Bunge Reports

NEW YORK - Feb 9/06 - SNS -- Bunge Limited reported net income of U.S. $149 million on sales of $6,726 million during the fourth quarter ending December 31, compared to a net of $105 million on sales of $6,121 million during the same three month period one year earlier.

This lifted net income for the 2005 fiscal year to $530 million on sales of $24,275 million, compared to a net of $469 million on sales of $25,168 million the previous fiscal year. Total volume for the year was 118.7 million metric tons (MT), up from 109.4 million in 2004. Quarterly volume was 29.8 million MT, versus 26.9 million in 2004.

Alberto Weisser, Bunge's Chairman and Chief Executive Officer, said, "In 2005, our principal problems stemmed from a weak operating environment in Brazil. Farm economics deteriorated due to a drought, lower soybean prices and a steadily appreciating Brazilian real.

"Farmers reacted by withholding crop sales and delaying purchases of farm inputs. The real appreciation affected Bunge directly, primarily by raising local costs and squeezing margins. Fertilizer inventory purchased earlier in the year was sold later at a stronger real-U.S. dollar exchange rate, pressuring dollar margins."

Weisser added, "Had we started the year with a lower level of fertilizer inventory, reduced crushing capacity sooner and improved our foreign exchange risk management program we would have achieved better results. The appreciation of the real, and its timing, was perhaps the biggest negative of the year, and we did not anticipate it or react to it quickly enough. We hedged our balance sheet exposure but not our local costs, and we could have made better decisions when hedging fertilizer inventories. Local costs in dollar terms increased by 19% in 2005 due to foreign exchange.

"The market situation in Brazil will improve more slowly than we had anticipated, largely due to the continued strength of the real. Farm economics remain weak, and retail fertilizer volumes will likely be flat for the year. We are not waiting for better conditions, however. We have taken steps to improve our performance in the current environment and, largely as a result of these changes, expect Bunge to produce better operational results in 2006."

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