Company is helped by Brazil sales, confident in face of price-fixing reports
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Monsanto Co. reported first-quarter net sales of $1.028 billion on Wednesday, up 22 percent from a year ago. The reasons: earlier-than-usual U.S. sales of Roundup herbicide as well as improved overall performance in Brazil.
The year so far is looking good for the agrochemical and biotech seeds company, said Hugh Grant, president, chairman and chief executive, during a conference call with analysts. Monsanto, based in Creve Coeur, is working on ways to make more money in Brazil, the world's second-largest soybean exporter but a historically troubled market.
And the company is "confident that our business practices are appropriate and above-board," Grant said, despite allegations of seed price-fixing in Tuesday's edition of The New York Times.
Monsanto turned in a first-quarter net loss of $97 million, or 37 cents a share. The result included one-time charges of 26 cents a share to write off goodwill on its shuttered European grain business; 7 cents a share for restructuring costs; and 8 cents a share for discontinued businesses and related layoffs.
Excluding those items, Monsanto would have turned in a net profit of 4 cents a share, beating the penny-a-share average estimate of analysts surveyed by Thomson Financial. A year ago, excluding a restructuring charge of 3 cents a share, Monsanto had a net loss of 4 cents a share.
U.S. farmers are benefiting from high commodity prices and using the extra cash to buy 2004 growing supplies earlier than usual, said Chief Financial Officer Terry Crews. Pre-payments on seeds and herbicide are up almost threefold from a year ago.
Suppliers, too, are taking early delivery of Roundup herbicide. Monsanto said it sold 6 million gallons in the first quarter. Comparable figures for last year were unavailable.
"All in all, I'm pleased with our performance so far, and I'm looking forward to what's shaping up to be a nice year," Grant said. But "I mention all of this with some hesitancy because ... it's never over 'til it's over, (and) early sales are only an indicator" of annual performance.
Monsanto repeated its expectation for 2004 earnings per share of $1.40 to $1.50 - with Crews saying he is "confident" the result will be at the upper end of that range.
Brazil blossoms
Brazil, the source of many problems for Monsanto in 2002, is becoming a bright spot. The company's decision to do business there based on cash payments, rather than credit, has eliminated concerns over defaults - which were rampant amid economic instability two years ago.
Monsanto said it also is beginning to collect premiums for its genetically modified seeds, which were legalized for the 2003-04 growing season in Brazil. Growers there for years had pirated the seeds from neighboring countries, planting them illegally to reap higher yields and lower herbicide costs.
Monsanto's Roundup Ready seeds can withstand applications of glyphosate herbicide, which Monsanto sells under the Roundup brand. As much as 10 percent to 20 percent of Brazil's nearly 50 million acres of soybeans carry the patented trait, according to some estimates, and it is helping to boost growers' productivity.
Experts say Brazil could surpass the United States as the world's biggest soybean exporter this year. Many expect the country to permanently legalize genetically modified crops.
Yet, Monsanto may not be able to stop seed smuggling. So, the company is negotiating with Brazil's biggest grain-elevator operators to collect royalties as the resulting crops are brought in, Grant said.
The grain would be tested for the presence of Monsanto's patented genes, and a "technology fee" would be levied on positive results. Elevator operators would keep a portion of the fee as an incentive to help with compliance.
Grant said the system could be in place for this spring's harvest, with break-even results. It could bring in profits next year, and eventually may be duplicated in Argentina.
"This is really critical in terms of our future pipeline as well," he said. "If we manage this business and find a way to capture value for this (technology), then and only then would I consider introducing new technologies" in Brazil.
Pricing is 'above-board'
Grant also told analysts that Monsanto has acted properly in negotiating technology licenses with competing seed companies, despite allegations printed in The New York Times.
The newspaper said Monsanto tried to control biotech-seed prices during the 1990s through licensing deals with Pioneer Hi-Bred International Inc. On Tuesday, Pioneer denied any "illegal or inappropriate activity."
Grant said Monsanto has a legal right to negotiate licensing terms.
"We take great care in how we go about those conversations, and we have internal controls and checks to make sure we're within the letter of the law," he said. "We're confident that our business practices are appropriate and above-board, and there's nothing in this article that raises any question about that."
Monsanto is being investigated by the Justice Department over alleged price-fixing of glyphosate herbicide. Responding to a question, Grant said he can't speculate on the direction of the 18-month-old inquiry or whether it could expand to seed pricing. But, he said, "we've seen nothing new to report in that process."
The Justice Department declined to comment.
John Roberts, an analyst with Buckingham Research Group in New York, noted that Monsanto just increased prices on some biotech seeds - a move that would be unusual for a company concerned with a price-fixing investigation.
Grant responded: "We feel very confident and very good about our business practices."
source: http://www.stltoday.com/stltoday/emaf.nsf/Popup?ReadForm&db=stltoday%5Cbusiness%5Cstories.nsf&docid=F1CBB450792534D486256E15003E0346 13jan04
[Dow Jones Newswires article below]
ST. LOUIS (AP) - Monsanto Co.'s loss widened to $97 million US in its fiscal first quarter as big charges more than offset the impact of a 22 per cent increase in sales.
The agricultural products company said Wednesday its loss amounted to 37 cents a share for the three months ending Nov. 30 versus a loss of $18 million, or seven cents per share, a year earlier.
Excluding a $69-million goodwill write-off related to the company's global wheat business, and restructuring charges of $42 million, the company would have earned $14 million.
On a per-share basis, the charges amounted to 41 cents a share. Without them, the company would have earned four cents a share, beating the forecast of a profit of one cent a share by analysts surveyed by Thomson First Call.
Sales rose to $1.03 billion from $846 million, largely due to higher sales of Roundup herbicide in the U.S. and Brazil. Roundup is the best-selling U.S. herbicide.
"As we begin the major selling season for seeds in the United States, early indications point to another solid showing for Monsanto's branded seeds and technology traits in this major agricultural market," said Hugh Grant, Monsanto's CEO.
Sales for Monsanto's seeds and genomics segment rose five per cent to $385 million. Sales for its agricultural productivity segment, which includes Roundup and other herbicides, rose 34 per cent to $643 million.
Monsanto officials reiterated that the company expects earnings per share for fiscal 2004, including estimated restructuring charges and good writeoffs, in the range of 55 to 65 cents per diluted share.
source: http://www.canada.com/search/story.aspx?id=9241aead-9621-4fba-8539-57f7a20eec59 13jan04
ST. LOUIS—Monsanto Co. (MON) reported a wider net loss in its fiscal first quarter, weighed down by the write-off for its global wheat business and restructuring charges.
The crop biotechnology and pesticides company Wednesday said its net loss for the three-month period ended Nov. 30 came to $97 million, or 37 cents a share, compared with a year-earlier net loss of $18 million, or 7 cents a share.
In the latest quarter, the company booked a goodwill write-off of $69 million, or 26 cents a share, for the global wheat business. The company also recorded charges of 15 cents a share related to restructuring efforts and discontinued operations. Excluding those items, a Monsanto spokeswoman said the company earned 4 cents a share.
Last month, Monsanto raised its first-quarter forecasts on a reported and ongoing basis by about 10 cents a share from its original guidance, citing better-than-expected results at its Brazilian operation and the timing of its U.S. sales. Previously, the company expected to post a net loss of 54 cents to 59 cents a share, and an ongoing loss of 7 cents to 12 cents a share, excluding items.
Total sales for the first quarter climbed 22% to $1.03 billion from $846 million a year earlier amid higher sales of Roundup herbicide in the U.S. and Brazil.
Sales at the company's agricultural productivity business, which includes crop-protection products and the lawn-and-garden herbicide business, surged 34% to $643 million.
Monsanto has been trying to lower costs related to its agricultural chemistry business. In October, the company announced a restructuring plan that included layoffs, cutting costs in the Roundup herbicide business and ending its plant-made pharmaceuticals business. The plan also included Monsanto's exit from its breeding and seed business for wheat and barley in Europe.
For 2004, Monsanto backed its December estimates for earnings of 55 cents to 65 cents a share on a reported basis, and earnings excluding items of $1.40 to $1.50 a share.
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