Friday, January 9, 2015

Monsanto Earnings Fall 34 Percent Due to Lower Corn Seed Sales!

Monsanto crew members Gerard Manuel, left, and Rommel Angale, right, count corn sprouts in a field of test hybrids in a breeding nursery near Kihei, Hawaii. (AP Photo/The Maui News, Matthew Thayer)

Seed manufacturer Monsanto reported a sharp decline in first quarter earnings Wednesday, pointing to lower corn seed sales in South America and current headwinds in agriculture.
Net profit was down 34% to $243 million, or 50 cents per share, compared to $368 million, or 69 cents per share, a year ago. This topped Wall Street expectations of 34 cents per share and was also stronger than the company expected.
Total sales fell more than 8% to $2.87 billion, missing Wall Street projections of $2.96 billion. Corn is its biggest revenue producer, but sales of the seed fell nearly 12% from a year ago, due largely to fewer planted acres of the crop in South America. Reduced demand for cotton seeds in Australia also contributed to the revenue decline, plus a timing shift that the company says will bring more revenue in during the third quarter.
“The near-term headwinds in agriculture persist,” said CEO Hugh Grant, referencing in part the lower commodity prices that have forced farmers to shift planting and spending.
“But our ability to deliver new solutions to help farmers improve yields while efficiently using resources provides the opportunity to deliver growth in both the current environment and over the longer-term,” said Grant.
The agriculture company is looking to soybeans as one such driver of growth. Sales of the crop were up 48% in the first quarter, bringing in $396 million and making the tech-enhanced seeds its second-biggest revenue producer behind corn.
Investors were also watching for an update on the company’s research and development pipeline. “From progress in our Roundup Ready Xtend systems to advancements in highly-relevant disease-resistance breeding traits – as well as next-generation insect control products and upgrades in our Climate services – we are seeing incredible progress across our research and development pipeline,” said chief technology officer Robb Fraley.
The company confirmed its full-year 2015 earnings guidance of $5.78 to $6.03 per share. It also reiterated its confidence in doubling ongoing earnings per share in the next five years.
Shares of Monsanto are up just 2% year-over-year, and ticked up 1.5% in premarket trading to $117.50.
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