Bunge, the giant agribusiness and food company, has announced a reduction in net income guidance for 2006 to US$425mn-445mn from US$495mn-515mn. The company expects “poor results, close to breakeven” for its second quarter.

Bill Wells, chief financial officer, states: “Business conditions in the second quarter have been more challenging than expected. Farmer protests in Brazil, with the objective of increasing government assistance to the farm sector, resulted in supply chain disruptions, plant stoppages and slow sales of agribusiness, fertiliser and edible oil products.

“While much of this protest activity has ceased, its effects on the second quarter will not be recovered in the second half of the year. Freight losses and increased competition have been challenging for international marketing. Argentina continues to feel the effects of recently added crushing capacity.

“Our foreign exchange hedging programmes are working well and are contributing to the improvements in the effective tax rate. However, we expect some shifting of results from the second quarter to the second half of the year as a result of foreign exchange movements during the quarter.

“Volatility from time-to-time is normal in agriculture-related businesses, but this quarter has been particularly difficult. Nevertheless, we believe that the major issues affecting the quarter are temporary in nature and substantially behind us.

“The new farmer aid package granted by the Brazilian government and a more stable real should help Brazilian farmers. New demand for bio-diesel inputs is also a positive sign for the future. Longer-term fundamentals for Bunge and our industry remain positive.”