Good day and welcome to the Bunge Limited First Quarter 2019 Earnings Release and Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ruth Ann Wisener, Vice President, Investor Relations. Please go ahead.

Thank you, operator and thank you for joining us this morning. It’s great to be here at Bunge. Before we get started, I want to let you know that we have slides to accompany our discussion. These can be found in the Investors section of our website at bunge.com under Investor Presentations. Reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well. 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 view 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 we encourage you to review these factors. On the call this morning are Greg Heckman, Chief Executive Officer and Thom Boehlert, Chief Financial Officer. I will now turn the call over to Greg.

Thank you, Ruth Ann, and good morning. I’m honored to have the opportunity to serve as Bunge’s new CEO, and we have a lot to discuss today. But first, I’d like to welcome Ruth Ann Wisener, our new Head of Investor Relations. Ruth Ann joined Bunge in March and brings a wealth of experience in food and agricultural industries from Tyson Foods and ADM among others. Ruth Ann’s relationships with analysts and investors will be a great asset for us, and I’m delighted to welcome her to the Bunge team. We are aggressively moving forward on the priorities we discussed last quarter, and we continue to ramp up the important efforts already underway to improve our business and operations. This morning, I want to share with you why I’m excited about the company’s prospects. I will then cover some organizational changes that we announced today. We will review our strategic priorities, and then Thom will provide additional detail on our first quarter results. And then finally, we will open it up for Q&A. Over the past several months, I focused on getting to know Bunge better by visiting many of our locations and meeting with our people across the globe. In South America, Europe and the U.S., I’ve seen some of our operations up close and received valuable feedback from employees on their ideas to improve how we operate. I’ve also seen the depth of our employees’ knowledge, passion and commitment to the success of our business going forward. I’ve gained new insights into how our business segments complement each other and how we can use those relationships to better leverage our assets. For example, as we had expected, integrating Loders Croklaan into our legacy portfolio is giving us opportunities to become a valued supplier of additional products and services…

Thanks, Greg. Good morning, everybody. Let’s turn to the earnings highlights on Page 4. Reported first quarter earnings per share from continuing operations, was $0.26 compared to a loss of $0.20 in the first quarter of 2018. Adjusted earnings per share, was $0.36 in the first quarter versus a $0.06 loss in the prior year. Notable pre-tax charges totaled $15 million during the quarter primarily related to the Global Competitiveness Program and an impairment charge. Total segment EBIT for the quarter was $151 million versus $61 million in the prior year. On an adjusted basis, total segment EBIT was $166 million versus $85 million in the prior year. In Agribusiness, adjusted EBIT was $120 million compared to $52 million in the prior year. Starting with Oilseeds, both quarters were negatively impacted by crush margin mark-to-market timing effects: in the first quarter of 2019, by mark-to-market gains taken in 2018 related to the first quarter production; and in the first quarter of 2018, by mark-to-market losses related to future production. Adjusting for these 2 effects, first quarter 2019 adjusted EBIT would have been approximately $146 million compared to $86 million in 2018, an increase of $60 million. Crush results adjusted for mark-to-market were the primary driver of the increase year-over-year. Both soy and soft crush volumes were slightly higher than last year. Soy crush margins were higher as we locked in a significant portion of our first quarter production last year before margins weakened. Margins were higher in North America, Brazil and Europe but lower in China due to the effects of the African swine fever and in Argentina, which was negatively impacted by farmer retention of soybeans. And soft crush margins also rose as higher vegetable oil prices improved performance in Europe and Canada. This more than offset lower results…

Thank you again for joining us today. The changes we have underway will help simplify our internal structure and processes, allowing us to leverage the depth of our expertise and increase accountability across Bunge. We are making progress against our strategic priorities, which will result in tangible benefits for our shareholders and customers. And with that, operator, let’s open the line for questions.

[Operator Instructions] The first question comes from Robert Moskow of Credit Suisse. Please go ahead.

Hi, thank you for questions. Greg, Bunge, historically, was run on a very regional basis. There were regional presidents who had a lot of authority, and I think that probably limited the capability of the company to leverage its global footprint. So can you talk a little bit about the cultural change that this reorganization will require? And can you talk about the potential for execution risk as you shift to this new model? Are there are other ag business companies like – well, peers of yours that have shifted to this model successfully that you are using as a comp also? Thank you.

Good morning, Rob. This is about performance. This is about simplification, accountability and speed. And we are looking to improve accountability and speed and through simplification it’s going to help a lot of that. We are going to organize around customers and markets, customers that we serve and the assets and people that operate and the markets that drive our margins.

Okay. Can you talk about whether this is a big cultural change for the company?

Well, eliminating the regional matrix is definitely a cultural change. But I think the journey the company has been on the last 2 years, if you look at the Global Competitiveness Program, the functions had moved to global. And the company has been transitioning there. And then if you look at the acquisition of Loders, so the Bunge Loders Croklaan, on our B2B Oils platform, the company positioned that as a global platform when they decided how that would best operate. So, there’s already been a couple of big shifts there with a lot of success behind them over the last 2 years. So, I think the evolution was started and it was time to go all the way.

Okay, great. And one follow-up, you mentioned that Loders will now report directly to you, and it’s shifted to a global platform. When you say that does that mean that it has now integrated with Bunge’s heritage Edible Oils operations or a part of Bunge’s heritage operations? Like is this a is this now operating like a global Edible Oils business or are there still kind of regional areas of Edible Oils that are separate from it? Thanks.

Yes. The team positioned it as a global platform. So, the Bunge Loders Croklaan JV and our legacy business-to-business Oils platform now operates as one platform under Aaron. No change there. The only change is he’ll be reporting to me.

Okay, the reason I asked is because I guess it gets down to like doesn’t it still get down to like the consumer level in Brazil like a retail bottled oils operation that even have some brands attached to it or is that part of this network or kind of separate or not?

No, that’s attached to our oilseed value chain. So those are attached to our value chains. In all of, these businesses, they even in a global business, there are certain things that are always of course executed locally. And that’s part of getting the business model right and being able to be very clear about who has the accountability and being able to make decisions at commercial speed for our customers and across our network for our shareholders.

Okay alright. I will stop there. Thank you.

Alright, thank you.

The next question comes from Adam Samuelson of Goldman Sachs. Please go ahead.

Yes, thanks. Good morning, everyone. So, I guess first, Greg, just wanted to dig a little bit more on some of the strategic actions and there was an illusion in your remarks to portfolio optimization and not specifically identifying businesses, and I get that for sensitivity reasons. But any way to frame how big that bucket could be, whether it’s in terms of how much invested capital it represents, what the multiyear average earnings of those businesses were, just framing kind of what in terms of portfolio changes, how big those that could be?

Let me walk you through the work how we are moving that forward. So, we have taken and prioritized into three buckets, if you will between what we want to do and what we know we can do. And that first bucket are all our active projects and we’ve dedicated internal and external resources, and that work is well underway. And those will be the things in the first bucket that you’ll hear about first when we’re able to share it. The second bucket are the things that are in late stage where we’ve made a decision about what we’re going to do. And now, we’re probably between two paths on how we do it in order to create the most shareholder value. And so those are late stage, and they’ll be moving in the active stage and having additional resources applied to those. And then the things that are in the third stage are things that are maybe a little more complex and where we’ve got some analyses ongoing or whether may be a bigger strategic question. So that’s to kind of frame where we are at right now.

Okay. But not at a point where you’d really know at least especially that first group kind of frame how big of an op how big that is, just at a high level even if those [indiscernible] businesses?

No. Just can’t do that right now.

Okay. And then shifting gears on the macro, just obviously, a lot of moving pieces in the world today between the between U.S.-China trade and ASF and appreciating that the timing and exact outcomes of each is still unclear. But I was hoping you could just frame how the company is approaching both of those from an opportunity and risk perspective over the balance of the year and into 2020.

Okay. Let’s start with ASF. As we said, the timing and the magnitude of the eventual impact, really tough. And so, we’re not going to try to predict that. That being said, we are running a number of scenarios. And our teams are seeing everything you’re seeing publicly and then, of course, looking across our portfolio with the information that we have. We believe the over the long term, that should provide us some tailwinds, but we’re just not willing to say when that’s going to be right now.

Okay. And U.S. China trade?

U.S.-China trade, that’s also a timing issue. Even if you knew the timing, you’d need to know the content of what the outcome is going to be, and we don’t know either about a resolution. So again, I think our team has done a very good job in what’s a difficult environment and ensuring that we continue to manage the earnings at risk in our portfolio and also protect the company from any of the stroke of pen risk that exists in this type of scenario. So, we’ve got no specific call on that.

Okay I appreciate that color. I will pass it on. Thanks.

The next question comes from Tom Simonitsch of JPMorgan. Please go ahead.

Good morning.

Good morning Tom.

You mentioned farmer retention of soybeans impacting Q1 results. Can you just provide some more color by region? How do you expect farmer selling to evolve from here? And how are you managing your supply of beans in South America?

Okay. Our team we’ve got a great footprint in South America and a great team there who’s doing a very good job of managing what we need. The Argentinian farmer has continued to retain the majority of his soybeans after marketing corn and wheat and using that as a hedge against the upcoming possible financial turmoil with an election in Q4. In Brazil, I think we know he’s well marketed. The farmer has well marketed early and then slowed things down. And he’ll really be driven by price, we think, on a go forward. And then, of course, the American farmer’s waiting to get in the field and hoping he’ll get a little dry weather and be busy. And the historical pattern is he’s probably we get into Q3, he’ll have a good look at how his crops coming along and what he ended up planting and he’ll have to make some choices.

That’s helpful. And also, could you walk through the softseed crush fundamentals by region? And maybe outline where you see the most upside or downside rest of the margins through this year?

Yes. I’d say just overall it looks a lot like last year right now. And then as crops come off later in the year, that’ll be the key that and I’m not calling any big change to what we saw last quarter when we put the business plan together.

I will pass it on. Thank you very much.

Thank you.

The next question comes from David Driscoll of Citi. Please go ahead.

Good morning. This is Cornell Burnette on for asking questions for David.

Good morning Cornell.

Okay. Great. Just wanted to start off, it sounds like when you’re building kind of the forecast here that in Agribusiness, the on the oilseed side, you’re basically just looking at the current strip for crush margins and assuming that kind of holds. And then on the grain distribution side, it just sounds like you’re I would assume that you’re not really expecting a deal with China. Just wanted to know was that the case? And then if so, kind of how do you look at ASF and the potential for a China deal kind of really impacting the numbers? Does it give you a sense that perhaps kind of the forecast over time could have some upside related to it because of these events. And so maybe the bias is just a little bit higher than where it was perhaps 3 months ago.

I mean let me start with the first 2, and then maybe you’ll have to help me there and come back on the last 2. The first, I think you’ve got them right. We’re continuing to look at what the market is telling us and providing with the forward move curves. So, you’re correct there. And then on the origination and distribution marketing business, again, we continue to look at the current marketplace and the outlook there. And that is tied, as you said, to U.S.-China trade. Because if you continue to have no resolution, we’ve got traditional trade flows interrupted and that they’re distorted. It’s very disruptive to the system and then not being able to put longer-term programs together while we’re staying in a very close-in position until things are clear definitely changes the soybean seaborne trade with the share of that market that China is.

Let me just add to that on the margins. There has been a run-up a bit in board crush over the course of April. When you look at our portfolio, a little less than half is really kind of correlated very directly to board crush, so that’s our U.S. production and our European production. But our Brazil and Argentine production as well as China are not really that correlated to the board crush. So, and those margins are lower than board crush at the moment. So, when we look at the outlook, we’re really looking at the market overall across all of our regions. The increase in board crush recently has given us confidence in our outlook. But of course, based on the conditions and the factors that we’ve talked about globally, those market prices can change pretty quickly.

And then just kind of thinking about like Argentina and Brazil, I would assume kind of on a year-over-year basis with the outlook for Argentina, it’s not like it has to be better with the new crop just given that you didn’t really have much soy to work with on this year. And then in Brazil, equally I think kind of at certain points in the year, you had Brazilian soy price just trading at big premiums that perhaps what you saw in the U.S. market so maybe basis was a little bit difficult for Bunge in those regions. So just kind of putting those 2 factors together, understanding that South America is structurally going to have somewhat lower crush margins than the U.S. But just kind of on a year-over-year basis, are you a little bit more optimistic about the South American business relative to perhaps what transpired last year?

I mean crush margins are lower around the globe compared to last year. I mean last year was a historically high year. So that’s our outlook. Our outlook incorporates, a crush margin environment, which reflects the current market much lower than last year.

If you look at the marketplace while North America is a little better now, still below last year than South America, the market is telling us with the curve inverted, that it’s not going to stay that way. And then in South America, which is well below last year at this time, the market is saying, they could get somewhat better. So, it’s a real mixed bag.

Okay, thanks a lot. I will pass it on.

Okay, thank you.

The next question comes from Vincent Andrews of Morgan Stanley. Please go ahead.

Thank you. Greg, could you maybe talk a little bit about sort of your philosophy around sort of how you want to drive the company’s earnings? And you could bring in risk management on that. And I guess what I’m asking is, are you openly going to aspire to some type of aspirational earnings per share target? And are you going to sort of encourage risk management that would sort of encourage really swinging for it when an opportunity is there and taking risk on it? Or are you going to encourage more of a tollbooth model where you’re trying to take the volatility out of earnings and demonstrate sort of a sustainable level of earnings power that maybe would get a higher multiple? So maybe you could just touch on some of those thematics?

Sure. Our short-term goal is to get Bunge positioned to reach the full potential of what is a fantastic portfolio and a really talented workforce. And that’s #1. As far as risk management, we’ve got billions of dollars of assets invested investments. And it’s our job through risk management to maximize the earnings that are available through that asset base but to ensure that the risk is appropriate for the environment that we’re operating in, which, as we’ve kind of been talking about here the last half an hour, is quite dynamic right now. We want to use the phenomenal capabilities that this company’s, got, but we have to have a risk-adjusted approach for the earnings that this portfolio will make.

Okay. And maybe just as a follow-up on farmer selling, which has been an issue for the industry increasingly. And you noted in the USDA report how much of the beans were unfarmed, which was pretty remarkable. Is there anything structurally that you think the company can do to improve the flow of beans from the farmer? Maybe if the even if that means accepting a lower margin over time, than you might get if you just sort of waited around and hoped that the farmer sold it at an attractive time for both of you? I mean what can change about that farmer selling dynamic?

Ultimately, the farmer is going to manage his business, but he is an important customer for us on that end of the supply chain. And so, we’re going to operate as we always do and try to be helpful, giving him insights and providing liquidity, providing logistics, if he needs it. And then using the balance of our system to find the best points of demand and then trying to get it from origin to destination as cheaply as possible. So, we’ll continue to try help that customer be successful. We need all our customers to be profitable and growing. That makes this industry a lot more fun.

Okay, thanks. I will pass it on.

The next question comes from Heather Jones of Vertical Group. Please go ahead.

Good morning.

Good morning Heather.

Good morning. So, I guess I wanted to start with your oil price outlook. So, you’ve mentioned that your overall outlook for the company hasn’t changed much. But so, but I wanted to dive into oil specifically. There are some positive demand drivers this year. But at least one of them, the Brazilian increase in the bio-diesel mandate, has been delayed. So, I was just wondering if you overall, has your outlook for the oil pricing for the year changed at all or do you think there are other things that can offset that Brazilian factor?

You’ve called out one of the things that was helpful here in Q1 no doubt. But there are a number of puts and takes in the portfolio. So, and we haven’t called that out particularly. I think this again is part of what we’re doing here with our operating model is to ensure in an environment that this dynamic that they are capturing all of the margin possible. And that’s through managing the oil and the meal and the beans and that the team is focused on making those decisions at commercial speed.

Okay. And my second question is on ASF and I understand that you have been pretty clear that you won’t talk to timing you won’t talk to magnitude, understandably. But one of the things we’re discovering is that there are, some doubt as to whether ASF can be a positive for companies like you and all when Chinese soybean meal demand is clearly down and going to be down considerably for an extended period. So, could you help us understand how forget timing, magnitude, but just how ASF could play out as a positive for Bunge with its existing footprint even with lower demand in China? How would that look?

Sure. Sure. And I might go back and just say one thing on timing that probably is important that ties into the answer is how we think about it’s really our customers. The animal protein has to see the price signals and then choose to expand, so we’re a second derivative of that demand. So that’s the thing that makes timing tough. And that’s why it’s probably those tailwinds are farther out. Now about 15% of our crush is in China. So, we really like being globally diversified with our footprint because we believe as the amount of beans slowing down slow down going to China because of the slow down meal demand there that the animal protein will expand at some point and that’ll be outside of China where the majority of our crush is. That should be good for meal demand. As the amount of beans going there are pushed back to origins around the world, again, that’s where the balance of our crushing exists. And again, that should be good for margins. So that’s how we’re kind of thinking about it.

Okay perfect. Thank you so much.

The next question comes from Ken Zaslow of Bank of Montreal. Please go ahead.

Hi good morning everyone.

Good morning Ken.

Just a couple of probably follow-ups more than anything else is, if you and following up on one of the questions, if you had reorganized in the way you are going to go in the future, how much do you think that would have contributed to your past performance over the last 5 years? How would that have made a difference in the earnings potential over the last 5 years? That’s my first question.

So, Ken, you’re starting with the easy ones. I’ve got to say we’ve got to we’ve we’re doing this because we believe it makes us better operators of our assets and to serve customers better. So, the easiest thing to look at would be kind of self-inflicted mistakes that we would be able to avoid. That’s the easiest thing to look at going backwards. That’s why we’ve talked about the faster commercial decision-making and ultimately, about trying to unleash the full potential of this portfolio. So, I don’t have a number for you. It’s more. And to be continued, I guess.

Okay. The second easy question I have is, when you break up the portfolio into those 3 buckets, and I’m not asking which ones, but in the active, how what percentage are you there on the active that you’re actually doing something? Or are you still in that third category where we are still analyzing? I guess what I’m trying to figure out is, what’s the speed to which we’ll start to see the actions, right? So, if you’re 90% in bucket 1 versus 10% in bucket 1, there’s probably a difference in timing, right? Is that not a fair way of thinking of that? And can you give us some perspective on that?

No. You got that right. The timing as we bucket, you’re going to hear about the things in bucket 1 first when I say active projects where we’ve got not only dedicated internal people working on it, we brought dedicated external people and resources to bear. And their conversations are ongoing. So, we’ll those are the ones you’ll hear about first.

Okay. So, there’s nothing in that bucket yet. Is that what you’re saying? There’s nothing in that bucket you’re all in bucket 2 and 3 at this point, and then...

No. No, no. We have a no. we have a number of active projects in bucket 1. We have a number of active projects with conversations going on way going on now, which are paving the way for change.

Okay. And then just one clarification on the African swine fever, and correct me if I’m wrong. So, China obviously does not buy soybean meal. So, the decrease in soybean meal demand by China is not a one-for-one on the global market. But if there’s an expansion outside of China as a one-for-one relationship to soybean meal demand on global prices, is that why there is a potential that African swine fever would actually be a net benefit over time to you? And is that the right way of thinking about it? And saying I’m wrong is fine, too. I’m just curious.

No. No, I think that’s the right way to think about it. Of course, you’ve got to make assumptions on which species the protein where does that protein demand get switched to by species and then by geographically, but yes, the soybean meal demand if it was like-for-like by species, it would be one-for-one on the meal demand. And then of course, without the meal demand being in China, they don’t need as many beans. So yes, I agree. You are right.

Great. Appreciate. Thank you, guys.

You bet. Thank you.

And we have a follow-up from Robert Moskow of Credit Suisse. Please go ahead.

Thanks for the follow-up. At the risk of stirring up trouble, one of your competitors had I think provided a much more bullish outlook for the back half of the year based on a thesis that the entire world will need to increase livestock supplies to make up for the depletion of the Chinese herd. And I think based on that, they thought that soybean meal prices would go higher, margins would go higher. And your tone today, Greg, I think is much more conservative than that. And that sounds like a purposeful choice and maybe a reasonable choice, but can you see I guess a lot of upside to that thesis if it plays out for your business?

Yes, sure. You are correct. We probably are taking a measured approach from the analysis we have done and it’s basically thinking about the animal lifecycle, right. So we have got to send the price signals to the market and then get the animals in place to create the demand and we think that’s beyond 2019.

Okay, thank you.

And we have a question I see from Vincent Andrews of Morgan Stanley.

Thanks for taking the follow-up. Just to go back on the China and the ASF and the soybean meal, I guess my question is if with the change to the herd there in theory, they need to import fewer soybeans and that means there is more soybeans available in the rest of the world. So I guess my question is, if crush margins do indeed increase because meal demand is higher, aren’t there excess beans around to be crushed to chase after that higher meal price? And ultimately, wouldn’t the market find an equilibrium perhaps at better margins than today but maybe not at sort of the fantastical crush margins that could be in place for a period of time?

I think you have said it well, I think we agree with you and that’s why the outlook is what it is. Wonderful thing, the market works and it will adjust. So I think that’s right.

Okay. Thanks very much guys.

Sure.

This concludes our question-and-answer session. I would like to turn the conference back over to Ruth Ann Wisener for any closing remarks.

So thanks for your time today. And if you have follow-up questions, please feel free to reach out to me.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.