April 10, 2012

Monsanto's Q2 profit up 19% on strong corn-seed sales

As it benefited from an early US planting season and strong corn-seed sales, Monsanto Co.'s fiscal second-quarter profit rose 19%.

The company raised its full-year guidance, and the record second-quarter earnings beat analysts' expectations.

"Our strong US selling season and growth from Latin America during the first sixth months have come together to set us up for a great 2012," chairman and Chief Executive Hugh Grant said in a statement.

For the quarter ended February 29, Monsanto reported a profit of US$1.21 billion, up from a year-earlier profit of US$1.02 billion, or US$1.88 a share. Stripping out items like a settlement, earnings per share rose to US$2.28 from US$1.87 a year earlier. Net sales rose 15% to US$4.75 billion.

The company had previously signalled a solid quarter was in the works, saying early seed orders for North America indicated a strong momentum. The quarter is a critical one for Monsanto; it traditionally reports 60% of profit in the period as the northern hemisphere's planting season begins.

For the year, the company said it now expects earnings of US$3.49 to US$3.54 a share. The company in January said it expected full-year earnings of US$3.39 to US$3.44 a share.

A mild winter and unusually early start to spring have prompted US farmers to begin preparing sooner-than-usual for planting, although most farmers have waited until April to actually put the seed in the ground. Corn is planted before soy, and net sales in Monsanto's corn seeds and traits business jumped to US$2.8 billion in the quarter, up 17.4% from a year ago.

The US government expects farmers will plant the most corn acreage this spring since 1937.

Monsanto's seed business, the largest contributor to revenue, posted a 15% jump in sales to US$3.92 billion. In addition to the growth in corn, soy net sales were up 12% from a year ago, to US$689 million.

The company's agricultural productivity segment, which includes herbicide sales, also saw higher net sales, while Monsanto's vegetable seed business reported a small decline in sales due to weakness in Europe.