By Jack Kaskey
Monsanto Co. (MON) (MON), the world’s largest seed company, projected third-quarter profit that exceeded analysts’ estimates after sales rose in the U.S., Brazil and Eastern Europe. The company also boosted its full-year forecast.
Profit will be $1.57 to $1.62 a share in the three months through May, excluding costs from a legacy tax matter, St. Louis-based Monsanto said today in a statement. The forecast topped the $1.29 average of 16 estimates (MON) compiled by Bloomberg.
Monsanto said earnings in the year through August will be $3.65 to $3.70 a share, excluding the tax issue, settlement of pollution claims and discontinued operations. The company in April forecast (MON) $3.49 to $3.54, while the average of 17 estimates was $3.56. Earnings were $2.96 a share in fiscal 2011.
Unusually warm weather in the northern hemisphere during the fiscal second quarter turned out to be only partly responsible for rising sales this year, Chairman and Chief Executive Officer Hugh Grant said today on a webcast. Demand for the newest insect-fighting corn seeds exceeded projections, while new herbicide-tolerant soybeans are at the top of the expected range as farmers realized the value of those technologies, he said.
“This is the second year in a row with earnings growth north of 20 percent, which is very positive,” Jason Dahl, a New York-based fund manager at Victory Capital Management, said today in a phone interview. “They are still spinning off cash, not cutting costs to get those results.”
Monsanto rose 2.2 percent to $76.41 at the close in New York. The shares (MON) have gained 9 percent this year.
Monsanto saw higher third-quarter sales of genetically modified corn in Brazil, soybeans and corn in the U.S., and recorded better-than-expected gains in Eastern Europe, it said. Grant said he expects the company will increase earnings by a percentage in the “mid-teens” in fiscal 2013.
“The performance we saw in the early part of the year has proven to be a powerful signal of even better results from some key businesses,” Grant said. “This year has been important confirmation of the momentum in our business.”
Monsanto said free cash flow in the current fiscal year will be $1.7 billion to $1.8 billion, narrowing an earlier range that dipped as low as $1.6 billion.
Monsanto is in talks with officials in China about boosting seed production, particularly corn and vegetables, as part of the company’s international expansion, Grant said on the webcast. Monsanto can’t own more than 49 percent of a biotech seed business in China, the world’s second-biggest corn grower, because of the industry’s strategic importance, he said.
Monsanto said March 1 it plans to expand a venture with China National Seed Corp., a unit of Sinochem Corp. (SICHCZ)