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Monsanto Profit Tops Estimates Ahead of Record Soybean Crop

09:10AM Apr 03, 2014

April 2 (Bloomberg) -- Monsanto Co., the world’s largest seed company, reported fiscal second-quarter earnings and sales that exceeded analysts’ estimates on record soybean profit as farmers plan to sow a bumper crop.

Earnings were $3.15 a share in the three months through February, the St. Louis-based company said today in a statement, topping the $3.06 average of 21 estimates compiled by Bloomberg. Sales rose 6.6 percent to $5.83 billion, beating the $5.8 billion average estimate.

The company kept its fiscal full-year earnings forecast of $5 to $5.20 a share, less than the $5.26 average of 21 estimates. The shares rose 0.8 percent to $114.42 in New York.

Monsanto, led by Chairman and Chief Executive Officer Hugh Grant, is ramping up sales of new types of genetically engineered soybeans just as tightening supplies push soybean prices to their highest in nine months. U.S. farmers plan to boost soybean plantings to a record 81.5 million acres this year, more than making up for a decline in corn, the Department of Agriculture said March 31.

"Soybeans were expected to be a big driver this quarter, but they were even better than expected," Chris Shaw, a New York-based analyst at Monness Crespi Hardt & Co. who recommends buying the shares, said by phone. "Fundamentally, things were very strong."


New Technologies

Net income increased 13 percent to $1.67 billion. Monsanto said its seed unit drove almost 80 percent of that growth, with the rest coming from sales of agricultural chemicals, primarily Roundup herbicide. Earnings from soybean seeds and related licenses rose 36 percent in the quarter.

Profit margins from selling soybean seeds and genetic licenses expanded 7 percent on sales of insect-resistant seeds in Latin America and a new herbicide-tolerant line in North America, Monsanto said in a slide presentation on its website. Its new Intacta and Roundup Ready 2 technologies should add $1 billion in sales over five years.

While winter weather in the Northern Hemisphere delayed shipments early in the period, improvements later in the period avoided "any significant timing impacts," the company said.

Corn seed gross profit rose 8.2 percent to $2.25 billion in the quarter while earnings from the much smaller cotton-seed and vegetable-seed businesses fell.


To contact the reporter on this story: Jack Kaskey in Houston at To contact the editors responsible for this story: Simon Casey at Steven Frank