Monsanto First-Quarter Profit Up on South America Strength

Monsanto Co. reported higher earnings in the first quarter than the prior year on strong demand from its South American business.

Net income was $29 million in the first quarter, reversing a $253 million loss in the year-ago period. Total crop protection, or Agricultural Productivity, sales dropped to $802 million from $820 million in the prior-year quarter. Seeds and Genomics sales were stronger, climbing to $1.8 billion from $1.4 billion.

“We’ve been very pleased with the strong support — especially from shareowners and growers — for the agreement to combine with Bayer,” said Hugh Grant, chairman and chief executive officer. “We expect the combination with Bayer to amplify the rate of innovation faster than either company could achieve alone, which will be critical in helping to increase grower productivity to meet projected demand in the decades ahead.”

With the expected strong start in the first quarter and continued focus on return on innovation and financial discipline, the company remains confident in its fiscal year 2017 outlook. Despite the fact that the year-over-year change in currency rates was modestly favorable in the first quarter of fiscal year 2017, the company continues to assume that the change in rates will have a relatively neutral effect on a full year basis given the recent strengthening of the U.S. dollar against several currencies.

The fiscal year 2017 full-year as-reported EPS guidance is expected to be in the range of $3.97 to $4.45. These earnings are expected to translate into $2.4-to-$2.8 billion of operating cash flows and $1.4-to-$1.6 billion of free cash flows, after deducting an estimated $1.0-to-$1.2 billion of investing cash flows. These investing cash flows reflect the planned investment in the company’s dicamba manufacturing facility and assume the successful sale of the precision agriculture equipment business.

The company expects roughly $100 million of gross profit from strategic licensing deals towards the end of the fiscal year which is anticipated to be roughly split between Seeds and Genomics and Ag Productivity. Seeds and Genomics segment gross profit is expected to increase to mid-single digits as a percent year-over-year, with soybean gross profit alone expected to grow by more than 20 percent, driven by new trait penetration and an anticipated reduction in cost of goods sold. In corn, growth is expected to come from global genetic share gains and global germplasm price mix lift in local currency that is flat to up low-single-digits, in terms of percentages. The company expects global corn acres to be roughly flat, with declines in U.S. corn acreage offset by the early increases in South America.

The company adjusted Ag Productivity gross profit to the expected range of $850-to-$950 million, reflecting year-over-year price declines in glyphosate-based herbicides in the first half of the year, offset partially by the benefit of licensing opportunities and expected higher volumes. The adjustment in gross profit outlook is a result of the approximately $85 million benefit from the sale of the Latitude wheat fungicide business that was ultimately recorded in other expense, net for the segment, as opposed to gross profit as anticipated.

The company’s restructuring and cost savings initiatives remain on track, with the opportunity to deliver approximately $380 million in annual savings at the close of fiscal 2017 in operating expenses and cost of good sold, as compared to fiscal year 2015. However, setting aside pending Bayer transaction related costs and restructuring expenses, overall operating expenses in fiscal 2017 are expected to increase slightly with inflation and the costs associated with the return to growth of the business more than offsetting the savings. The expected tax rate for the year remains in the range of 25-to-28 percent.

For the second quarter of fiscal year 2017, the company expects as-reported and ongoing earnings per share that is approximately $0.20 to $0.50 better than the prior year. The company sees this first half earnings improvement as a reflection of the benefit from the sale of the Latitude business and the absence of a significant portion of the Argentine peso devaluation from the prior year. In the second half of the fiscal year, the company expects roughly 40 cents less in earnings per share benefit from strategic deals versus the prior year in addition to a more challenging currency environment than in the first quarter.

The company’s higher Seeds and Genomics sales in the first quarter included a 25-plus percent increase in planted corn acres in Argentina and more than a 10 percent increase in corn acres planted in Brazil accompanied by double-digit price increases in corn germplasm in local currency in both countries. In the U.S., demand for year-one hybrids remains strong and the early read on the order book supports the company’s intention to grow genetic share.

The company continues to build on the momentum of Intacta RR2 PRO soybeans in South America as it remains on track to reach a target of 45 to 55 million acres in fiscal year 2017. In the U.S., demand for Roundup Ready 2 Xtendsoybeans remains strong and the company is well-supplied for more than 15 million acres of the product. With the EPA approval for in-crop use of dicamba in-hand, the company has received nearly two-thirds of the necessary state approvals for both soybeans and cotton, and expects to have the rest before planting. The company said it has provided extensive, ongoing customer training and expects customers will have an outstanding experience with the Roundup Ready® Xtend crop system.

Topics: , ,

Agrichemicals

Agrichemicals

Arysta LifeScience Names New Head of Europe, Middle East & Africa

Arysta LifeScience has named Hildo Brilleman as the company’s CEO of its Europe, Middle East & Africa (EMEA) region, effective

Agrichemicals

Missouri Latest U.S. State to Set Dicamba Cut-off Date for 2018

Missouri Department of Agriculture 'takes proactive measures to reduce off-target crop injury during the 2018 growing season.'

Agrichemicals

BASF Reports End of Season Dicamba Results

BASF field reps investigated 787 soybean symptomology claims during the 2017 season.

Agrichemicals

Seed Firms’ Changes Bring Uncertainty, Promises

The months ahead will reveal what these altered players will look like and how they’ll work with dealers and growers. They’ll also show where companies are focusing efforts in trait development and crop systems.

Agrichemicals

AMVAC’s Trogele: ‘Entire Downstream Channel of Our Industry Will Be Challenged’

AMVAC Chief Operating Officer Bob Trogele offered his insight on the current agrichemical environment, and on how retailers can possibly engage with post-patent companies.

Agrichemicals

Albaugh Enters Collaboration on New Wheat Varietites

Colorado Wheat Research Foundation, Inc., Albaugh, LLC and Limagrain Cereal Seeds, LLC have announced the release of the first two new herbicide-tolerant CoAXium Wheat Production System varieties.

monsanto roundup
Agrichemicals

Monsanto, Farm Groups Sue California Over Glyphosate Warning Requirement

Monsanto Co. says it has joined a coalition of U.S. farm groups in a lawsuit against the state of California to stop a requirement for cancer warnings on products containing glyphosate.

Agrichemicals

Arysta, DuPont Sign Fungicidal Seed Treatment Deal

Arysta LifeScience will supply to DuPont Crop Protection an innovative fungicide technology with an initial focus on corn and soybean seed applied products.

Agrichemicals

The Dicamba Factor to Weigh Heavily in 2018 Decisions

Other newer herbicides, too, are poised to expand growers’ options as weed resistance struggles show no signs of abating.

Agrichemicals

FMC Third-Quarter Profit Jumps on Americas Volume Growth

Third quarter segment revenue grew 6% year-over-year, excluding India.

Agrichemicals

EU Hits Deadlock on Glyphosate Reauthorization

The EU license for glyphosate is set to expire on Dec. 15.

Agrichemicals

Is it 2008 All Over Again? Chinese Supply Crunch Hits Crop Protection Players

Post-patent players, retailers seek out options and opportunities as the unknowns of supply constraints and consolidation from the Big 6 to the Big 3 take hold.

Agrichemicals

Nufarm to Acquire Portion of FMC’s Herbicides

Nufarm will acquire FMC's SU-class herbicides and Florasulam.

Agrichemicals

Arkansas Plant Board Votes to Adopt Dicamba Cut-Off Date

Changes will prohibit dicamba use in Arkansas between April 16 and Oct. 31.

Bayer
Agrichemicals

EU Restarts Clock on Bayer-Monsanto Deal Review

The European Commission has resumed its antitrust review of Bayer’s planned takeover of U.S. seed maker Monsanto after the companies

Adjuvants

Aqua-Yield Introduces New Herbicide Adjuvant

At only 4 oz./acre application rate, Aqua-Yield has introduced the industry game-changer, Nano-Pro. In university and field testing, Nano-Pro was

Rice Field
Asia

India Asks Germany to Resolve Early Fungicide Issue in Rice

India today asked Germany to address at the earliest the issue related to the tolerance level of fungicide tricyclazole in

Fungicides

Adama New Zealand Removes Mancozeb Cover Spray from Sale

Adama New Zealand, a member of Adama Group, a global crop protection leader, has reported it had pre-emptively recalled Mancozeb

Agrichemicals

Weak Brazil Volumes, Prices Hit DowDuPont Results

Additionally, an expected reduction in corn area in Brazil, as well as a delayed start to its summer season, impacted sales in the region.

Latest News

Americas

Valagro Launches Biostimulant in Brazil

After being launched in Spain, Egypt, Mexico and Italy, RETROSAL is being officially presented to the Brazilian market.

Agrichemicals

Arysta LifeScience Names New Head of Europe, Middle East & Africa

Arysta LifeScience has named Hildo Brilleman as the company’s CEO of its Europe, Middle East & Africa (EMEA) region, effective

Agrichemicals

Missouri Latest U.S. State to Set Dicamba Cut-off Date for 2018

Missouri Department of Agriculture 'takes proactive measures to reduce off-target crop injury during the 2018 growing season.'

Agrichemicals

BASF Reports End of Season Dicamba Results

BASF field reps investigated 787 soybean symptomology claims during the 2017 season.

Agrichemicals

Seed Firms’ Changes Bring Uncertainty, Promises

The months ahead will reveal what these altered players will look like and how they’ll work with dealers and growers. They’ll also show where companies are focusing efforts in trait development and crop systems.