Duignan with JPMorgan. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Can we talk about on-farm storage, both in the U.S. and in Brazil? In the U.S., do you agree that, that's more of a secular trend? We've had a lot of on-farm storage built over the last 5 or 6 years? Brazil might be more a little bit cyclical or just based on currency. But could you talk about what impact this has on your business, both on the cadence of your -- the seasonality of your business and also on what it could do to working capital demands as we go forward?

Okay. I mean, you're right that, certainly, in the U.S., on-farm storage has expanded at a significant rate over the last few years, and farmers are increasingly in a position to hold the vast majority of their crop. In Argentina, for example, it's been in the form of silo bags, but the same thing is true. So that trend is clearly there. We're not, as Bunge in the U.S., set up as a -- or our business model is not based on large storage revenue returns. We are much more of a throughput handler with our footprint primarily in the south where crops turn fast, et cetera. So to us, it is not -- it's not a major significant impact on earnings. But the trend is clear that farmers are increasingly in a position to choose how they market their crops. Ann P. Duignan - JP Morgan Chase & Co, Research Division: And in Brazil, how should we think about those crops coming to market? Does it just put more pressure on the logistics business?

Well, in Brazil, what's clearly happened over the last 2 or 3 years is that the whole infrastructure and, let's say, the ability of companies like ourselves to handle snacks and logistics during harvest, we've gotten better at it. We've invested -- one example is the new port we have in the northern part of Brazil, Tefron, which clearly takes some of the pressure off during the peak. But in general, better planning, investments in transshipment facilities and, certainly, also some interior storage has been added. But in general, we're just better at running the system in Brazil. I don't think there's as much of a shift towards on-farm storage as you might have seen in the U.S. It's more just the industry has gotten better at handling peak crops. And we're better at anticipating trouble, so to speak, whether it's weather or in this year, it was the truck strikes. We've got more ways to deal with the complexity. Ann P. Duignan - JP Morgan Chase & Co, Research Division: Great. I appreciate the color. And then just a quick follow-up on the China environment. Can you talk about what's going on there from a fundamental standpoint rather than just the trading?

Yes. I mean -- and China is a very different place from a crush margin perspective, certainly, this year than it was last year. Margins in China have rebounded sharply. This time last year, we were looking at negative gross margins in China, and now, really, for the balance of the year, we are looking at margins that are in the $30-plus range, so covering full cost plus some. So it's a better environment. A lot of the reason, I think, has just been the discipline that comes after a difficult year, which the entire industry experienced. Financial players are essentially out of the picture, so there's not a lot of -- there doesn't seem to be any market distortion as we saw last year. And I think, in general, just more discipline. So margins have improved. Underlying demand is good, so we expect a year of growth in China. And protein demand, an offtake, 5% give and take. So it feels like China has returned to more normal types of behaviors and where it's really underlying demand and fundamentals that determine margins. And so it feels a lot better than it did last year at the same time.

Given the change to the financial system in China with all of the reforms they have made, we expect that to be a structural shift that -- in a way that business operate that lasts for the longer term versus a temporary movement in market margins.

Our next question comes from Evan Morris with Bank of America.

Just a question first on the oilseeds processing margins. You mentioned that they improved in Brazil and Argentina and should remain good through September. Just -- if you could put a little context around that. Where are the margins now? How do they compare with last year? And I guess, when you say good through September, does that mean sort of in line with current trends? Are you expecting an improvement? Can you just put some context around that?

Yes, I think, in Brazil, margins are probably about as they were last year, maybe a little bit better. We've got a big crop almost done with the harvest now, but it looks like a 90 million ton plus crop. And so we expect that crush margins and the pace of crush will be -- remain very strong in Brazil through the balance of the year, but particularly, with good margins in the next 4, 5 months as Brazil supplies both its own growing domestic needs but also exports. And in Argentina, a lot of it depends ultimately on farmer selling, but it's a bumper crop. It's the largest crop we've had. And we've got active deliveries of beans to the ports. All the crushing plants are running at full speed. And Argentina has really sort of taken the stage now of global pricing of soybean meal and at good margins. Whereas last year, it was touch and go. So Argentina, really, is an improvement, without a doubt. So I think, in general, if you take South America sort of as a weighted average, margins are better than they were a year ago, and the prospects for the next 4, 5 months are improved.

Okay. And just -- you had a big second quarter last year in Agribusiness. You talked about slower farmer selling, possibly differing income. Sugar & Bioenergy was, I guess, more weighted to the second half, and it sounds a little bit like you're tempering maybe the Food & Ingredients growth for a few reasons. And I know it's tough to forecast quarters. Just trying to understand, I guess, the cadence of the year. Is it -- should that -- are you thinking that second quarter total operating profit, I guess, would be below year ago levels before rebounding in the second half? Is that the right way to think about how the rest of the year shapes up?

Yes. You're not far off. I think we'll have a good second quarter. That, I feel comfortable with. But the 2 things we flagged, really, farmer selling on the one side and softseed margins, which are clearly not as good as they were last year. The question, really, is, can soy overcome all that? And it's too early to tell. But it is -- those are the flags we are bringing up. So it will be a good quarter, but it might not be as fantastic as you would've expected earlier in a normal year where everything would be firing on all cylinders. That being said, we still expect that it will be a very strong year in Agribusiness and significantly better than last.

Our next question is from David Driscoll with Citi Research.

Just wanted to follow up on the -- on Evan's question on second quarter. So sequentially, slower farmer -- sorry, just slower farmer sales and then sequentially, lower crush margins appear to be kind of pretty factual almost at this point, just given the shift from really strong North American crush margins to the Southern Hemisphere. And then furthermore, granted, this is hard because there's different periods that might contradict this. But generally, guys, I think that the second quarter is the seasonally lowest EBIT quarter of the year. Just to kind of dial into this as much as we can, is that accurate? Is this thing -- would you think that second quarter would be the seasonally lowest EBIT quarter?

I think, David, things shift year-to-year, as you're aware. I think in the longer term, the first quarter has probably been a little bit weaker than the second. But we are seeing some of the weakness that you've referred to this year. And last year, it was a strong quarter, to put it in perspective. So last year, probably a little bit stronger than usual; this year, a little bit weaker. We're not seeing big moves, and we're not really concerned about the soy margins in the quarter. I think Soren said it well. We've got 2 flags. One is farmer selling, and farmer selling can change quickly based on how commodity prices move, how currency moves and how the farmer reacts. So there's still going to be some movement in that. I think we know that sunseed margins will be off in the second quarter. I don't think we see that changing. But realize, the second quarter isn't the biggest quarter for sunseed. It's about 15% of our crush, et cetera. So on the margin, it's going to affect our results, and you'll see the impact. But it's not the biggest driver of our results on the other hand. So maybe that context helps a little bit.

Can I follow one other point here? It's that -- so the Northern Hemisphere crush margins, Q4 and Q1, just as we'd calculate, those board margins were exceptional relative to almost any period in history that I look at. North America, good consolidated market. So again, what I feel so unsure about is, this Q1 and even Q4 were benefiting from that. But that is not true in the second quarter, really shifts to South America. So when you guys describe South American margins as good, I think a lot of investors will kind of compare them to the first quarter. And I just don't even think they do compare. I think South American margins are -- while good, they are much lower than Northern Hemisphere margins from Q4, Q1. Is that fair?

Yes, I think that's -- that is fair. Your description is correct. But I would say, though, if you take the weighted average of soy crush margins, Dave, between China, Argentina, Paraguay, Brazil, U.S. and Southern Europe, which is where we have our footprint, the weighted average of that, I still feel is as good or maybe even better than it was a year ago. So it is true that some of the extreme goodness of North America, U.S. in particular, may not be there the same way as it was in the past year. But China for sure is making up for a large part of that. And in general, Brazil, Paraguay and Argentina looks better than it did the same time last year.

That's helpful. Final question for me is, we have this outbreak of avian influenza in the turkeys and in the chickens here. These would be your end customers. What's your assessment of the situation in the United States right now? And what type of impact would it, could it have as the year progresses? And I'm looking for just kind of scale here. Is this a significant issue that we should be worried about regarding the sales of soymeal and other products that you'll sell to those customers?

I would say that at this point, I wouldn't consider it to be material impact to overall soybean meal demand. I mean, there is an impact, but you're talking about less than 1%, perhaps, of the total soybean meal consumption in the U.S. So at this stage, I wouldn't flag it as a big negative. But these things can spread. I mean, so what's -- I don't know what's going to happen in the next weeks. Hopefully, it'll be contained. And everybody is obviously working hard to make sure that happens. And from what I've read, that seems to be the belief. So at this stage, with what we know, not be a big deal.

Our next question is from Farha Aslam with Stephens, Inc.

I wanted to think if [ph] you noticed this, and if you can reiterate your 850 [ph] target for 2017. So in one of your ways of getting that was your SAP system incentivizing your operations. Could you just share with us on the bigger picture where you stand with your SAP implementation and kind of some of that strategic improvement that's been generated by that?

Yes. I think -- I apologize, but you broke up a little bit. But if I caught the correct -- the question correctly, you're asking where we are on SAP implementation and how we're going to benefit in the long term.

Yes, yes.

We are probably 78% to 80% through our SAP implementation. We have some final markets and businesses to finish putting it in place. It will give us a deeper visibility and more real-time information on both the commercial and the cost side. And it'll help us coordinate logistics figure, so we think it will provide a benefit. And that is one of the things our performance improvement teams are very much in focus on as they drive the logistics initiative, they drive our productivity initiatives in our processing facilities and our food facilities is how are they going to be able to leverage that information across the company. We also are very strong in the area of using best-in-class performance and taking our best practice across the company. And we're already able to do that in a lot of our manufacturing operations where SAP is already in place. Even though it's not everywhere, it's in enough places that we can get a significant advantage from it.

Okay. And just as a follow-up on that North American farmer selling. What gives you the confidence that the farmer will go ahead and sell in the second half of the year while you're holding back right now? I mean, this is now the third harvest that's going to come. And is there enough capacity for them to continue to hold crops because I think they haven't really sold the last 2?

Yes. At the moment, you're in sort of the season where farmers are in the field. They're planting their crops. Their thoughts are not necessarily on selling grain. But it is a fact that on-farm storage of crops, corn in particular, is at an all-time record high. So although a lot of storage space has been added in North America over the last several years, you would expect that with another large crop, which we expect, that marketing pattern should return to something more normal in the second half, but maybe not the second half, but the last 4 months of the year.

And so just this improved on-farm storage capacity, do you think that grain storage in the U.S., which is sort of underowned over the last year or 2 is a permanent shift in terms of downtick in earnings opportunities because of this better-capitalized farmer and more on-farm storage? Or do you think it's a temporary issue that was a result of the 2012 SAP?

No. I think that -- well, first of all, Bunge's business model in grain in North America is not really based on storing large amounts of crop. We're more of a handler. And our asset footprint, particularly in the southern part of the United States, reflects that. I do think that this -- that there is a shift that's taking place that's not going away. Farmers are increasingly in a position to store their crops to the extent that they have the financial wherewithal to do it.

So would you think that same-storage income is going to lower in the U.S. or North America [indiscernible] that it has been in the past?

It's difficult to predict, really. The fact that there is a lot more on-farm storage means that there is competition for commercial storage. That's clear. But ultimately, it really depends on the size of the crop. And we just don't know how big it's going to be yet. So you could still have wide carries with the existing amount of on-farm storage, assuming that we have another record crop. We just don't know yet.

Our next question is from Jim Tiberio -- I'm sorry, Tim Tiberio with Miller Tabak. Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division: I have a question on capital allocation. I was a bit surprised that didn't get a little bit more commentary on the forward buyback outlook. How should we be thinking about, I guess, your prioritization of cash return versus maybe increased M&A opportunity as we enter 2015?

Well, I think Drew said it, and we've repeated it in the last several calls, that we are committed to a balanced capital allocation approach where we evaluate the best long-term returns for shareholders across the spectrum of ways that we can spend fund from operations. And we are committed to that. And I think we demonstrated that again in the first quarter with the buyback. We will continue to stay true to that. So on an ongoing basis, we'll evaluate where best returns are, and clearly, bolt-on M&A is a piece of that. We had a small bolt-on in the first quarter. We will continue to look for things like that, that complement our existing Food & Ingredients business and have strong ties into Agribusiness. And so as the year progresses, we will just make those calls, and that's really all I can say. We're committed to a balanced approach. Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division: Okay, that's fair enough. And I guess, on the M&A side, it sounds like bolt-on acquisitions versus transformational acquisitions are still kind of your thought process at this point. Is that fair?

Yes. At this point, that's right, yes. Tim J. Tiberio - Miller Tabak + Co., LLC, Research Division: Okay. And then just one last question. I know you expanded into Canada with this partnership with the Canadian Wheat Board organization. My understanding that there's still some limited port capacity in Vancouver, but I know you've invested quite considerably in the Pacific Northwest over the couple last years. Can you kind of frame up for us what's the -- how you're thinking about the long-term EBIT potential from this partnership? And will this require more in-country CapEx, potentially on the West Coast of Canada?

Well, the acquisition in partnership with the [indiscernible] of the Canadian Wheat Board is, in a way, sort of the first step in completing what we know has been the missing piece of Bunge's global Agribusiness footprint in Canada. And so our focus over the next months as we -- well, first of all, we have to close. And then subsequently, it's about integrating the existing Canadian Wheat Board assets with those of Bunge and completing the build-out of what the Wheat Board has already started, a number of facilities that are sort of halfway completed that'll be state-of-the-art, that will fit right into what we've got. And so by then, we will have an eastern footprint that really is quite excellent. The second stage then will be looking at how do we expand west. And we can't get into too much detail at this point, but that is clearly in our thoughts. How can we leverage that footprint then into how we access West Coast flows more efficiently, whether that is partly through our existing terminal in the U.S. or whether that means new opportunities in the Canadian West Coast. That remains to be determined, but it's clearly on our mind.

Our next question is from Adam Samuelson with Goldman Sachs.

I guess the first question is, thinking -- or maybe going back to the capital allocation question in the Wheat Board and buybacks in thinking both on the Wheat Board, can you just quantify how much cash, if any, you're actually putting into the JV? And then what do you think kind of the actual capital inflow you're going to need to be on the hook for there?

We have not yet fully disclosed the financing of the Wheat Board transaction and what the structure will be, so I don't want to get out ahead of ourselves here. But I think it's important to remember 2 things that, one, a large part of our contribution will be our recent Canadian asset, so that is transferring existing assets in versus using cash to fund our portion of that transaction; and secondly, upon the establishment of the new entity, the structure of the deal was specifically made, so we have the ability to use cash that'll be in that entity to expand the business. And we very much would like to invest in appropriate assets in Canada and support the Canadian farmer and give the Canadian farmer as much opportunity as he can to market his grains effectively.

But I guess the takeaway there is that we shouldn't be thinking what the CWB and the increased Canadian presence as materially changing the CapEx outlook you laid out at the Analyst Day and the opportunity for incremental cash that they can go back to shareholders via repurchased over time. Is that a fair assessment?

Yes.

Yes. The CapEx that we presented at Investor Day, by and large, will stay as we presented it, yes.

Okay, great. And then maybe switching gears to Farha's -- kind of taking Farha's question in a little bit different light. You talked about $325 million of EBIT improvement from cost efficiency actions in Agribusiness and Food & Ingredients through 2017. I'm sure and I hope this is something you're tracking rigorously internally. Can you help us think through how much has actually been achieved to date? How much of that $325 million should start -- should be expected to contribute to 2015 earnings, and how that layers through the next couple of years as you execute on those actions?

Yes, I -- we do track it. We track it monthly, and we track it, obviously, quarterly. So for the first quarter, I'd say somewhere around $30 million; $20 million in Food and $10 million to $15 million in Agribusiness is what flowed through the P&L. And that will gather -- that will grow in size as the year progresses. And we expect that we will be somewhere between $90 million and $100 million between Agribusiness and Food at year end. And 2016 will be a step-up from that. And as you said correctly, the combined impact of Food and Agribusiness by 2017 will be the $325 million. So that's the type of progression we are looking at.

So just to be clear, that was $30 million in -- of -- in the quarter or $30 million annualized run rate? I just want to be clear on that.

In the quarter between Food and Ag combined.

Our next question is from Ken Zaslow with Bank of Montréal.

So I know we're all -- there's a lot of talk about the second quarter. But could we bring it down a little bit? In terms of this quarter itself, it sounds like you had exceeded your expectations or came in line with your expectations. Could you first answer that?

I would say that it was a good quarter, maybe on the higher side of our expectations but not far off.

Okay. And then how does that translate for the full year? Rather than just the second quarter, there seems to be some moving around of -- mark-to-market seems like that between first and second. But for the full year, what is the expectation relative to where we started out because it sounds, again, like things are playing out more positively in the ag industry?

Yes. I think we certainly expect a better year in ag than we had last year for the full year. And as you can see, we're off to a good start. Q2, who knows? It's a little -- still too early to tell, but we mostly are talking about a shift in earnings. So if you look at the full year in Agribusiness, it should be a very good year, better than last year. And if you look at Food, although we do have some headwinds in some of the markets where currency translation is an issue, we are largely able to overcome it through our performance improvements, the ones that I just mentioned. And so Food will be a nice step-up in earnings. So the combination of both, really, should make for a good -- for a very good 2015 and, as we've indicated, on a nice path towards the $8.50 in 2017. So overall, it looks very good.

Okay. When you think about that path to $8.50, I don't know if I asked the question at CAGNY. I just kind of want to -- 1 quarter under your belt maybe not the best time to estimate it. We'll get a little bit further there. Do you think that the progression through to -- to your $8.50 number is evenly weighted through the years, a little bit weighted earlier, given the operating environment? Or how do you kind of see the progression between now and getting to your $8.50 number? And has it changed since CAGNY?

Yes. I mean, stopping short of guidance, I would say it is -- it's probably more linear but with the usual variations that you always have to expect can happen within our type of industry.

Our next question is from Rob Moskow with Crédit Suisse. Robert Moskow - Crédit Suisse AG, Research Division: This will just be kind of, I think, modeling types of questions. Your oilseeds and grains breakout that you're providing. In terms of proportion to each other, is that pretty typical with oilseeds 3x the size of the profit contribution between the 2? Tough question.

That's a tough question because it is very seasonal, and it is very quarterly. But I think it is fair to say that the majority structural earnings of Bunge should come out of the oilseed bucket. Any given quarter, that can, of course, be different. But the majority of the earnings power in a normal year should be in the oilseeds section.

Yes. I would agree to that. It tilts towards oilseeds but maybe not in the exact proportions we're seeing in the first -- yes, first quarter.

No, the first quarter may not be an indication of that. More as it relates probably to the asset base that Drew was mentioning, which is more of a 60-40 split in favor of oilseeds being larger. That's probably more of a normal -- if there is a normal distribution, that's probably more like it. Robert Moskow - Crédit Suisse AG, Research Division: Right. And the reason that return on asset is higher in oilseeds is because it's crushing operations that tend to get good margins. Is that the primary reason?

I think if you look at the balance, you'll tend to see the oilseeds a little bit more oriented towards assets that are fixed assets, which tend to provide higher returns. And you see that expressed in the crush margins. Typically, in businesses that are more flow business with some -- with a more working capital type of structure, you'll tend to see a little bit lower margin. So I think that's correct. Also realizing that you're getting a little bit tilt towards Agribusiness because we've -- towards grains because we've put all of our service income over there to give you some more clarity and insight where actually some of that service income is earned working on things for the oilseeds side of the house. Robert Moskow - Crédit Suisse AG, Research Division: Okay, I'll follow up on that one. And then for Food & Ingredients, did you quantify what the currency hit for the year is going to be in terms of profit?

Well, what we estimate at the moment is that the foreign exchange impact in our Food earnings is -- could be somewhere around $30 million to $50 million, call it $40 million. And that some of that, we will be able to offset by our improvement programs that I -- as I described. So if you want to sort of go back to Investor Day and some of the other indications we've given last year about the expectations of a good Food year in 2015, you would've come to somewhere around $370 million. And so that was our expectation as we started out the year. And now it's going to be a little bit less than that, in all likelihood, but not dramatically so. Robert Moskow - Crédit Suisse AG, Research Division: Okay. And then last question. Grains had a big quarter, I guess, because of the Middle Eastern trade that you did. And it was a high-margin trade. Is there any reason to believe that you couldn't do that again in second quarter because of the size of the North American crop? Is that the driver that provides that ability?

I'm not sure exactly what you're referencing there. Our grain results were a combination of good results across many geographies. Grain origination in Brazil, for example, was a very big contributor and should be again in the second quarter. So it's not one business that created the result in the first quarter.

Yes, it's not an outsized result or a special result in the fourth quarter. It would be typical -- the business reacted in a way that would be typical of what we'd expect on an ongoing basis.

And Rob, the export programs you're referring to were in -- more in oilseeds. Robert Moskow - Crédit Suisse AG, Research Division: More in Oilseeds, okay. So that's where it lies. Okay. Is there any reason to believe that, that couldn't continue into second quarter?

No, I think we should expect to have good oilseed trading and distribution results also in the second quarter. I mean, we've got a -- it's a global franchise. We've got activities everywhere in the Mediterranean, in the Northern Europe, in Southeast Asia, in the Caribbean. So it's a big portfolio of distribution that is tightly closed and closely linked to our crushing business. But yes, we -- second quarter should be a good quarter for that.

[Operator Instructions] And our next question comes from David Driscoll with Citi Research.

Just 2 quick ones. Drew, what -- I'm sorry, what did you say for share repurchase for all of 2015? You did -- I think you said $200 million in the first quarter. What happens from here?

Yes. Dave -- David, we didn't do a forecast of share repurchases, and we tend not to. We'll continue our capital allocation processes of looking at our various options. Share repurchase is something that is part of our plans as our bolt-on acquisitions and some other things, but those are the -- probably the 2 most variable at the moment. And we'll look at the opportunities in each, and see where we think we can create the most value for shareholders and react accordingly.

Can you remind me what remains on your repurchase authorization?

Our current purchase authorization has expired. And we are in the process of discussing with our board a potential new program.

Okay, okay. So maybe there's something more to say later on. On Food & Ingredients, I think the target is, hopefully, if my memory is right, $425 million in segment earnings by 2016. The question -- hopefully, I got that right. But the question is that given your comments, Soren, about the foreign exchange environment, in your opinion, is that target still safe by 2016? Or would you kind of haircut it because of the ForEx issues going on now?

No, I think -- I mean, there is so much time between now and then that I would say that should still be our target. So no, I would not haircut that. I think this year, the haircut is a little bit like I just described. But I think we should still -- that is the target we are still aiming for, and I believe it's realistic.

Our next question comes from Adam Samuelson with Goldman Sachs.

Just a quick follow-up on FX. $30 million to $50 million in Food & Ingredients, what's the benefit of -- from FX in Agribusiness and Sugar? Or put in another way, what's the net FX impact for the company in '15 given current rates?

Yes, I would say, on balance, we believe the net for Bunge is a positive. You can discuss how much it is. But clearly, Agribusiness is benefiting from the opposite effects that the Food & Ingredients has. It encourages farmer selling. It reduces our cost. And to the extent that it continued to hold dollar margins as we have, it should be a net positive throughout the year.

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. We'll see you next quarter.