Monsanto Profit Hit By Glyphosate Declines, Steep Seed Discounting
7 April 2016 Monsanto posted weaker second-quarter sales and earnings from a year ago, on glyphosate declines in the Agricultural Productivity segment, increased discounting in the United States in corn and soybeans, lower soybean volumes with the slower start to the U.S. season and expected lower acres, as well as higher corn cost of goods sold resulting from smaller production plans in the prior year.
Monsanto’s Agricultural Productivity sales, which include crop protection and lawn-and-garden herbicide products, fell to $715 million from $1 billion a year ago. Seeds and Genomics sales declined to $3.8 billion from $4.2 billion a year earlier. Total net sales for the company were $4.5 billion in the period, compared with $5.2 billion in the same period a year ago.
Net profit fell to $1.06 billion, or $2.41 a share, compared with $1.4 billion, or $2.92 a share a year earlier.
The positive drivers in the quarter, Monsanto said, were the benefits of the company’s reduced share count, Brazil corn pricing, increased Intacta RR2 PRO soybean adoption and reduced operating expenses.
Looking ahead, Monsanto said it continues to expect gross profit growth from its core Seeds and Genomics segment in fiscal year 2016 to be relatively flat with the previous year. Exclusive of currency headwinds of nearly $400 million, seeds and genomics gross profit is estimated to be up single digits, driven primarily by the expected increase in potential licensing deals in the range of more than $300 million to as much as $450 million in fiscal year 2016, increased Intacta RR2 PRO soybean adoption and global corn market expansion. With generic glyphosate pricing holding relatively steady, the company continues to expect the Agricultural Productivity segment gross profit to be roughly at the mid-point of the range of $900 million to $1.1 billion of gross profit in fiscal year 2016.
In soybeans, Monsanto said it continues to build on the strong grower adoption of Intacta RR2 PRO soybeans in South America as the company remains on track to reach 35 million acres in fiscal year 2016. The company also has seen strong grower interest for its Roundup Ready 2 Xtend soybeans, and is “pleased with the recent announcement of the U.S. Environmental Protection Agency’s open comment period regarding the in-crop use of dicamba herbicide.”
“Monsanto still awaits the final EU approval of the stacked product, which has experienced unexpected administrative delays after receiving the European Food Safety Authority’s positive opinion last June. The company continues to be positioned to provide its new Roundup Ready 2 Xtend soybeans for three million acres this year as it awaits the final EU approval,” the company said.
In cotton, Bollgard II XtendFlex is now expected to reach two million acres in the technology’s second year of commercialization.
Through new hybrid portfolio introductions across key corn growing regions, Monsanto expects to grow corn share in 2016, with germplasm price mix lift expected to be flat in local currency.
Get The Newsletter Today!
