Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Monsanto again lifts profits hopes, as soy seed sales surge

Twitter Linkedin

Monsanto again nudged higher its earnings hopes, as the agrichemicals giant, facing a takeover by Bayer, reported better-than-expected profits, fuelled by rising herbicide prices and the popularity among farmers of soybeans.

The US-based group, which expects later this year to complete its $66bn purchase by Bayer, said that it expected to report earnings per share for the year to the end of August "at the high end" of a range of $4.09-4.55.

That compares with a forecast in April of earnings per share coming in at the high end of a range of $3.95-4.44.

That itself was an upgrade from previous guidance of earnings reaching $3.83-4.35 per share.

'Improvements in pricing'

Monsanto's shift came as the group unveiled a rise of 17.6% to $843m in earnings for the March-to-May quarter, on revenues up 1.0% at $4.23bn.

That was equivalent to $1.90 per share, excluding one-off items, ahead of the $1.76-per-share figure that investors had expected.

The growth reflected a 12.1% rise to $371m in gross profits from the agricultural productivity division, which sells herbicides such as Roundup, and where Monsanto flagged "improvements in pricing and volumes for glyphosate-based herbicides and continued sales of XtendiMax dicamba-based herbicide".

In the core seeds and genomics business, gross profits actually eased by 1.7% to $2.02bn, reflected in part one-off effects, but also the switch by farmers away from corn, profits from which dropped 5.4% to $922m, and a dent in alfalfa, where Monsanto did not receive licence fees gained a year before.

'Strong soy demand'

However, gross profits in soybeans soared 50% to $588m, as US farmers sowed 20m acres with Roundup Ready 2 Xtend alone, a seed genetically modified to be tolerant to both dicamba and glyphosate herbicides, allowing farmers to spray off weeds in their crops.

The comments come ahead of US Department of Agriculture data on Friday which are expected to show US growers planting a record soybean area this spring, largely at the expense of corn, for which low prices have made it a less attractive option.

In South America, sowings with Intacta RR2 pro seed "now exceeds 50m acres."

"In soybeans, Monsanto has seen strong demand for the latest technologies," the group said

Share reaction

Hugh Grant, the Monsanto chairman and chief executive, said that for the group overall "our innovation leadership and commitment to our grower customers is driving our growth.

"I'm very pleased with what our teams have accomplished this year, balancing meaningful progress on both delivering the business and working to close the deal with Bayer."

At the UK's Warwick Business School, international business professor John Colley said: "Third quarter earnings figures for Monsanto continue the recent improving trend as US agribusiness markets continue to grow."

Monsanto shares stood 0.9% higher at $118.26 in morning deals in New York, earlier touching a two-year high of $118.47.

By Mike Verdin

Twitter Linkedin
Related Stories

Evening markets: Ags gain, as funds begin to get that year-end festive mood

Ag prices recover, helped by the likes of more positive comment on US export competitiveness, and some more negative talk on Argentine rains

Morning markets: Grains stage a recovery. Will it last?

Corn, soybean and wheat futures start Wednesday making headway which has been difficult to come by of late. Cotton gains too

Evening markets: ags overlook crumbs of comfort in Wasde to set fresh historic low

The Bcom ag commodity subindex ends at a fresh record low, as US export fears overtake upbeat interpretations of corn, cotton estimate revisions

Headline Wasde data, and change from market estimates

How the USDA’s Wasde data compare with last month’s estimates, and the figures than investors had expected
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069