Agricultural products provider Monsanto Co. (MON) is scheduled to reap second-quarter results before the market opening on Thursday, April 2.
Wall Street analysts expect the company to report earnings of $2.07 per share on revenues of $4.14 billion for the second quarter. Analysts' estimates typically exclude special items. In the year-ago period, the company posted net income of $2.02 per share on total net sales of $3.78 billion.
The U.S. rural economy has fared better than most sectors during the recession due to consistent demand for agricultural products. No wonder, Monsanto is optimistic about its near-term growth prospects.
Recently, Monsanto said it is closer to reaching its goal of more than doubling its fiscal 2007 gross profit by 2012, expressing confidence in its full-year 2009 on-going earnings target.
In mid-February, the St. Louis, Missouri-based company backed its fiscal 2009 on-going earnings guidance of $4.40 - $4.50 per share compared with $3.64 per share reported in the fiscal year 2008. Analysts are projecting earnings of $4.69 per share for fiscal 2009. The company's full-year outlook includes anticipation for earnings growth of 10% to 12% in both the second and third quarters.
Monsanto also expects to generate more than $1.8 billion in free cash for fiscal 2009.
The company operates in two segments. The Seeds and Genomics segment produces corn, soybeans, canola, and cottonseeds, as well as vegetable and fruit seeds. The Agricultural Productivity segment offers glyphosate-based herbicides for agricultural, industrial, ornamental, and turf applications.
Monsanto expects its industry-leading seeds and traits business to more than offset possible declines in its Roundup herbicide business.
The Seeds & Genomics segment is projected to maintain about 18% compound annual growth rate in its gross profit through fiscal 2012, while the Roundup and other glyphosate herbicides businesses are expected to peak in fiscal 2009 with gross profit in the range of $2.4 billion - $2.5 billion and settle to roughly $1.9 billion gross profit in fiscal 2012.
The seed company is also planning to introduce two more products - SmartStax corn and Roundup Ready 2 Yield soybeans - on a commercial basis. Demand for Monsanto's Roundup Ready 2 Yield soybeans is estimated to help boost soybean seeds and traits gross profit by about 70% between fiscal 2009 and fiscal 2012.
SmartStax is designed to deliver a higher-yielding package by combining a broader spectrum for herbicide tolerance and insect control with the potential for reduced refuge requirements. SmartStax would raise the bar as the most durable and complete on-farm package for weed and pest management and would become the platform for all of the company's future corn technologies, the company said.
For the first quarter, the company posted a more than two-fold increase in profit to $556 million or $1.00 per share, fostered by higher margins and greater demand for its products in Latin America. Earnings per share for the quarter topped analysts' expectations, while top line also grew 29% and outshined the Street view.
Among others in the field, the Basel, Switzerland-based Syngenta AG (SYT) reported 25% growth in fiscal 2008 profit, aided by increased demand for its pesticides and herbicides. Annual sales advanced 26% on growth across all product lines and regions.
Monsanto shares, which have been trading between $63.47 and $145.80 in the past 52 weeks, closed Wednesday's trading session at $81.74, down $1.09 or 1.32% on a volume of 10.6 million shares.
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