KANSAS CITY, Missouri (Reuters) - Monsanto Co <MON.N> posted a higher quarterly profit on record revenue from its herbicide, corn seed and other products, but the stock fell on disappointment the company did not raise its full-year earnings forecast.
By Carey Gillam
KANSAS CITY, Missouri (Reuters) - Monsanto Co <MON.N> posted a higher quarterly profit on record revenue from its herbicide, corn seed and other products, but the stock fell on disappointment the company did not raise its full-year earnings forecast.
Monsanto said its expects ongoing earnings this year in a range of $3.15 to $3.25 per share, affirming its own forecast made just a week ago that set expectations for growth of well over 50 percent compared with 2007 ongoing earnings. But the Wall Street consensus forecast rose to $3.30 per share following the company's March 25 outlook.
Soleil Securities analyst Mark Gulley said while he was pleased with Monsanto's results, he felt the company was too cautious in its outlook.
!ADVERTISEMENT!"The key for me is the revised gross profit goals; they've raised their gross profit goal modestly, but it still looks too conservative to me," Gulley said.
St. Louis-based Monsanto, a global leader in the development of biotech corn, soybeans, cotton and other crops, said thanks largely to a jump in herbicide sales, net income rose to $1.1 billion, or $2.02 a share, from $543 million, or 98 cents a share a year earlier.
On an ongoing basis, the company earned $1.79 a share for the second quarter, which ended February 29. Analysts, on average, were looking for $1.75 a share, according to Reuters Estimates.
The company said quarterly gains came on record net sales of $3.8 billion, up 45 percent, for the second quarter.
Monsanto also on Wednesday reiterated its 2012 gross profit target of over $8 billion, and said 2008 gross profit should grow to more than $5 billion. The most significant contribution to gross profit in 2008 is emerging from sales of Monsanto's Roundup herbicide, which is seen more than doubling its gross profit year-over-year, Monsanto said.
"Obviously, we've had a tail wind from the unprecedented performance in our global Roundup business," Monsanto Chief Financial Officer Terry Crews said. "If you adjust our 2012 gross profit target just for the change in Roundup gross profit to $1.8 billion, we would now expect our total gross profit to increase by $600 million, exceeding $8.5 (billion) to $9 billion by 2012."
Still, Monsanto shares, which have risen more than 10 percent in the last six months, dropped more than 6 percent, before partly rebounding to trade down 2 percent at $110.69 in late-morning trade on the New York Stock Exchange.
Results in the quarter also reflected growth in both price and volume sales of Roundup, including more U.S. sales of branded Roundup than typical for the period. Net income for Roundup and other glyphosate-based herbicides totaled $982 million in the quarter, up from $530 million a year earlier.
Other key drivers for the quarter were a 47 percent gain in net sales of corn seed and trait products and a 22 percent jump in soybean seeds and trait products.
Quarterly results were also favorably impacted by 23 cents per share from the settlement of Monsanto's claims in conjunction with the emergence from bankruptcy of chemicals company affiliate Solutia Inc.
The company said it now expects its free cash flow for fiscal year 2008 will be $1.3 billion, down from the $1.4 billion it had indicated a week ago, reflecting planned capital expenditures of up to $196 million over the next 18 months at its glyphosate manufacturing facility in Luling, Louisiana. The investment will increase global production capacity, the company said.
Monsanto's full-year 2008 EPS and free cash flow guidance does not reflect the effect of the recently announced agreement to acquire De Ruiter Seeds.
(Reporting by Carey Gillam, additional reporting by Euan Rocha in New York, editing by Dave Zimmerman)
