Monsanto first-quarter earnings exceed estimates

MONSANTO, the world’s largest seed company, posted first-quarter earnings that exceeded estimates, as Latin American farmers grew more genetically modified corn, and said US orders are ahead of last year.

Net income climbed to $126 million (€98.4m), or 23 cents a share, in the three months through November, from $9m, or 2 cents, a year earlier, Monsanto said yesterday.

Monsanto said last month that earnings would be 15 cents to 20 cents a share, and the average of 10 estimates compiled by Bloomberg was for profit of 18 cents.

First-quarter revenue rose 33% to $2.44 billion from $1.84bn as farmers in the southern hemisphere bought more genetically modified corn seed. Chief executive Hugh Grant is increasing sales in Argentina and Brazil, the drivers of first-quarter earnings, where he plans to introduce the first insect-killing soybean seeds.

“The strength in the quarter was driven by a sharp increase in biotech seeds and traits in the Brazil and Argentina markets,” Michael E Cox, a New York-based analyst at Piper Jaffray, who rates the shares “overweight,” said in a note.

“Farmers are quickly upgrading to advanced seed technology to bolster yields and combat insect pressure.”

Monsanto narrowed its full fiscal-year earnings forecast to $3.39-$3.44 a share, compared with a December forecast of $3.34-$3.44. The average estimate of 13 analysts in the survey was for profit of $3.44 a share.

US seed orders are ahead of last year and “tracking well” with 2012 goals, Monsanto said.

“We’ve seen a very strong start to the year, with real growth in Latin America and early orders in the US that underscore our sustained momentum carrying into 2012,” Mr Grant said.

Monsanto said it advanced a record 14 research projects toward commercialisation. The company also maintained its full-year cash-flow guidance of $1.3bn to $1.5bn.

Results in Monsanto’s first and fourth quarters are typically weakest because farmers are between planting seasons in North America and Europe, where the company generated about two-thirds of its revenue last fiscal year.