October 4, 2012

As the world's largest seed company saw corn and cotton seed sales decline, Monsanto Co.'s (MON) fiscal fourth-quarter loss widened.

Looking ahead, the company predicted full-year earnings of US$4.18 to US$4.32 a share. On average, analysts polled by Thomson Reuters predicted US$4.38.

The company's seed business has increased in importance, as the agricultural biotech giant has moved away from weed killers amid growing competition from generic products.

The seed business has grown--aided by farmers planting more corn seed as grain prices have risen--helping the company post higher earnings for much of the year. Still, the company was expected to post a loss in its fourth quarter. The period is typically its weakest due to the seasonal nature of seed sales.

Jefferies late last month said it expected Monsanto to end the fiscal year on a strong note, and the investment bank raised its earnings estimate for the new fiscal year. It expects increased soy planting in Latin America and higher corn and soy prices to boost results.

For the period ended August 31, Monsanto reported a loss of US$229 million, or US$0.42 a share, compared with a year-earlier loss of US$112 million, or US$0.21 a share. Factoring in restructuring charges, the per-share loss was US$0.44, compared with US$0.22. Net sales fell 6.1% to US$2.11 billion.

Analysts polled by Thomson Reuters expected a per-share loss of US$0.42 on US$2.25 billion in revenue.

Monsanto's seed business--the company's biggest top-line contributor--saw 10% lower sales of US$1.22 billion. The segment's decline was due in part to sharply lower cotton seed sales, as well as lighter corn seed sales.

Shares closed Tuesday (Oct 2) at US$90.56 and were down 2.3% premarket. The stock is up 29% so far this year.