THIS SECTION: Video Achievements and Progress Mapping the Way Forward The bottom line
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Soren Schroder

CEO, BUNGE LIMITED

Dear
Shareholders,

Bunge plays a key role in the world’s food supply. What we do, and how we do it, matters to a wide range of communities, companies and individuals around the world.

By connecting farmers to local and global markets, by conducting trade and processing commodities around the world, we ensure dependable and sustainable supplies of staple foods. And we create high quality ingredients for meals that people prepare at home, buy in stores and eat in restaurants.

It’s a big purpose, a great responsibility and a compelling value creation opportunity. More than 30,000 talented and engaged Bunge employees, who represent the diversity and global footprint of our business, pursue it every day. Together we demonstrated the strength and resiliency of our organization in 2016, delivering a solid year while progressing on strategic priorities that set the foundation for future success.

2016 was a year of many achievements. We generated $1.5 billion in funds from operations (adjusted), achieved returns above cost of capital and maintained adjusted EPS essentially flat with last year, weathering a challenging environment. The team drove a significant turnaround in Food & Ingredients and Sugar & Bioenergy by structurally improving the underlying competitiveness of our operations, and, while it was a tough year for Agribusiness, the segment finished on a strong note.

On the back of strong cash generation, we continued our prudent focus on capital allocation, returning over $450 million to shareholders through dividends and share repurchases. Capex of $784 million was $66 million below our guidance and is tracking approximately $275 million below our 2014–2017 target. Throughout the year, we also delivered $135 million of cost and efficiency benefits, exceeding our 2016 target by $10 million.

It was a year of significant progress in executing our strategy. We made multiple portfolio enhancements that will build sustainable value in Bunge. Our value-added food and ingredients portfolio was enriched with the acquisitions of edible oil producers Walter Rau Neusser and Ana Gida in Europe. We expect similar benefits in our Mexican milling business from the pending acquisition of Grupo Minsa. We also improved on our winning footprint, replacing our Rio de Janeiro mill with a more efficient facility and advancing the upgrade of our export terminal in New Orleans. In our Agribusiness portfolio, we completed a multi-seed crush plant in Ukraine, built our first soft seed crushing plant in China and complemented our strong soy crushing presence in Spain, Portugal and Italy with the acquisition of two plants in Northern Europe.1

Partnerships remain important, and in 2016 we created regional joint ventures with industry leaders. Two focus on export flows: a partnership with SALIC that is building a highly efficient, coast-to-coast Canadian grain operation, and an expanded relationship with Amaggi, through which we operate logistics assets in northern Brazil. The first will fill a key gap in our footprint and the second will enable us to run a new system at full capacity. Another two partnerships enhance our value chains in Southeast Asia. One with Wilmar strengthens our value chain in Vietnam, and another with OFI expands our oils distribution capabilities in Asia.

1 Acquisitions of Ana Gida and the Northern Europe crush plants were announced in 2016 and closed Q1 2017.

ZERO-INCIDENT VISION

Underpinning these accomplishments is our unwavering commitment to safety. We progressed on our journey toward a zero-incident safety culture, introducing new processes and standards with a specific focus on eliminating high potential exposures. More than 3 million training touch points were performed, in the form of toolbox talks and online learning, and we introduced our families and extended communities around the world to the importance of safety via 62 family safety days. These combined efforts contributed to a 34% reduction in lost time incidents and a lower number of safety incidents overall.

Targeting Near Misses:
Safety First
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Targeting Near Misses:
Safety First

In 2016, Bunge began an enhanced global effort to track near misses. A near miss is an event that does not result in a safety-related incident, but which has the potential to do so. Left unaddressed, near misses can lead to incidents and injuries. By empowering our workers to report near misses, we became aware of more than 100,000 potential exposures. Now we can better understand root causes, take proactive, corrective actions, and prevent today’s close calls from becoming tomorrow’s injuries. It is another step toward creating a zero-incident culture.

ACTING, CONSERVING & ENGAGING

Sustainability is central to our vision. Our philosophy is to “Act, Conserve, Engage” by working internally to reduce our environmental footprint, collaborating across value chains to increase traceability and transparency, and tackling big issues like deforestation. Our work in the palm oil sector is a good example. We have made progress in increasing the traceability of our palm supply — reaching nearly 90 percent globally and 95 percent outside of Asia — while enhancing our governance. We were honored to have our efforts in sustainability recognized with a AAA sustainability rating from MSCI.

2016 SCORECARD: STRONGER AND BETTER EPS

Right Balance
Returns drive capital allocation:
  • $200m share repurchases
  • +11% dividend with $257m total payout
  • Capex below target
Value-added growth:
  • Europe Oils — Walter Rau Neusser & Ana Gida
  • Wheat milling — Grupo Minsa*
Winning Footprint
Additions & Upgrades
  • Port terminal — New Orleans
  • Crush — Ukraine, N. Europe & China
  • Wheat milling — Rio de Janeiro
Growth JVs & partnerships
  • Northern Brazil port
  • Vietnam soy crush
  • Canada grain
  • S.E. Asia product distribution
Best in Class
Cost savings
  • $135 million in 2016; $255 million since 2014
Talent
  • Building our bench
Sustainability
  • Progress on non-deforestation and palm oil
  • Expanded environmental goals
Stand for Safety
Stand for Safety
  • 34% reduction in lost-time incidents
  • 3 million training touch point.

As we look to 2017 and beyond, growing earnings in a meaningful way remains our number one financial goal.

MARKET GROWTH

We are in a growth industry, with positive market fundamentals. Total trade in corn, wheat and soy is projected to expand 180 mmt by 2025, and some of our strongest origination markets – Brazil, Argentina and the Black Sea – will lead the expansion in exports. Consumption of edible oils for food and biofuel will grow as well. And with a global middle class on the rise, we will see an increase in food spending away from home.

Bunge’s focus, scale, geographic footprint and globally integrated team position us to leverage these positive trends. We see growth aligned to three key drivers, and expect to realize their full potential in the medium term.

World Trade of Corn, Wheat and Soy
Source: Bunge
World Soy Crush
Source: Bunge

LEADING IN CRUSH:
$120 to $200 million incremental EBIT opportunity

Our leading position in oilseed crushing, especially soy, will be a key growth platform. Global soy crush should expand by 80 mmt in the coming decade, and we expect structural margins in key origins will increase $3 to $5 per ton as capacity utilization increases. Based on our 41 mmt capacity, this would translate into $120 to $200 million of incremental EBIT contribution.

Creating a Winning Footprint:
New Northern Europe Soy Crush Plants
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Creating a Winning Footprint:
New Northern Europe Soy Crush Plants

Northern Europe is the world’s second largest destination market for soy products. Expanding our oilseed processing and distribution franchise, which has a strong presence in Spain, Portugal and Italy, into the netherlands and France completes our pan-European presence.

Our two new plants will also internalize flows within our global oilseeds value chain, expand our distribution capabilities and create direct access to new customers. Integrated product flows, direct from origin, will help Bunge meet increasing demand for supply chain integrity — from traceability and sustainability to non-GMO, identity preserved programs.

ADDING TO VALUE ADDED:
$100 to $125 million incremental EBIT opportunity

As the world’s largest producer of softseed oils and a regional leader in milling in the Americas, we are already in a strong position to serve—and help B2B customers manage—consumer demand for foods with health, functionality, clean label and sustainability traits. And we’re investing in the world-class formulation capabilities, people, technologies and assets necessary to provide value-added solutions that are ahead of the curve. Recent bolt-on acquisitions have broadened our product offerings and capabilities, while providing expanded market and customer access.

There is room for a lot more value added growth in Food & Ingredients, both in increasing our offerings to existing customers, and in expanding our customer base. Today, we estimate our share of wallet among key customers is approximately 10 percent, and with the capabilities we have been building, we see room to grow. We are focused on increasing our sales of value-added products, knowing that a 10 percent increase in sales can deliver $30 million of incremental EBIT. All told, we expect our efforts to generate $100 to $125 million in additional EBIT.

From Commodities
to Value-Added
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From Commodities
to Value-Added

Our 2016 majority-share acquisition of Walter Rau Neusser, a world-class food service oil supplier based in Germany, is helping to transform Bunge’s edible oil business. By splicing Walter Rau Neusser’s products, people, R&D, technical know-how and customer relationships into Bunge’s existing business, we are accelerating our value-added journey and building deeper connectivity with global food service and food processor customers.

ENSURING EFFICIENCY:
$250 million incremental EBIT opportunity

The effort we have put into building a culture of continuous improvement and the successful execution of asset and process optimization programs have generated material benefits. We are more than halfway to our 2014-2017 target of $345 million of improvements, with $255 million achieved so far. Between 2018 and 2020, we forecast benefits of an additional $250 million from industrial operations, logistics and SG&A, approximately half of which should hit the bottom line.

From Efficiency to Earnings:
Bunge’s New Rio Mill
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From Efficiency to Earnings:
Bunge’s New Rio Mill

Our new mill in Rio de Janeiro, Brazil, is a perfect blend of efficiency, improved operations and customer solutions. Its incorporation of the latest milling technology will reduce operating costs while improving the quality and variety of flours produced. These enhancements will facilitate sustainable growth in the B2B channel and drive margin improvement. Additionally, its location at port and with easy access to main roads into one of the nation’s most populous regions will ensure supply chain efficiency and overall growth potential.

While the beginning of 2017 will be slow, overall market conditions should be more favorable. Strong demand for proteins and oils will increase crush utilization and margins, and commercialization of crops will normalize with the arrival of record production in South America. In Food & Ingredients, we expect 2017 to be a year of growth in earnings driven by an increased share of added value products and overall volumes. In sugar milling, we are confident in our ability to deliver another solid year of performance, while continuing to seek alternatives to reduce exposure to the business. We will continue to drive performance improvements across all of our businesses, with $100 million of benefits planned for this year. We expect strong cash from operations to support our returns-driven approach to capital allocation.

Bunge has never been stronger. We are focused on what we do best — oilseeds and grains. We are a more streamlined and integrated company than we have ever been, and we are using our size and scale to reach a larger set of customers with a broader portfolio of offerings. Our talented, diverse team exemplify the Bunge core values of citizenship, teamwork and entrepreneurship, and have proven their tenacity and adaptability.

As we enter our third century of operations, our team is primed for even greater success – standing on a solid foundation, focused on growing markets and executing a clear, effective strategy. I am proud of the team for bringing us to where we are, and grateful to you, our shareholders, for your continuing support.

Best regards,
Soren Schroder