Monsanto Reports Lower Q2 Financial Results.

Apr 01, 2015

Monsanto Announces Q2 Profits Slip But Long Term Prospects Remain Strong.

Joe Dales, Farms.com Editorial Team

Monsanto released the lower financial results for the second quarter but reassured investors that the good prospects for full-year earnings despite setbacks from a strong dollar and the potential for fewer corn acres planted which depressed quarterly profits more than had been expected.

The company reported earnings for the December-to-February quarter down 14.7% at $1.43B - equivalent to $2.90 per share, a little below the $2.93 per share that Wall Street had expected.

The profit decrease, on revenues down 9.9% at $5.20B, resulted from slower corn seed sales as farmers react to lower corn commodity prices and for the crop that is more expensive to grow.

The following link has the full financial report:

http://news.monsanto.com/press-release/financial/monsanto-announces-second-quarter-financial-results-within-guidance-balanced

The overall sluggish farmer demand for corn seed resulted in reported gross profits from the corn seed down 16.7% at $1.88 Billion, on sales down 14.7% at $2.91B.

The company also flagged "the significant deterioration of several key currencies versus the dollar", so reducing to US-based Monsanto the value of foreign earnings.

Nonetheless, it restated expectations of earnings for its full financial year, which ends in August, coming in at $5.80-6.05 per share, albeit saying that the result was expected "in the low end of the range… given the industry-wide headwinds of declining corn acres and the strengthening dollar".

Monsanto said that it was faring relatively well in branded corn seed compared with rivals, holding or growing its market share "footprint" in "every market", including in Brazil, where it claimed a 2-point rise in market share.

In soybean seed sales, Monsanto said that its proprietary seed and royalties had sold well. Soybean seed profits for the quarter rose 12.8% to $608M, on revenues up 7.8% at $883M.

Monsanto's full-year earnings forecast included an expectation that its seed division, responsible for the vast majority of group earnings, will see a profits rise in the "low-to-mid digits" in percentage terms.

For the agricultural productivity segment, which includes the glyphosate-based herbicide Roundup, Monsanto said that profits were expected to fall by "approximately" 10%, compared with a previous forecast of a fall of "up to "10%. Monsanto said it was expecting a "softening" in prices of glyphosate herbicides, and a hit from "deteriorating currencies".

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