Monsanto Cuts Profit Forecast on Herbicide Price Decline

  • Sees `additional headwinds' from delay to dicamba approval
  • Also cites weaker foreign currencies, including Argentine peso

Monsanto Co., the world’s largest seed producer, cut its full-year profit forecast as lower prices for its glyphosate herbicide and a devalued Argentine peso add to the pressures from weaker agricultural markets.

The St. Louis-based company now sees profit excluding one-time items of $4.40 to $5.10 a share, it said Wednesday in a statement, compared with a January prediction of $5.10 to $5.60. The shares fell 4.3 percent to $88.48 at 9:31 a.m. in New York.

Weaker currencies are hurting Monsanto’s foreign revenues, while the decline in agricultural commodities such as corn and soybeans has reduced profits for farmers. That in turn has put pressure on prices for crop chemicals such as glyphosate, the most widely used weedkiller. The company also cited "additional headwinds" from the delay in the U.S. Environmental Protection Agency in approving dicamba herbicide for use on crops as part of Monsanto’s Roundup Ready Xtend system.

“The macro-environment is proving to be even more challenging, yet we still see strong long-term growth opportunities for our business,” Chief Financial Officer Pierre Courduroux said in the statement. Courduroux is due to make a presentation Wednesday at a conference organized by Bank of American Merrill Lynch at 12:45 p.m. New York time.

  • For the revised forecast, 25 cents to 30 cents a share is accounted for by currency, Monsanto said. Another 30 cents is from "macro factors" weighing on the seeds and genomics business, the company’s largest by revenue.
  • For the fiscal second quarter, Monsanto now expects earnings per share of $2.35 to $2.45, excluding one-time times. The average of 19 analysts’ estimates compiled by Bloomberg was for $2.84.
  • The company cut its full-year free cash flow projection to $1.4 billion to $1.6 billion from $1.6 billion to $1.8 billion.
  • It now sees "relatively flat" full-year gross profit growth from seeds and genomics. Its agricultural productivity business’s gross profit will now be closer to the mid-point of the range of $900 million to $1.1 billion.
  • Full-year operating expenses, excluding costs related to restructuring and environmental and litigation settlements, are seen down slightly.
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