Monsanto Profit Tops Estimates on Soybeans and Roundup

Monsanto Co., the world’s largest seed company, reported fiscal first-quarter earnings that topped analysts’ estimates on rising sales of engineered soybean seeds and Roundup herbicide.

Net income in the three months through November increased to $368 million, or 69 cents a share, from $339 million, or 63 cents, a year earlier, Monsanto said today in a statement. Profit excluding a discontinued business was 67 cents, beating the 64-cent average of 17 estimates compiled by Bloomberg. Revenue rose 6.9 percent to $3.14 billion, topping the $3.07 billion average of 15 estimates.

Chairman and Chief Executive Officer Hugh Grant is focused on selling more genetically modified seeds in Latin America to drive earnings growth outside the core U.S. market. Sales of soybean seeds and genetic licenses climbed 16 percent, and revenue in the unit that makes glyphosate weed killer, sold as Roundup, rose 24 percent.

“Glyphosate really crushed it,” Chris Shaw, a New York-based analyst at Monness Crespi Hardt & Co. who recommends buying the shares, said by phone today. “Overall, it was a pretty decent quarter.”

Profit in the fiscal year that began Sept. 1 will be $5 to $5.20 a share, St. Louis-based Monsanto said, repeating an Oct. 2 forecast. The average of 17 estimates compiled by Bloomberg was for per-share profit of $5.26.

Pricier Seeds

Gross profit from soybeans climbed 42 percent as Monsanto began sales of Intacta, engineered to control insects in South America. Farmers are planting more land with soybeans to take advantage of higher crop prices relative to corn, Shaw said.

Intacta is expected be planted on 3 million acres in Brazil this year, the fastest launch of any Monsanto product, Chief Operating Officer Brett Begemann said today on a conference call. Intacta may ultimately be planted on 100 million acres in Brazil and Argentina, markets where Monsanto previously wasn’t able to collect royalties on modified beans, Michael E. Cox, a Minneapolis-based analyst at Piper Jaffray Cos., said by phone today.

“Intacta over the next two years will prove to be the single most important earnings driver for Monsanto,” said Cox, who recommends buying the shares.

Monsanto rose 2.1 percent to $115.23 at the close in New York. The shares have gained 17 percent in the past year.

Corn Sales

Gross profit in the seed unit fell 2 percent as gains in soybeans and vegetable seeds weren’t enough to make up for declining sales of corn and cotton seeds, Monsanto said. Farmers in Latin America are expected to plant less corn in the current growing season and U.S. farmers aren’t making early purchases like they did last year, Monsanto said.

Gross profit in the agricultural-productivity unit, which makes Roundup herbicide, the world’s top-selling weed killer, surged 50 percent, Monsanto said in the statement. Gains were helped by 8 percent higher retail prices for generic glyphosate, the active ingredient in Roundup, Shaw said.

“That business is benefiting from higher prices and wider margins,” Matt Arnold, a St. Louis-based analyst at Edward Jones, said today by phone. “It’s definitely swinging the right way for Monsanto.”

Excluded from adjusted earnings are payments from the Posilac bovine growth hormone business that was sold to Eli Lilly & Co. in 2008, Sara Miller, a Monsanto spokeswoman, said in an e-mail.


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