September 18, 2007

Monsanto takes strong profit shares

Premarket shares of US biotech giant Monsanto jumped in trading as the firm confidently expressed that earnings for its just-concluded fiscal year will be above expectations on continued strong corn seed sales, a lower tax rate and higher-than-projected pricing for its Roundup business.

The seed conglomerate based in St. Louis, Missouri expects net income for the year ended August 31 of about US$1.79 a share and earnings of about US$2 a share excluding discontinued operations and acquisition-related costs. Previously, Monsanto's estimated per share range from US$1.36 to US$1.54 and US$1.75 to US$1.80 a share, respectively.

Monsanto noted its good fiscal earnings on "strong early sales of corn seeds in Brazil and Argentina which were higher than originally anticipated." Tax bill cuts, including costs related to its recent acquisition of Delta & Pine Land and higher-than-projected prices on Monsanto's Roundup brand of herbicides also contributed to the increase.

A venture with Dow Chemical which kicks off  in 2010 is expected to rake in more profits. The two companies have joined forces to create corn seeds crammed with traits to fight off weeds and insects. Under the brand SmartStax, the firms target to make these seeds available in the market two years from now. Monsanto said Friday the agreement will allow it to expand its market share by broadening the products it can offer.

Shares of Monsanto closed Friday (September 14) at US$73.50 and jumped to US$76 in premarket trading.