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Monsanto up over a quarter in record Q3

Date:07-04-2008

Monsantos sales spiked by more than a quarter in the three months to end May 2008 compared with the same period last year. Total revenues were up by 26.2% to $3,588 million, while net income for the quarter rose by 42.3% to $811 million. The main drivers were the herbicide, glyphosate, and cotton and soybean seed and traits. There was “resurgence in glyphosate”, the company says.
Third-quarter sales of the herbicide, Roundup, and other glyphosate-based products jumped by 54.3% to $1,168 million. Revenues from other “agricultural productivity” products were flat at $373 million. They included sales from the lawn and garden herbicide and animal products businesses. Gross profits for the segment soared by 64.1% to $750 million, led by Roundup and other glyphosate-based herbicides doubling their gross profits.
Monsanto’s seed and trait business rose by almost a fifth to $2,047 million in the third quarter. The company enjoyed increased soybean and cotton seed and trait sales in the US, and higher maize sales in the US, Europe and Africa. Maize sales dominated but the major risers were soybeans, up by 37.5% to $447 million, and cotton, up by 31.6% to $279 million.
Gross profits from seeds and traits were up by 16.5% to $1,219 million, led by soybean sales. The increase in penetration in Brazil and the US resulted in a 32.5% rise in soybean profits to $269 million, the company says. Gross profits for other crops rose by “mid to high single figures”.
Monsanto’s sales for the first nine months of the fiscal year rose by 35.4% to $9,466 million, while net income soared by over 80% to $2,196 million. Gross profit jumped by 44.6% to $5,253 million. The record results have been “remarkable”, Monsanto chairman CEO Hugh Grant says. The first nine months have provided a “solid foundation” for the company to reach its target of more than doubling gross profit in 2012 against 2007, he adds.
The company saw sales of its Roundup and other glyphosate-based herbicides rise by a whopping 63.1% to $3,158 million compared with the first nine months of the last fiscal year. Gross profits almost doubled to $1,905 million and more than doubled on Roundup sales. Revenues from its other agricultural productivity products were up by just 5.8% to $880 million. Gross profits for agrochemicals almost doubled to $1,905 million and more than doubled on Roundup.
Sales of seeds and traits in the first nine months rose by 28.6% to $5,428 million. Sales were boosted by the performance of maize world wide (+30.5% to $3,189 million) and of soybean and cotton in the US, the company says. Gross profits from seeds and traits were up by 26.1% led by the 31.1% rise on maize. The rise in soybeans and cotton was “in the mid to low teens”, and 28.6% for vegetables.
Monsanto’s share of the key maize markets has improved in the nine-month period. It is on course to gain 2-3 percentage points in the US from its 23% share in 2007, some 5 percentage points in Argentina (from 40%), and a 0.5 percentage point increase in the EU (13%). It has held its share in Brazil (40%) and India (39%). “Some 260 million acres [105 million ha] were planted world wide with at least one Monsanto trait, a 5% increase on last year,” Mr Grant says. He added that the figure “understates the effects of multiple traits on one acre”.
He gave cautious “working estimates” for the US maize crop for the next planting season of 90 million acres (36 million ha), for soybeans of 70 million acres (28 million ha) and for cotton, some 9 million acres (3.6 million ha).
Diluted earnings per share (eps) continued to rise impressively, accelerating in 2008. Ongoing eps rose by 42.1% in the third quarter to $1.45 and by 69.7% in the first nine months to $3.70. The company has increased its full-year eps guidance to $3.40.
Monsanto’s third quarter results ($ million)
3rd qtr ended May 31st
2007
% change
2008
Sales
2,842
+26.2
3,588
Agrochemicals1
1,130
+36.4
1,541
Seed & traits
1,712
+19.6
2,047
EBIT2
799
+36.2
1,088
Agrochemicals1
242
>100
502
Seed & traits
557
+ 5.6
586
Net income
570
+42.3
811
 
Monsanto’s nine month results ($ million)
Nine months
2007
% change
2008
Sales
6,990
+35.4
9,466
Agrochemicals1
2,768
+45.9
4,038
Seed & traits
4,222
+28.6
5,428
EBIT2
1,725
+81.5
3,131
Agrochemicals1
423
>100
1,488
Seed & traits
1,302
+26.2
1,643
Net income
1,203
+82.5
2,196
1 includes veterinary products; 2 earnings before interest and tax
The company’s fourth-quarter results are largely influenced by its global cotton business and US Roundup herbicide sales for crop protection and usually record a loss, Monsanto says.
Mr Grant is bullish on Monsanto’s longer-term prospects, saying the company is “uniquely positioned” to aid in improving yields. “Whereas others say: ‘food or feed or fuel’, we say ‘and’.” Monsanto believes that its seeds can help farmers double their yields for soybeans, maize and cotton from a 2000 base by 2030.
Monsanto seeks to drive growth primarily through seeds and traits. The company targets growth of 1-2 percentage points of market share in maize in Argentina, Brazil, the EU and India, and at least two percentage points in the US for its Dekalb brand and one for its American Seed Inc (ASI) brand.
“We delivered 28 million acres of triple stack in the US market in fiscal 2008, with some 60% of brands as triple stack,” Mr Grant says. The company targets an increase in the share of Dekalb maize sales in the US for triple stack products from the present 62% of the brand’s sales to 65% in 2009. It also aims to get at least 65% of ASI’s sales as triple stack against 2008 share of 57%, and 50% for licensees’ sales (43%).
Monsanto expects some 45-55 million acres [18-22 million ha] of US maize to become triple stacked. “We see a path to planting 34-35 million acres [14 million ha of maize] in 2009 with a Monsanto triple stack package before the launches of SmartStax in 2010,” Mr Grants says.
The company made a joint application for US and Japanese approval for their GM multiple insect-resistant and herbicide-tolerant SmartStax maize in June.
The company is to introduce next year “the first innovation in soybeans for 13 years with Roundup Ready 2 Yield”. It has been approved in the US, Canada and Japan and has key export approvals pending in China, Mexico and Europe. “We hope to take the same type of yield revolution to Brazil. Insect-protected Roundup Ready 2 Yield soybeans will be the first stacked trait combination in soybeans and the first product to be developed in the industry specifically for the Latin American market,” Mr Grant says.
Monsanto’s new fiscal 2008 targets are for gross profits from seeds and traits of $3,700 million and some $1,900 million for Roundup and other glyphosate products.
The 2012 gross profit targets are for $6,500-7,000 million from seeds and traits and some $1,800 million from glyphosate-based herbicides and $350 million from other agricultural productivity products.
 
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