Monsanto Co. (MON), the world’s largest seed company, posted third-quarter earnings that exceeded analysts’ estimates as U.S. farmers bought more of the company’s genetically modified corn.
Net income climbed 35 percent to $937 million, or $1.74 cents a share, in the three months through May 31, from $692 million, or $1.28, a year earlier, St. Louis-based Monsanto said today in a statement. Profit excluding a legacy tax matter was $1.63 cents a share, topping the $1.60 average estimate of 13 analysts in a Bloomberg survey. The company forecast profit of $1.57 to $1.62 on May 30.
Sales of corn seed and genetic licenses rose 35 percent as U.S. farmers planted the biggest crop in 75 years. Soybean sales gained 15 percent, driven by demand for the newest seed engineered to tolerate Monsanto’s Roundup herbicide. Chairman and Chief Executive Officer Hugh Grant also is expanding in Latin America and Eastern Europe.
“Corn is clearly the driver now,” Chris L. Shaw, a New York-based analyst at Monness Crespi Hardt & Co. who recommends holding the shares, said today in a phone interview. “It was strong across the board, and they maintained their guidance for next year.”
Monsanto rose 1 percent to $78.65 at 9:18 a.m. in New York before the start of regular trading.
Sales climbed 17 percent in the quarter to $4.22 billion from $3.61 billion. Monsanto reiterated its earnings forecast for the year through August of $3.65 to $3.70 a share, excluding the tax issue, settlement of pollution claims and discontinued operations. The average estimate of 16 analysts in the survey was $3.70 a share.
Profit in fiscal 2013, which begins in September, will increase by a percentage in the “mid-teens,” Monsanto said, repeating its long-term earnings target. Growth drivers include corn and soybeans in the U.S. and Brazil, Argentine corn, vegetables, and price gains associated with seed improvements, Monsanto said in a presentation on its website.
U.S. farmers have doubled planting of Monsanto’s insecticide-producing corn in 2012, exceeding the top end of the company’s 25-million-acre forecast by more than 1 million acres, Monsanto said in the presentation. More acres will be planted in 2013, the company said.
Roundup Ready 2 soybeans were planted on about 30 million acres, an increase of more than 10 million acres, and plantings will rise again next year, Monsanto said.
Sales of insect-fighting corn will increase next year in Brazil and Argentina, according to the presentation. Sales of similar technology engineered into Intacta soybeans will begin next year in Brazil, with farmer trials planned for Argentina the following year.
(Monsanto scheduled a conference call at 9:30 a.m. New York time. Dial +1-877-869-3847 or log on to its website at http://www.monsanto.com.)
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