Bunge increases investment in area of sugar and alcohol
Valor Econômico
Bunge shall invest nearly US$ 750 million over the next three years in order to enlarge the first three sugar and alcohol plants it bought or erected in the country since it starred in the segment, in 2008. The five units incorporated after the acquisition of the control of the São Paulo based Moema Par should also be enlarged, but the schedule and the investment of resources for that are yet to be defined. With those investments, the American multinational plans on increasing by 50% the entire sugar cane crushing capacity of its sugar and alcohol structure. Adding the first three plants to the units managed by Moema before, the total capacity shall get, until June, to 20 million tons of sugar cane per harvest. By 2012, there will be 30 million, even if the five newly absorbed units are not enlarged.
The US$ 750 million is part of a three-year (2010-2012) US$ 2.8 billion investment plan started precisely with the acquisition of the control of the businesses of Moema at the cost of US$ 1.5 billion. That is: of the total plan, the sugar and alcohol front, in which the multinational has already took over the third place in Brazil, behind Cosan and Louis Dreyfus, should represent 80%. "That does not mean we will slow down in the other segments in which we operate. But we are new to the area of sugar and bioenergy and we see it with great enthusiasm", said Pedro Parente, CEO and President of the holding Bunge Brasil, strengthened in his job as an Executive after a restructuring of the management in the country that is in its final stage.
Biggest exporter of the Brazilian agribusiness because of soy and third largest in the overall ranking, behind Petrobras and Vale - US$ 4.344 billion in shipments in 2009, according to data of the Secex (Brazilian Foreign Trade Secretariat) -, Bunge had earnings of R$ 31.7 billion (US$ 17.3 billion) in the country in 2008, when its overall net sales got to US$ 52.574 billion. The group that has shares listed in the United States has not published its balance sheet of last year yet, and it preferred not to disclose estimates on the Brazilian results.
It was because of the replicated management structures of the divisions of Food and Fertilizers and of the strong entry into a new segment of operation - sugar and bioenergy - that the restructuring became necessary. "It is a difficult business that goes from the field to the end consumer and has tight margins. We have to extract the most value possible from each link of the chains in which we operate". And these chains, in whatever it depends on Parente, will grow. The US$ 2.8 billion investment plan was defined before the sale of the mineral fertilizer assets to Vale, and when the funds from the deal get into the cash - the payment will be made in cash - the Brazilian Division will fight for its share.
In spite of that, opportunities for acquisitions in the segment of sugar and ethanol continue on the radar and new deals may be defined at any time, particularly because the incorporation of Moema is almost finished, with the maintenance of nearly the entire administrative body - Ricardo Brito, shareholder and Chairman of the group at the time of the acquisition is the President of the Council of sugar and bioenergy of the multinational company in the country. "Brazil is the most efficient country in this area. There are plenty of possibilities for us", said Parente. In plants he already operates in the States of São Paulo, Tocantins and Mato Grosso do Sul, the goal is to always have the highest level of mechanization of the harvest possible. The unit of Pedro Afonso, in Tocantins, shall go into operation in June with an initial capacity to crush 2.5 million tons of sugar cane by harvest. Both it and the plants of Santa Juliana in São Paulo, and Monte Verde, in Mato Grosso do Sul, will be enlarged to crush 4.5 million tons by 2012.