Bloomberg News

Monsanto Raises Forecast as Net Gains 77% on Herbicide Sales

June 29, 2011

June 29 (Bloomberg) -- Monsanto Co., the world’s largest seed company, reported fiscal third-quarter earnings that topped analysts’ estimates and raised its full-year profit forecast on higher sales of Roundup weed killer and genetically modified crop seeds.

Net income climbed 77 percent to $680 million, or $1.26 a share, in the three months through May 31, from $384 million, or 70 cents, a year earlier, St. Louis-based Monsanto said today in a statement. That beat the $1.10 average estimate of 17 analysts in a Bloomberg survey. Sales rose 21 percent to $3.59 billion from $2.96 billion.

Profit excluding some items will rise to $2.84 to $2.88 a share in the fiscal year through August, from $2.41 a year earlier, Monsanto said. Its previous forecast was for $2.72 to $2.82. The average estimate of 20 analysts surveyed by Bloomberg was $2.82.

Roundup, the world’s best-selling herbicide, and other crop chemicals returned to profit after a $175 million loss before interest and tax in the year-ago quarter. Gross profit from seeds and genetics rose 21 percent after Chief Executive Officer Hugh Grant cut prices of new corn and soybean seeds in an effort to stop gains by DuPont Co.’s Pioneer unit.

“Its decision to aggressively lower its list prices has provided the company with a much-needed opportunity to repair its badly damaged relationship with growers,” Don Carson, a New York-based analyst at Susquehanna Financial Group who rates Monsanto “positive,” said in a June 26 report.

Monsanto also said the staff of the Securities and Exchange Commission is conducting an investigation regarding its customer incentive programs relating to its glyphosate products in fiscal years 2009 and 2010. Monsanto said it received a subpoena for documents and is cooperating

High crop prices are generating record income for U.S. farmers, according to U.S. Department of Agriculture data. That typically helps boost demand for pricier seeds that Monsanto engineers to kill pests and tolerate applications of weed killer.

Monsanto rose $1.18, 1.8 percent, to $66.90 yesterday in New York Stock Exchange composite trading. The shares have declined 3.9 percent this year.

DuPont last year tied Monsanto for the lead in North American corn-seed market share, and the Wilmington, Delaware- based company said on June 14 that it gained more share this year in corn and soybeans.

--Editors: Steven Frank, Simon Casey

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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