Monsanto earnings wilted in fourth quarter


Monsanto's soybean seeds more than doubled in sales.
Monsanto’s earnings fell short of expectations, although soybean sales more than doubled. Creative Commons

By Tobias Burns

Monsanto Co., squeezed by stagnating corn-seed sales in what the company characterized as a “challenging” agricultural environment, turned in fourth-quarter results that landed slightly short of estimates.

For the quarter ended Aug. 31, the St. Louis-based agribusiness giant had a net loss of $156 million, or 31 cents a diluted share, a narrower loss than the year-ago quarter’s deficit of $249 million, or 47 cents a share.

Sales sprouted more than 19 percent to $2.63 billion from $2.20 billion, driven by a spike in sales of soybean seeds, which have benefited from increased demand abroad.

The recent South American launch of Monsanto’s latest high-tech soybean product Intacta, which protects against worms and other pests, also helped boost revenues.

Although Monsanto shares have been under pressure in recent months, many analysts remain undeterred by the soft results.

“We think the recent weakness in the stock, primarily driven by falling crop prices, is misplaced,” Morningstar Inc. analyst Jeffrey Stafford told investors in an Oct. 1 note. “We expect Monsanto to generate impressive returns over the long run.”

Monsanto’s latest fiscal harvest was hurt by a 4-cent-per-share environmental settlement charge. Excluding the charge, the per-share loss was 27 cents, just shy of analyst forecasts at 24 cents.

While the fourth quarter is typically weak for Monsanto because of seasonal factors, the company offered a muted forecast for near-term results.

“Monsanto expects its first quarter will be roughly half of the total earnings from the first quarter of 2014,” it said in a statement, attributing the dip to the fact that farmers are cutting back on the amount acres they will plant with corn and cotton. The company told investors to expect earnings per share for the first quarter between $5.75 and $6.00, below the $6.03 that analysts surveyed by Reuters have been expecting.

Full-year revenues were up 6.6 percent to $15.86 billion from $14.86 billion, with net income up 9.3 percent to $2.7 billion, or $5.22 per share.