Thursday, agricultural products provider Monsanto Co. (MON) reported a 3% drop in profit for the second quarter of 2009, as the most recent quarter included a charge and did not repeat a gain recorded in the year-ago period. Adjusted earnings increased from last year and beat analysts' estimate, driven by higher revenues from the company's U.S. corn and soybean seeds and traits businesses. Further, the company backed its ongoing earnings per share guidance for 2009.
The St. Louis, Missouri-based company reported second-quarter net income of $1.092 billion or $1.97 per share, a decline from $1.129 billion or $2.02 per share reported for the same period in the previous year.
The latest period's results were affected by $162 million or $0.19 per share attributable to in-process research and development charges related to the company's acquisition of Aly Participacoes Ltda. In the second quarter of last year, Monsanto had a gain of $0.23 per share as part of its settlement of claims associated with Solutia's emergence from bankruptcy.
Earnings per share from ongoing business was $2.16, up from $1.77 reported for the second quarter of the previous fiscal. Ongoing EPS is calculated excluding certain after-tax items that Monsanto does not consider part of ongoing operations. On average, 12 analysts polled by Thomson Reuters expected second-quarter earnings of $2.07 per share. Analysts' estimates typically exclude special items.
Net sales for the second quarter increased to $4.035 billion from $3.727 billion in the previous year, driven by higher revenues from the company's U.S. corn and soybean seeds and traits businesses, though partially offset by lower volumes of Roundup agricultural herbicides. However, analysts were looking for revenues of $4.14 billion.
Segment-wise, Seeds and Genomics generated $3.042 billion in revenues, up from $2.545 billion in the previous year, while Agricultural Productivity sales dropped to $993 million from $1.182 billion in the previous year.
In the Seeds and Genomics segment, corn seed and traits brought in $2.078 billion during the second quarter, while soybean seed and traits generated $615 million. Cotton seed and traits contributed $33 million to sales and vegetable seeds $209 million. All other crops seeds and traits together accounted for $107 million.
In the Agricultural Productivity segment, sales of Roundup and other glyphosate-based herbicides were $776 million, and all other agricultural productivity products accounted for $217 million.
Gross profit as a percentage of net sales grew to 62% from 59%. Operating expenses increased to $949 million from $748 million in the prior year. Effective tax rate was 29% in the just concluded quarter, lower than 33% last year.
For the first quarter of 2009, the company had reported an increase in profit, strengthened by higher margins and greater demand for its products in Latin America. First-quarter net income surged to $556 million or $1.00 per share from $256 million or $0.46 per share in the prior-year quarter.
The company had reported ongoing income from continuing operations for the first quarter of $546 million or $0.98 per share, which was higher than the year-ago quarter's $250 million or $0.45 per share. Total net sales for the quarter grew 29% to $2.65 billion from $2.05 billion in the same quarter last year.
For the six-month period, Monsanto's net income increased to $1.648 billion or $2.96 per share from $1.385 billion or $2.48 per share. Net sales advanced to $6.684 billion from $5.776 billion generated last year.
Among others in the industry, Syngenta AG (SYT) said in February that its full year 2008 profit rose 25% from last year, helped by increased demand for its pesticides and herbicides. The Basel, Switzerland-based company posted full year net income attributable to shareholders of $1.385 billion, up 25% from $1.109 billion in the previous year. On a per share basis, earnings advanced 28% to $14.63 from $11.42 earned last year. Annual sales for fiscal 2008 grew 26% to $11.6 billion from $9.24 billion in 2007.
Looking ahead, Monsanto expects full-year 2009 earnings per share to be in the range of $4.23-$4.33 on a reported basis. On an ongoing basis, the company continues to expect full year earnings per share in the range of $4.40-$4.50, compared to $3.64 per share reported last year.
Wall Street expects Monsanto's 2009 earnings in the range of $4.50-$5.00 with a consensus of $4.69 per share.
MON is currently trading at $81.52, down $0.22 or 0.27%, on 6.21 million shares. For the past year, the stock traded in the range of $63.47-$145.80.
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