Monsanto Profit Tops Analyst Estimates as Seed Sales Gain in Latin America
Monsanto Profit Tops Analyst Estimates
Paulo Fridman/Bloomberg
Workers gather dead insects in a research field of Monsanto Co. insect-protected Genuity Roundup Ready 2 Yield soybean plants near Pirassununga, Brazil.
Workers gather dead insects in a research field of Monsanto Co. insect-protected Genuity Roundup Ready 2 Yield soybean plants near Pirassununga, Brazil. Photographer: Paulo Fridman/Bloomberg
Monsanto Co. (MON), the world’s largest seed company, posted first-quarter earnings that exceeded estimates as Latin American farmers grew more genetically modified corn and said U.S. orders are ahead of last year.
Net income climbed to $126 million, or 23 cents a share, in the three months through November, from $9 million, or 2 cents, a year earlier, St. Louis-based Monsanto said today in a statement. Monsanto said last month that earnings would be 15 cents to 20 cents a share, and the average of 10 estimates (MON) compiled by Bloomberg was for profit of 18 cents.
First-quarter revenue rose 33 percent to $2.44 billion from $1.84 billion as farmers in the southern hemisphere bought more genetically modified corn seed. Chief Executive Officer Hugh Grant is increasing sales in Argentina and Brazil, the drivers of first-quarter earnings, where he plans to introduce the first insect-killing soybean seeds.
“The strength in the quarter was driven by a sharp increase in biotech seeds and traits in the Brazil and Argentina markets,” Michael E. Cox, a New York-based analyst at Piper Jaffray Cos. who rates the shares “overweight,” said in a note yesterday. “Farmers are quickly upgrading to advanced seed technology to bolster yields and combat insect pressure.”
Forecast Narrowed
Shares of Monsanto rose (MON) 4.7 percent to $76.11 as of 9:58 a.m. in New York, the biggest intraday gain in three months.
Monsanto narrowed its full fiscal-year earnings forecast to $3.39 to $3.44 a share, compared with a December forecast (MON) of $3.34 to $3.44. The average estimate of 13 analysts in the survey was for profit of $3.44 a share. U.S. seed orders are ahead of last year and “tracking well” with 2012 goals, Monsanto said.
“We’ve seen a very strong start to the year, with real growth in Latin America and early orders in the United States that underscore our sustained momentum carrying into 2012,” Grant said in the statement
Monsanto said it advanced a record 14 research projects toward commercialization. The company also maintained its full- year cash-flow guidance of $1.3 billion to $1.5 billion.
Results in Monsanto’s first and fourth quarters are typically weakest because farmers are between planting seasons in North America and Europe, where the company generated about two-thirds of its revenue (MON) last fiscal year.
To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net.
To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.
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