Bunge North America
What's in store?
Bunge is one of the largest agribusiness companies in the U.S., operating out of White Plains, N.Y. The terminal will be ideal for Bunge as it will allow the company to efficiently cater to increasing worldwide demand for agribusiness products from ordinary consumers and farmers.
Bunge has 172 commodity storage facilities plus 56 oilseed processing plants across the world. It also has close to 60 merchandising and distribution offices worldwide. Its agribusiness net sales increased by 8%, whereas its volumes decreased by 2%, in 2010, compared to 2009, primarily because of lower oilseed processing in Europe. Let us delve a little deeper into the financials.
In 2010, Bunge's revenue growth from agribusiness was around 8.42% compared to the previous year, whereas competitor Archer-Daniels-Midland's
Geographically speaking, almost 23% of Bunge's revenues come from the U.S., with the remaining 77% coming from overseas operations. So this new facility will definitely help in providing products more efficiently to its domestic market.
From a balance sheet perspective, the company's long-term debt has fallen from $3.6 billion to $2.5 billion. Looking toward the income statement, Bunge's EBITDA has risen to $1.5 billion in 2010 from a low $342 million in 2009. This has helped the company to ease its own leverage position.
The interest coverage ratio is 5.1, up from 1.2, which means that Bunge is in a much better position to service its debts. From what I can tell, the company's fundamentals look strong, and it can actually afford to take on further loans, if it so wishes, to help finance more projects like this.
The Foolish bottom line
Once the terminal is integrated into the company's operations, it will provide Bunge with fast loading and unloading capabilities. The Mississippi River terminal will give it access to a number of international ports as well as several inland. This is a solid deal and I think Bunge has definitely taken another step in the right direction.
Sarosh Nicholas doesn't own any shares of the companies listed above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.