Monsanto posts $680M 3Q profit

Jul 1, 2011
by DTN

Monsanto Co. says higher sales of genetically engineered seeds helped it nearly double its thirdquarter profit.

The St. Louis, MO-company reported last Wednesday its net income rose to $680 million, or $1.26 per share, for the quarter ended May 31, compared with $384 million, or 70 cents a share, a year ago. It says revenue increased 21 percent to $3.59 billion.

The results widely beat expectations, with analysts surveyed by FactSet saying they had expected net income of $1.10 per share on revenue of $3.4 billion. Shares of Monsanto rose nearly 4 percent to $69.40 in premarket trading.

The fiscal third quarter is critical for Monsanto because it includes the springtime months in which the company makes the bulk of its seed sales to farmers. Monsanto is locked in a competition for farmers’ dollars with seed developers like Dupont, which owns the seed company Pioneer Hi-Bred. Monsanto is trying to convince farmers to pay a premium for seeds that include many genetically altered traits, rather than choose a cheaper version with just one or two traits.

Monsanto said its total seeds and traits revenue rose to $2.65 billion from $2.36 billion last year. Corn seed sales jumped 10 percent from last year to $1.12 billion. Soybean sales rose 10 percent to $605 million.

The company raised its 2011 outlook for ongoing earnings per share to between $2.84 and $2.88 from the prior estimate between $2.72 and $2.82.

Monsanto said sales at its agricultural productivity segment, which produces the popular herbicide Roundup, surged 57 percent to $943 million. The segment had been languishing in recent years in the face of cheaper, generic Roundup versions produced in China.

But Monsanto said its Roundup business is under federal investigation. The company said the U.S. Securities and Exchange Commission (SEC) is investigating customer incentives Monsanto paid out for its Roundup business during fiscal years 2009 and 2010. The SEC has subpoenaed Monsanto, seeking documents related to the incentives, and Monsanto said it is cooperating. — DTN