Letter to Shareholders
A more diversified revenue stream—achieved through greater cogeneration and anhydrous ethanol capacity—better weather and more economically balanced government policy will also help. Problematic weather in recent years has contributed to the lowest sugar content per ton of cane (ATR) in two decades, and the Brazilian government has kept gasoline prices too low to ensure adequate margins for hydrous ethanol. Fortunately, we expect a recovery in ATR in 2013, which will provide a boost to margins. And in February, the Brazilian government announced a nearly 7% increase in gasoline prices at the pump. Brazilian ethanol producers need even higher prices in order to produce the levels of ethanol that Brazilian society needs, but this is a welcome step.
The fundamentals of the sugar & bioenergy business speak to its long-term potential. Global demand for sugar is growing and Brazil has a strong position as the world's leading exporter. The Brazilian car fleet is expanding, gasoline consumption is rising at 7% per year and the nation's electricity consumption is also growing. All of these trends bode well for our business, and our expectation is that sugar & bioenergy will be a profitable and strong part of Bunge's portfolio for years to come. We are committed to making its promise a reality.
Improved performance in sugar & bioenergy, coupled with continued success in agribusiness and food & ingredients, should enable Bunge to generate returns at or above its cost of capital this year. This is an important point. A successful past and a promising future can both engender confidence, but we have to deliver for shareholders in the here and now. I am convinced that the strength of our core businesses and the improvements we are making in sugar & bioenergy will enable us to do so in 2013.
Fundamentally Optimistic
Of course, Bunge's ultimate success rests in the hands of its next generation of leaders. In this sense, I could not be more optimistic. Soren Schroder is the right person to lead Bunge toward its third century. He has a great track record. Soren was instrumental in building our global marketing and trading unit and establishing our agribusiness franchise in Europe and the Middle East, and since 2010 he has been a strong leader of Bunge North America. Soren also brings to the role of CEO deep industry experience, a global view and the values, passion and energy that are fundamental to effective leadership.
He will benefit from the oversight, support and input of the Board of Directors, which is evolving in step with the growth and increasing geographic and product diversity of the business. In the past 18 months, the Board has welcomed three new independent directors, James Hackett, Kathleen Hyle and Andrew Ferrier, who hail from the energy and agribusiness sectors. We also said a fond farewell and thank you to three directors, Octavio Caraballo, Jorge Born, Jr. and Larry Pillard.
The Board has taken appropriate steps to ensure a well planned, smooth and successful CEO transition. Until June 1, I will continue as CEO and Soren will gain exposure to additional parts of the business and meet with employees, customers and investors. In the second half of the year, I will serve as executive chairman, and my priority will be ensuring that Soren has the support he needs to succeed.
Leaving the Bunge team will be difficult. It has been an honor to lead this group, and I am immensely proud of what we have accomplished together. But 2013 is my 15th year as chairman and CEO, and 15 is a good number. The time is right to entrust the company to proven colleagues, and to let new ideas and perspectives come forth. The time is right for me to transition from manager to mentor.
Mark Twain famously wrote that "the first half of life consists of the capacity to enjoy without the chance; the last half consists of the chance without the capacity." If I intend to prove him wrong, I better get started.
Thank you for your confidence these past years. I look forward to participating in Bunge's ongoing success alongside you, as a fellow shareholder.
Regards,
Alberto Weisser
Chairman & Chief Executive Officer
Bunge Limited
April 3, 2013