April 3, 2009
Monsanto 2Q profit falls despite seed sales jump
Monsanto Co., the world's biggest seed maker, reported Thursday (April 2) its fiscal second-quarter profit loss by 3.2 percent, but still beat Wall Street expectations as corn and soy sales rose sharply.
Monsanto's corn seed sales increased by 19 percent for the quarter soy sales jumped 35 percent. Overall, revenue from genetic traits - which the company licenses out to other firms - and seed sales rose 20 percent.
Higher seed prices have pushed up corn sales, said Chief Executive Hugh Grant.
While Monsanto didn't win big market share advances during the quarter, Grant said higher profit margins on corn seed shows Monsanto's effective strategy execution of boosting profits by developing new traits for staple crops like corn and soy amid a growing global demand for food and crop-based fuels.
Monsanto bases its fiscal year on the agricultural calendar, and the second quarter is a time when US farmers start placing their orders for the coming spring planting season. Analysts keep a close watch on Monsanto's seed orders as the company tries to take market share from other biotech firms like Pioneer Hi-Bred, a DuPont Co. subsidiary.
The St. Louis-based company earned US$1.09 billion, or US$1.97 per share, in the three months ended Feb. 28, down from US$1.13 billion, or US$2.02 per share, a year ago.
Monsanto says it earned US$2.16 per share excluding one-time income taxes the company does not consider part of ongoing operations.
Thomson Reuters said analysts expected a loss of 3 cents a share.
Monsanto's revenue increased 8.3 percent to a record US$4.04 billion from US$3.72 billion a year ago with a boost from sales of genetically engineered seed.
It takes years to develop new genetically engineered crops, and Grant said the company is set to be the first to release a drought-tolerant strain of corn after more than five years of research into the crop.
He said that "nobody else can show these five years of real results in real fields."
Its shares rose US$1.33, or 1.6 percent, to US$83.31 in afternoon trading on April 2.
