Okay. I think we're gonna get going here with our next presentation from Bunge. Since joining Bunge in 2019, CEO Greg Heckman has engineered a comprehensive transformation across the company's operations, portfolio mix, execution, risk management, and capital allocation. The business improvements have positioned Bunge to realize a sustained upwards earnings trajectory and returns well in excess of its cost to capital in the coming years. We're grateful to have you join us today, Greg. Thank you for being here. And I'd also like to welcome CFO John Neppl, who's been with Bunge for the last four years, joining about two weeks after Greg, if I'm not mistaken. Right around the same time. Appreciate you both joining us today.
Thanks for having us. Great to be here.
Maybe if I start kind of at a high level. You've established an earnings growth framework to increase mid-cycle earnings from $8.50 - $11 by the end of 2026. Maybe if you reflect on how you're tracking in terms of the initiatives to build that baseline, are there areas where progress has been faster, slower? Maybe reflect on how it's gone so far.
Sure. you know, one, real proud of the team and the progress that we've been making. As you think about the external environment, we've definitely had a few things outside of our control that you didn't expect. The things that were within our control, of course, where we've been able to make investments in the, in the asset base and some of the debottlenecking, some of the brownfield projects, we've made great progress. I think you've seen that in the performance, in our improved operating rates, less unplanned downtime, higher capacity utilization, really pleased about that. No doubt with COVID and with some of the supply chain problems, some of the greenfield projects haven't developed as fast, but we're really starting to see the progress on that.
Of course, on the M&A front, we've probably got the biggest pipeline of opportunities that we've seen the entire time, and that's really across our entire platform, whether it's continuing to look for opportunities to strengthen or fill in any areas of weakness in our, you know, leading oilseed crushing platform, in the origination or distribution that supports that, any areas to improve, of course, around the wheat milling or our dry corn milling that makes sense. Of course, in the Plant Proteins area, we've, you know, announced a greenfield there and continue to make some progress on our growth. Our specialty oils, our Plant Lipids business, the specialty fats and oils we continue to grow, just announcing recently a bolt-on there.
The renewable feedstocks area continues to just be an area that a number of opportunities continue to roll out of. You know, we can talk some more on that later, but whether it's the joint venture with Chevron or the things that we're doing with some of the input providers and ultimately around regenerative ag. Really excited about the different areas that we've got to put capital to work.
The guidance for this year is 11 +, so still at the high end. You talked about some things. The operating environment's obviously been very, very conducive. you've also said that you don't expect to return to kind of your baseline over the course of the timeframe, I believe is the way you've kind of talked about it. you know, can you talk about the durability of that 11 + or maybe the bridge from this year's outlook to the 2026 goals? how are you thinking about the moving pieces?
Yeah, I think when we, when we look at the big drivers of that today, you know, we're performing better than kind of when we built this baseline looking at long-term crush margins, long-term refining margins. Those things today are still above kind of how we viewed the long term. What we're seeing, especially on the refining side, is that pretreatment capacity is slower to come online, and the durability of our refining margins have been there. What we're really expecting is as we move forward through 2023 and through 2024, for those margins to largely stay in place in terms of on the refining side.
As we're investing in capital that's gonna build up the base business, you know, that should ultimately potentially refining margins start to come down maybe a little later than we expected, say 2025 timeframe, we should see the benefits of some of these capital projects. You know, very simply, we don't see ourselves getting back to the $850 baseline, you know, based on how we look at the next few years.
Got it. Okay, that makes sense. I guess one of the big changes within the business has been the risk management side as well, and how your approach to risk management has evolved. Can you talk about that and how that has enabled or changed kind of the fundamental model of the company?
Sure. We're really proud of how we manage the risk in our assets, and not only for ourselves, but our customers. I think one of the key things, is that we've driven it through the entire organization. When we think about, you know, risk management, the Chief Risk Officer reports directly to me, so is a peer to the commercial team and is really a partner to the commercial team. When you think about our billions of dollars in investment in storage handling, processing, distribution assets, those are all just earnings at risk until you hedge them up.
We're constantly thinking about the environment that we're operating in, the earnings power that we have, and that the risk that we are managing to lock in those earnings at risk if you have the have to take risk out forward, and the team is working very well together. It's also the making data available to the team and the analysis and our proprietary data, as well as how we worked out with external data, that's continuous improvement. The changes that we've made on the systems and the visibility that the team has to spend their time running analysis, running stress scenarios, looking out forward about what we believe about margins and getting those earnings at risks hedged in. We're really proud of what we've done there.
We do believe it's industry-leading, and we'll continue to develop it.
Great. On the capital deployment side, you talked about some of the projects you have in place today, what that means for 2025 and 2026 as maybe you start to see some easing of some of the underlying fundamentals elsewhere. How do you think about the right level of growth CapEx for the business over the next several years? Obviously, the return profile is very good. You have a lot of cash. You have a lot of cash coming in, potentially going forward. Is there a case to accelerate it? I guess, how are you weighing that positively and negatively?
I mean, ultimately, you know, we look at returns first, and the opportunities have to be there. I think when you look at the cash flow we've been able to generate over the past few years, we've obviously built a lot of capacity for additional CapEx. When you look at the amount available for that, it really breaks down between what do we have for M&A opportunity, what do we have for CapEx, what do we have for share buyback? Ultimately, returns are a big driver of that. Frankly, today, our biggest, probably, limitation might be our internal ability to execute on that many projects at a time. We've got a very robust list of not just CapEx, but M&A opportunity.
Because we have the capital to do really kind of all of that, we have to manage that against our, how we feel about execution risk. In terms of, you know, whether it's CapEx or M&A or share buyback, it's really driven by the returns and the strategic opportunity. We're doing all three.
Maybe this is a good time to touch on M&A, but certainly, we'll hit on that here going forward. When you think about shaping the portfolio over time, the plans and priorities around that, you have sustainability projects that you're working on. There are some of the other things that you mentioned off the top. You know, what is the plan to shape the portfolio kind of longer term? You've talked about a 15%, I think, ROIC on your projects. Is that still the right way to think about it? Some of these seem like maybe a little more higher margin projects. How do you think about all of that?
Yeah. I'll let John talk to the terms. When you think about the stack of projects that we have and whether it's or organic or M&A, it's really about executing our strategic priorities. It's like how do we accelerate where we wanna get to? I mean, we're really proud of how resilient the portfolio has been the last four years with all the different challenges and opportunities that have come at us. As we think about that global platform, it's how do we continue to fill in any of the geographies where we have weakness, and whether that's around the crush, whether that's around the origination, or it's around the special oils. The real change has been the focus on sustainability in the last three years, and how that's driving.
If you look at whether it's our joint venture with Chevron, and so that we're really partners in understanding how to go from the farmer to their retail customer to have the most efficient change to supply them with renewable feedstocks for renewable diesel today, but long-term, that could be sustainable aviation fuel. Taking that relationship and investing in CoverCress together and continuing to develop a cover crop. As well as if you look at our relationship with Corteva, we talk about our ability to work with them for several years. You know, it's a long-term commitment to develop a seed that can have a value to the farmer that produces it, but ultimately, after we crush it, to have a higher, a better amino acid profile for the poultry producer.
Those are commitments with the right partners to make investments for the long term. That, of course, has led to, as renewable diesel has gotten more important, now with Corteva and Chevron, we're now making an investment in winter canola. Another high oil seed crop that can be another profit point for the producer, but also to increase the amount of renewable feedstock to serve that industry so we can continue to serve food, feed, and fuel industry. It all continues to weave together, as well as the assets to support that.
Yeah. From a return perspective, I mean, ultimately, we look at a risk-adjusted return requirement everywhere we do business. If it's something that we view as core, and it's in a, in a country or an area where we're very strong and we're very familiar, you know, we'll accept returns below 15, but they gotta be double digit. If it fits right, you know, somewhere in that 11-13 range isn't unreasonable. That'd be on a kind of a bigger strategic project. When we look at things like debottlenecking and brownfield and small capacity expansion projects, we're seeing things, it's still seeing things well north of that number. On a blended rate, we're probably close to that 15% number.
From an M&A perspective, I mean, how does that fit into the broader shaping of the portfolio? I guess as we sit here, is it a good environment? Is there bigger projects, I mean, smaller sizes? Like, how do you think about what makes sense right now for the business?
The thing I think we're really proud of, and John's talked about, we've put ourself in a financial position where we really have the flexibility to kind of pull all the levers, right? Whether it's the internal investments, whether it's bulk on M&A, whether it's transformational M&A, of course, share buybacks are an important part of that. All that is available to us. I will say from an environment of seeing higher interest rates, seeing a world that has less globalization, where every origin, every destination is not available, so you've got a more complex world. With the war in Ukraine, we expect the world to stay complex. We've seen what seemed to be an outlier of a weather events, which now seems to be every year, whether it's Canada, Brazil, or now Argentina this year.
That creates more volatility and more dislocation. As we think about where to make those investments is how to continue to maintain the resiliency of that global platform and how to continue to build onto it. We are seeing with, I think, the higher interest rates and the environment, we're seeing some deals that we think are developing or could develop that we haven't seen for a while. We're seeing some deals that didn't happen two years ago that continue to be on our priority list that may come back around. Look, we're gonna continue to be disciplined. We're gonna be, you know, very thoughtful.
We've had to work very hard to shape this portfolio to be the leader, to be in a position to do the kinda deals with the other industry people like the Cortevas, like the Chevrons, our Orígeo in Brazil, where again, we're doing a deal with UPL there, surrounding the farmer, bringing them regenerative ag practices while getting the right cocktail of inputs to them and then helping them market their product. Yesterday, we just announced a deal with Nutrien. Again, it's around that producer.
It's driven from whether you're a feed, food, or fuel customer, they're all talking to us about, "How do we get a lower carbon intensity into our products and give our consumers what they want?" To that, we've gotta get some of that value, and we gotta drive that back to the producer. It's these partners and the investments you'll see us make in the future that will help us do that for the farmer, for the producer because you've gotta make change at scale. If you're really gonna make a difference, it's about making change at scale, and it's about doing it sustainably. Those partners are helping us do that because the producers, they love the productivity that they've been able to produce, right? That's how we fed a hungry world.
They don't wanna give up that productivity in the volume, and they still want the price. As you bring them change, you bring them a different package around the regenerative ag and a different package of inputs. It's gotta make sense, and they've gotta be able to get to market, and they've gotta be able to do it at scale and sustainably year after year.
Speaking of carbon intensity and some of those dynamics, I wanna get your kind of updated thoughts on the renewable diesel side. There have been delays. There, you know, has been some regulatory stuff, I guess, you know, for some of the plants. You mentioned on the earnings call starting to see some of the demand start to build, so maybe some of that's coming through. Do you think that the outlook for renewable diesel capacity has changed, the investment case has changed at all? Or is this kind of the beginning of the ramp that you would've expected, and we have some durability now moving forward?
Yeah, I can start there.
Sure.
I think, look, we still believe the long-term trajectory is there. Certainly, there have been some delays, you know, driven by a couple things. One has been there have been some operational issues.
Mm-hmm.
In that space, that's maybe resulted in a little bit slower ramp-up of some of the investments that have been made. The other one is, frankly, you know, petroleum crack spreads were pretty good there for a while, and I think what we saw were some of our customers certainly maybe taking their time in the transition and maybe slowing it down a little bit. We don't see that and what's happened at the same time then is that anything around the refining site has also slowed down around the pretreatment. That's why we've enjoyed the refining margins a little longer than maybe what we originally expected. Long term, we see it there.
You know, this recent RVO, the recent preliminary RVO numbers that came out, we think the market probably overreacted a little bit to that. It was really driven by, as you all know, probably supply expectations, not necessarily, what the market can provide and what the market will demand. Ultimately, you know, we're hopeful that the revised RVO numbers that come out will be constructive. We still think regardless of where those end up, that the long-term trends are in place. You know, renewable's a stairway to sustainable aviation fuel and further use in the marine industry. You know, we're optimistic long term that the S&Ds are still there.
I'd probably, you know, add on one thing that we'll see where the next RVO comes out. I think what's really good is that during the comment period, we've definitely seen the industry and the industry organizations really engage with the policymakers and ensure that everybody's at least starting with the same set of facts. The one thing the policymakers have been clear about is, you know, look, they wanna ensure that all constituents, you know, feed and fuel and the farmers, that everyone is met. You know, they're being thoughtful. They're taking the time. I think it'll be, you know, a number of steps over years. We're really building out a new industry. You know, it's important what John said.
It's starting with the renewable diesel, the one thing that's been consistent with all of the energy companies that are our customers, right? Because we sell them all, not just Chevron, is that they see renewable feedstocks and vegetable oils as being a very important part of their liquid fuels transition for the next 10 - 15 years, and they see renewable diesel as a really important pathway ultimately to sustainable aviation fuel. We'll see where marine fuel plays out. There will need to be some policy support for SAF and for marine long term. Look, it continues to develop, and that's why you see the investments being made in innovation around the seed side, in innovation, you know, at the farm gate to lower the CI scores, drawing, calling on demand on the UCO side.
The market's doing its work when it's allowed to work.
You mentioned 10-15 years, so I don't wanna get too caught up in, like, very narrow period of time. It's interesting when you think about the demand pull on feedstocks for renewable diesel and some of the softness that we're seeing kind of on the vegetable oil side in the nearer term. Now that we're starting to see some of the demand ramp, I guess, you know, just trying to put it all together in my head, but the question is really longer term, how do we bridge to the feedstock that we need? I mean, we have, obviously, crush capacity that's been announced and coming online. We probably need a bunch more. I don't know if you think globally. How does all of this play out?
Yeah. I think the industry's really going to have to pull every lever, right? The market has done some of the work that it has incented some expansion in oil seed crushing. Some of that will come in soy, some of that will come in soft, which is roughly twice as much oil. You know, we announced our expansion in Destrehan down in the Gulf, which is part of our Chevron JV, that will have switch capacity.
Mm-hmm.
We'll not only have the ability to do soy, but to do soft seed, whether it's a CoverCress or a winter canola. Of course, we're there at the port as far as if we have the opportunity to import soft seed in the global market and/or export the meal to meet the market. We're thinking about optionality when we make the investments in our footprint as well. There's a lot of switch capacity globally, and as the market is calling on that oil, you'll see that switch capacity all run on soft seed rather than on soy. Roughly 20% of our capacity is soft seed today, including the switch.
Of course, you know, ultimately, you'll see the U.S. has gone, you know, from being an exporter of oil to ultimately being an importer of oil. You look at the investment we just made, we bought the Fuji plant, a plant from Fuji, down in the Gulf, in Avondale. That's a great fit for us. We were out of capacity on tropical oil to feed our food customers, their growth, as well as any switching that they were doing. We've been able to plug that right into our system. We're short human capital, so our ability in M&A sometimes is to add the human capital that allows us to execute. We kept 90% of those employees. We've already got it in our SAP system.
We're already serving food customers, and we plugged it right in. We also had another expansion project where we had equipment on the way. We've been able to switch that equipment. It's headed for Avondale. We're gonna triple the capacity of that by adding another line, and we'll continue to run the plant while we do that, serving customers. All of those things will help to solve it. All the cover crops that we talked about, the higher oil crops and the investment that is being made there. Again, the market's driving the innovation to be able to serve food, feed, and fuel.
I'll maybe just add to that. We, you know, we're building as well in Brazil, in particular, capability to source low CI feedstocks for both the U.S. and Europe. That, that's underway. We've, we've had some success there early developing partnerships with some key animal processors and others down there. We're pretty excited about that opportunity.
How do you frame maybe the sustainable aviation fuel opportunity relative to renewable diesel? I mean, is it a bigger opportunity? Kinda how do you think about your role in SAF production over time with some of the partnerships that you have, is that a, you know, if you could put all the pieces together for us.
I think one of the keys with our joint venture with Chevron, right, is that it is a joint venture. It's not a supplier-customer relationship. We are able to talk about policy. We are able to talk about changes that we can make in the farm gate or in our refineries. They can talk about how things work in their refineries and where they believe their ultimate retail customer is going today and where they believe policy is going. We can think about policy together and communicate and give ourselves, you know, a different view through their lens or them through our lens. We, of course, have that relationship with Chevron, but we don't globally. We have the opportunity to work with them where they exist.
In places they don't, we can work with others, or places they are, if we don't wanna work with them or they don't wanna work with us, we can work with others. We're having those conversations with other energy companies and, you know, we're looking for those opportunities to continue to connect with them to try to help build that out and build that low cost, low CI supply chain as policy continues to develop.
The knock-on effects kinda globally as you think about the demand pulls, whether it's, in Canada or Europe or what have you, I mean, how do you think Relative to kind of what you've already established, how do you think about the longer term dynamics there?
Well, we think they're very good. I mean, if you look in Canada right now, there's gonna be policy which should bring some additional canola demand or canola processing on there to meet that demand around their RD. We're not only gonna meet it through expanding, you know, crush. We did the joint venture with Olleco in Europe around the collection, you know, of full lifecycle oils, if you will, the collection of UCO. We're excited about that, and what's been even amazing is how excited our end customers are about that and looking at where else we can replicate that globally.
The different growth levers that are appearing around the renewable diesel demand, and ultimately SAF, it's not even clear how it's all gonna play out, but we've got a lot of resources working against it, and we're fully engaged there.
That makes sense. You started to mention the meal side and kinda thinking through all the different dynamics as you're making your plans around capacity, et cetera. You know, what is your comfort level that there is a home for all the meal that will be coming on? You know, the ability to export or not export meal feels like there's some debate about that. Obviously, you see that as an opportunity. Can you just share your thoughts on how you see this playing out over the next several years?
Yeah. We spend a lot of time looking at this and talking about it. I think there's a number of factors to think about. One, there just continues to be the population growth. There's a natural growth in meal demand and in protein demand from population, from continuing growth in per capita consumption that's driven around per capita wealth. That's up and to the right, and you can argue what that is. That plugs along. You've got continuing commercialization around the world. You know, what we saw in China as they commercialized their feeding industries, especially in the pork side and some in poultry, the inclusion rates. The inclusion rates go up as people commercialize their feeding operations.
You've got kind of the shift that continues as we see pork and poultry to be favored over beef. It looks like that trend continues to tick up because, of course, they're bigger users of protein meals. Ultimately, you know, meal, the feeders like to use it, right? It's a good product. Things that we can do to value it up, like we were talking about the Corteva seed project around amino acids or other things that can be done to even make it more usable. We have a number of things, you know, that we're working on that side. Ultimately, they like to use soybean meal. It finds its way into the ration or protein meal.
I'd maybe just add a couple things. One is we already today handle far more soybean meal than we produce ourselves. We've got the end customer base globally, which I think is important. We're also investing in additional export capacity, our existing facility to be able to handle that meal. We do expect it to be exported, we expect to be a player in that.
Like, where does that-
In the Gulf.
Okay.
We're gonna be adding to our existing facility.
Got it. Got it.
Yeah. Here in the U.S., Scott. Before we change gears here, I wanted to ask about the refined and specialty side, which you've talked about being a little bit more durable there. I mean, obviously, just had your two best quarters ever, I believe, in that segment. You talked about the pretreatment side. I don't know what shifts that or what kind of visibility we have to that starting to come on more as we go. You know, you talked about it being more durable. The durability of that over the next two to three years feels like it's obviously gotten more. Just the different dynamics and how good or sustainable the recent momentum might be, or is it at a somewhat more moderate level? How do you think about that?
Sure. Yeah, I'll start. If you look at that industry, it was very underutilized from a capacity utilization from the refining side.
Mm-hmm
...based on some structural changes in the industry here a few years ago. That changed with the addition of some of the fuel demand, and it tightened things up, and we're running at higher capacity utilizations, which is kinda like free capacity. It was in place. Now, 80%, depending on how you cut it here in North America, between 70% and 80% of our product still goes to the food industry, but we're much, much more in balance. We also have made the investments. You know, when we weren't running at high capacity utilization, you didn't need to make those investments in debottlenecking and capacity utilization, which we've continued to do in our refinery system. That again is improving profitability in that segment.
Then of course, as we're serving customers and flows are changing, there's the reformulation, and we're working with customers to innovate, whether it's around the formula for cost or if it's around new products. That, that's a value add where we're working with customers and stickier. We saw our ability to serve through COVID has changed the relationship with some of those bigger customers that you innovate with over the long term. Then as, you know, John was talking about, some of the pretreatment has been slower to come online, and they've also seen it's a little more complex, and getting the catalyst to work, hasn't worked quite like they thought.
Some of those projects will have been slowed down based on them being able to buy the feedstocks and not having the risk of having to build over the long term or their R&D projects being a little bit slower because of the profitability they've had in their other refining operation. We've got a bigger book of business on for the balance of the year than we've had historically, which generally is very good for the refining overages on the balance of the business to be done. That also gives us good visibility into 2024. If you remember in our operating model, we were very conservative about where we expected those to be. We expect that to continue to contribute well out into 2024.
Great. Global crop supply, right? I mean, with the disruptions in the Black Sea, it was, oh, we need two crop cycles or three crop cycles. Now we've had a very nice crop in Brazil, a lot of acreage here in the U.S., and if the weather cooperates, we'll have a big crop here as well. Are we kind of on the verge here of getting back in balance, or how do you think about that? When you think about your merchandising business and kind of historical profits versus where we've been, I mean, if we get back to a more comfortable level, I guess, what does that mean for the profitability there?
You wanna start with?
Yeah.
...forecasting the merch and?
Yeah, I mean, you know, from a merchandising standpoint, that historically has been the area where we've it's been the most difficult to forecast. As we look at the balance of the year, we've got a pretty modest forecast in for our merchandising business, especially related to how things have looked the last two to three years.
Mm-hmm.
You know, certainly, it's hard to predict volatility in the market and, you know, certainly weather. Things like Argentina's had a big impact on global volatility, the Ukraine, as you pointed out. A lot of those things that really resulted in kind of significant volatility Through the past year and through maybe the first part of this year, you know, it's difficult to see whether that continue or not, but if it does, we certainly would expect, you know, upside in the merchandising business. You know, globally, I'll let Greg comment kind of on the, you know, around the world on the crop side, but.
Yeah, you know, from a global S&D, you're right. We've had, you know, record bean crop in Brazil, and that's happened at the same time that we've seen a horrible crop in Argentina, not only from a quantity, but from a quality, which is, you know, a very interesting dynamic, I think, for the balance of the year because you're gonna have the second half of the year will really be out of beans in Argentina. We'll have, you know, less meal and oil coming out of Argentina, which is gonna call on crushing the rest of the world. For how we're set up, that's good right now because from a crushing, pulling on the rest of our global system to balance that out is a net positive.
The big bean supply in Brazil is not only feeding our Brazil system and helping crush margins there, but it's been positive, of course, supplying China, and supplying our European crush. A very good setup. As you said, the US looks like the acres are there. Planting is going very well so far, so we do expect to have a good North American crop. You know, and we need one. The curves are telling us we expect to see a good bean crop in the U.S., and that should be favorable in the second half, and especially into the fourth quarter. It's, you know, it continues to be a pretty interesting, you know, a pretty interesting setup. It seems like every year there's some new challenge.
Of course, things continue, unfortunately, to be, you know, very complicated in the Black Sea area with the war in Ukraine. You know, is the corridor gonna be open? Is it not gonna be open? Of course, that's hurting the profitability for the farmer there and their ability to invest and plant the crop and what can get harvested and the speed that it can get exported. I mean, if you look pre-war, you know, roughly the USDA thinks the corn production in Ukraine right now will be roughly 50% of what it was pre-war. In that's an important origin.
There's just a number of different, you know, challenges from just looking at the history that they're gonna look like they're gonna keep things maybe not as tight, but still fairly tight, until we can make a couple more crops.
I would just say two other things. One is I don't think we see geopolitics getting any easier in the next few years, and we don't see weather volatility getting any better. You know, it's hard to predict, obviously.
Sure.
Every day, every indication is weather volatility is gonna continue to be an issue. Those two things, when you have a global platform like we do, and you have, you know, all the origin destination combinations that we can put together, that really bodes well for a business like ours versus our competitors.
That makes sense. Can you talk a little bit more about the Brazil operating environment? You talked about the big crop there at favorable basis, et cetera. A lot of focus on near term US board crush, which you guys have hedged. So, you know, that is what it is, but I guess should be a big Brazil quarter for you guys, I believe. I think even the crush margins there have gotten better since we last spoke on the earnings call. If you could just kinda frame how things are shaping up in Brazil.
Sure. Yeah. No, crush margins are very good in Brazil. You know, from a net margin standpoint, it's probably as good as anything in our system right now. Also on our origination and, you know, port and distribution system that's fed from South America, and Brazil specifically, big crop is very good for that, right? Solving the problems that needing to get that move. Of course, you saw China pull on South America harder than North America, which, you know, net-net has been positive for us and for our footprint.
Then it looks like we've got a big, you know, corn crop, big safrinha crop coming right behind this record bean crop, which will begin to put some stress on the storage handling distribution system, not only domestically, but through the ports and export. That generally is a good setup for us and for margins as well. Like the, you know, love our footprint globally, love our footprint in South America, and the setup right now is good.
Then in Europe, you talked about some of the challenges, obviously, you know, with the Black Sea volumes, et cetera. Can you just talk about the operating environment in Europe for crushing on the soy and rapeseed side and how that supply of U.K.-Ukraine product, you know, impacts global prices and just the dynamics there. There's also been a lot of headlines recently on, you know, the deal and whether it gets renewed and all those various things, how impactful that could be.
Yeah. In Ukraine, we've been running one of our two sun seed crushing facilities. We hope when it's safe for our employees that we'll hopefully shortly be able to run our second facility. We've made the repairs, we're prepared to come back up. You know, our employees are clamoring. They wanna go back to work. They're fantastic. That has with the industry not running as hard, a lot of that seed has found its way into other places in Europe and around the globe. That's created, you know, good margin environment on the soft seed side, overall, but sun specifically. The environment has improved in Europe from a year ago on the crush side overall, and soy specifically.
You know, we mentioned better bean supply, less protein meal, and especially here in the second half coming out of Argentina. That's good for crush margin. Then we got lower energy costs, 'cause energy was really challenging last year. That entire environment is better for Europe.
Okay, great. You've been clear on your intentions around the sugar business. I doubt there's anything new to share on that specifically, but just curious how the operating environment, which seems to, you know, be in a better place generally, is impacting your timelines or your thinking around that. Is there anything that we should be aware of, that, as we think about, you know, your aspirations around the sugar business?
Yeah. We haven't let the current environment affect our timeline. I mean, we still wanna be very thoughtful and deliberate and get this done. Ultimately, what it allows us to do is we don't wanna give the business away. Fortunately, we're in an environment today where the business is performing very well. We have a great management team down there. We do expect, you know, to pull a decent amount of cash dividends out of that business over, you know, until we don't own it.
Mm-hmm.
We'll run it like we own it till we don't. But, you know, it's not a business, because of the current margin environment, we're gonna fall in love with again. It's something that we are still committed to divesting. When you have a partner and you've got to introduce a new partner to potential buyers, it creates more, you know, certainly more variables in negotiating deals than maybe otherwise a bilateral conversation would be. It takes a little more time.
Got it.
Well, we got.
We're working it.
Got a great team running that business. We've got a great partner. Environment looks good. John'll get them to give us some dividends.
Yeah.
We'll do the right thing at the right time.
That sounds good. I think we have enough time for one more before my last question. I wanted to ask about China, and kinda what you're seeing from a demand perspective out of China. It feels like there was a surge, maybe things got tempered a little bit. Just a little color around what how that's progressed relative to your expectations?
Go ahead.
Look, definitely, you know, China always is very spot on the crush side. We've seen demand improve. Even, you know, anecdotally, our team on the ground and our team that's been over there, the restaurants, I think from, you know, people living in China, they're all full. A lot of the expats, where you had a lot of the international travelers, those are not full. There's, there's more demand yet to come, and we've seen a little bit of that. Maybe the animal industry got a little bit ahead of that expansion, so we've seen animal margins come off a little bit. The numbers are there, so that will improve itself.
Of course, with, as I said, the big bean crop in South America, that's going to feed and improve margins in China, over time, as well as a tighter meal situation because of what's going on in Argentina. We're constructive China, I think especially versus last year, which was pretty tough.
I think that was one of the watch-outs we pointed out at the Q1 earnings call, was, you know, any improvement in China could, you know, help with our forecast as well.
Sure.
Yeah.
Okay. Then the last one is on share repurchases, which I know you get asked about a lot. You've been out of the market, you were talking about because of some M&A-related things that you... you had to be out of the market. Once you are able to get back in, I mean, cash balance is substantial, there's a lot of capacity.
Yeah.
What's the appetite? Would you do it in an accelerated fashion? I guess any color around how we should be thinking about the buybacks from here, especially in the context of some of your commitments that you've made.
Yeah. I think first and foremost, it is gonna continue to be an important part of our allocation. It doesn't look like that the last two quarters, we've been. You know, we haven't been able to be in that market. We are committed to it. We have a $300 million authorization remaining on our current board authorization that we hope to exhaust, you know, this year. Expand and add another authorization on and continue to be in that market. It will be an important part, and when it makes sense, we'll do more, and, you know, but we've got a commitment that long term it's absolutely an important part of what we're gonna do.
We feel our shares are very underpriced. No one's more excited to get back in the market to buy some of our shares than we are. On the other hand, we're building, you know, the earnings power of this company for the long term, and you can see that by looking at, you know, our LTM. We're being thoughtful. We have the company in the position financially, as well as we've shown we can execute, and we have the ability to pull every lever around M&A, organic, share buyback, and we'll be thoughtful about which we do when, and we're really excited about the position we're in right now.
Great. We are out of time, so I will leave it there. Thank you very much, for spending time with us.
Thank you.
Thank you.
I'll follow you guys off.
Thanks.
Okay. Thank you.