-$24.77
$39.76
bear -$24.77
base -$2.03
bull $39.76
margin of safety $10.00
market price* $106.14
Business condition attached to the margin of safety
The combined Bunge-Viterra business shows it can cover its costs of funding: for example four consecutive quarters of net income running near or above the roughly $1.1 billion combined pro forma level, or capital spending stepping down from the current $1.5-1.7 billion a year toward the roughly $1 billion of annual depreciation.
Bunge is one of the world's largest agribusinesses. It buys soybeans, other oilseeds and grains from farmers, stores and ships them, crushes oilseeds into meal and vegetable oil, and refines edible oils. Since 2 July 2025 it also owns Viterra, bought for about 65.6 million Bunge shares (worth about $5.3 billion then) plus about $1.9 billion of cash. Revenue was $70.3 billion in 2025, roughly doubling in the second half because of Viterra. HOW WE MEASURE EARNINGS. We take cash from operations, remove the swings from receivables, inventories, payables and derivative timing (a large part of Bunge's reported cash flow, including $5-7 billion a year of receivable-securitization flows in 2021-2022), subtract stock compensation, and subtract capital spending needed to keep the plants and elevators running. On that basis owner earnings per share were about $10.85 (2021), $10.41 (2022), $9.58 (2023), $2.56 (2024) and negative $0.96 (2025). The fall is not mainly a collapse in profit (net income was $2.3 billion in 2023, $1.2 billion in 2024, $0.8 billion in 2025) but a tripling of capital spending, from $399 million in 2021 to $1.72 billion in 2025. Because Bunge is heavily indebted after Viterra, we then add back interest paid (about $560 million in 2025 and running near $700 million a year now) to get the cash the business earns before its lenders, value that, and subtract what is owed. WHICH YEARS DESCRIBE TODAY'S BUSINESS. 2021-2023 were peak crush-margin years for a smaller company with low capital spending, and those conditions have reversed, so we do not use them. Only 2024-2025 reflect the current margin environment and spending level, but each includes roughly $225-245 million a year of one-time Viterra deal and integration costs, which we add back after tax, and 2025 includes only six months of Viterra. Adjusted, cash earned before lenders was about $1.0 billion in 2024 and $0.6 billion in 2025; the middle of the two is about $790 million, our anchor. Growth check: the 2025 figure fell about 50% from 2024 (about 42% after adding back deal costs). We start our base case at $600 million for two years, close to the actual post-deal run rate, and reach $790 million in year three, not before. The reason it may rise is dated and in the filing: 2025 holds only six months of Viterra (depreciation was $238 million in the first quarter of 2026 versus $120 million a year earlier), 2026 capital spending is guided to $1.5-1.7 billion versus $1.72 billion in 2025, and the deal costs are ending. The reason for caution is also in the filings: net income in the three quarters since closing was only about $344 million ($181 million, $88 million and $75 million), well below the $835 million pro forma for 2025 that Bunge discloses for the combined company. We did not lift the level on a pro forma figure that recent quarters do not yet confirm. GROWTH CREDITED AND LEFT OUT. We credit no growth in any case. Bunge has grown by large acquisitions and big plant projects, not by small repeatable steps funded from its own cash, and plants under construction have no disclosed returns we can price. Left out: Viterra cost savings (a management target), higher crush volumes from new capacity, biofuel demand growth and any margin recovery. Earnings power is assumed to continue at a flat level because capital spending needed to maintain the asset base is charged in full each year, and Bunge has earned a profit every year in our data. Intangible amortization is small ($47 million in 2025) so it does not distort the picture. WHAT IS OWED. At 31 December 2025 Bunge had $14.05 billion of borrowings ($10.17 billion of bonds and term debt, including $1.34 billion due within a year, plus $3.88 billion of short-term borrowings) against $1.1 billion of cash and $0.9 billion of marketable securities. We credit $1.5 billion of cash, subtract $1.47 billion for outside owners' share of subsidiaries whose cash is fully counted, and reduce the debt by $0.8 billion because most of the bonds carry coupons of 2-5.25%, below the 6% we value at. That leaves about $13.2 billion of claims ahead of shareholders (about 195.7 million diluted shares, first quarter of 2026). Much of the borrowing funds about $11.4 billion of readily marketable commodity inventories; because we strip out inventory swings from earnings, we do not also credit those inventories as an asset. Debt rose to $14.6 billion by March 2026. Bonds are investment grade and staggered (2026 to 2035), so we see no forced-refinancing event in the base case. CASES.
Base: about $600 million a year of cash before lenders for two years, then $790 million continuing. Business worth about $12.8 billion, owes about $13.2 billion, so shares are worth about negative $2, meaning the company appears to owe roughly what it is worth.
Bear: $550 million a year, roughly the post-closing net income run rate rolled through our formula, with no benefit from the cheap bond coupons if refinancing is dearer. Business worth about $9.2 billion, owes about $14.0 billion, roughly $4.8 billion more than it is worth, or about negative $25 per share.
Bull: the combined business earns what the pro forma results imply, about $1.05 billion a year, with capital spending at the low end of guidance, and from year four spending returns to about $1.35 billion, the level Bunge actually reached in 2024. Business worth about $21.0 billion, owes about $13.2 billion, leaving about $7.8 billion, or roughly $40 per share. BREAKING THE CASE. The result is extremely sensitive to capital spending. Bunge spends about $1.6 billion a year against $0.95 billion of depreciation, and part of that is discretionary expansion. Under our rules only growth already secured is credited and growth spending is not treated as a cost only where revenue rose, which did not happen organically, so almost all of it is charged as maintenance. If the discretionary part were cut, as in 2021-2022 when spending roughly matched depreciation, cash before lenders would be several hundred million dollars higher and equity value could be about $40-50 per share. That is why the margin-of-safety price depends on a business condition. We could not reconcile the sharp drop in recent quarterly net income against the pro forma figure from the filings alone; Viterra's standalone contribution is not disclosed. MARGIN-OF-SAFETY PRICE. With the base case near zero and the bear case deeply negative, no ordinary share price gives a margin of safety today. If the business shows it can earn its way past its funding costs (see condition), we estimate the base case would be near $30 to $40, and the margin-of-safety price is about $10, a wide discount because of leverage, cyclicality and the size of the debt.