Monsanto Co. said its earnings fell 15% in its fiscal second
quarter, missing analysts' expectations as corn-seed sales weakened
and a stronger U.S. dollar pressured results.
The biotech-seed giant increased its estimate for the impact on
full-year results from a strengthening dollar, which has made
Monsanto's seeds and crop sprays more expensive for farmers in
Latin America and elsewhere.
Demand for Monsanto's high-tech seeds also has dipped because of
record harvests that have led to mounting stockpiles and sharply
lower futures prices. Monsanto said the slowdown in corn-seed sales
and increasing currency challenges meant full-year profit would
likely be on the lower end of its previously outlined range of
$5.75 to $6 a share. Overseas currencies' slide versus the U.S.
dollar were expected to deliver a 35- to 40-cent hit to earnings,
the company said.
"Two years of spectacular growing conditions have translated to
the current oversupply situation for corn," said Hugh Grant,
Monsanto's chief executive, on a conference call. "Farmers have
sharpened their pencils across their input costs as they balance
risks with returns."
The world's largest seed company by sales also has been
contending with consumer criticism of biotech foods, and in recent
weeks has protested a World Health Organization agency's
classification of glyphosate, which Monsanto markets under the
Roundup brand, as a potential carcinogen.
"It's unfortunate that junk science and this kind of mischief
can create so much confusion for consumers," Mr. Grant said
Wednesday, arguing that 40 years of regulatory review had proven
the herbicide's safety.
Monsanto on Wednesday reported a profit for the quarter ended
Feb. 28 of $1.43 billion, or $2.92 a share, down from $1.67
billion, or $3.15 a share, a year earlier. Excluding income from
discontinued operations, the per-share profit was $2.90, within the
company's forecast for a decline between 5% and 10%. Analysts had
projected $2.93 a share.
Revenue decreased 11% to roughly $5.2 billion, below analysts'
expectations of $5.58 billion.
Monsanto shares climbed 2.4% to $115.27 in early trading
Wednesday. Analysts said the stock got a boost because the company
stuck with its profit guidance, rather than reducing it, and
because U.S. farmers are projected to not cut corn acreage as much
as some traders anticipated, according to U.S. Department of
Agriculture estimates released Tuesday.
Corn sales, Monsanto's biggest source of profits, declined 15%
to $2.9 billion for the quarter as U.S. farmers are projected to
dedicate more fields this year to soybeans in pursuit of higher
profits. Soybean sales climbed 8% to $883 million and sales in
Monsanto's agricultural productivity segment, which includes its
Roundup brand weed killer, declined 14% to $1 billion.
The results also were weighed by previously announced shifts in
some of Monsanto's seed and pesticide businesses that will move
more profits to the company's third quarter reporting period.
"The fundamentals of our business are unchanged," said Mr.
Grant.
Write to Jacob Bunge at jacob.bunge@wsj.com and Tess Stynes at
tess.stynes@wsj.com
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