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Latin America Seed Growth Lifts Monsanto to Stronger-Than-Expected First Quarter as Company Guides to High End of Fiscal Year EPS Outlook

Thu, 01/05/2012 - 3:23am
Monsanto

ST. LOUIS, Jan. 5, 2012 /PRNewswire/ -- Monsanto Company (NYSE: MON) delivered above-estimate results for the first quarter of its fiscal year 2012 and pointed to the high end of its previously reported earnings per share guidance for the year on the strength of its seed business.  The company also previewed a strong U.S. order book and announced 14 phase advancements across its breeding, biotechnology, and chemistry and agronomic research and development platforms, representing a record number of advancements for its annual pipeline update.

 

($ in millions)

First Quarter

2012

 

First Quarter

2011

Net Sales By Segment

 

 

 

 

 

 

Corn seed and traits

$

895

 

$

614

 

Soybean seed and traits

 

242

 

 

226

 

Cotton seeds and traits

 

194

 

 

112

 

Vegetable seeds

 

157

 

 

183

 

All other crops seeds and traits

 

46

 

 

28

TOTAL Seeds and Genomics

$

1,534

 

$

1,163

 

 

 

 

 

 

 

 

Agricultural Productivity

 

905

 

 

673

TOTAL Agricultural Productivity

$

905

 

$

673

 

 

 

 

 

 

 

TOTAL Net Sales

$

2,439

 

$

1,836

 

 

 

 

 

 

 

Gross Profit

$

1,096

 

$

824

 

 

 

 

 

 

 

Operating Expenses

$

851

 

$

760

 

 

 

 

 

 

 

Interest Expense – Net

$

35

 

$

28

Other Expense – Net

$

6

 

$

12

 

 

 

 

 

 

 

Net Income Attributable to Monsanto Company

$

126

 

$

9

 

 

 

 

 

 

 

Diluted Earnings per Share (See note 1.)

$

0.23

 

$

0.02

Items Affecting Comparability – EPS Impact

 

 

 

 

 

 

Restructuring charges

 

 

 

0.01

Diluted Earnings per Share from Ongoing Business (For the definition of ongoing EPS, see note 1.)

$

0.23

 

$

0.03

 

 

 

 

 

 

 

Effective Tax Rate

 

34%

 

 

38%

 

 

 

 

First Quarter 2012

 

First Quarter 2011

Comparison as a Percent of Net Sales:

 

 

 

 

Gross profit

45%

 

45%

 

Selling, general and administrative expenses (SG&A)

21%

 

25%

 

Research and development expenses

14%

 

17%

 

Income before income taxes

8%

 

1%

 

Net Income Attributable to Monsanto Company

5%

 

—%

 

"We've seen a very strong start to the year, with real growth in Latin America and early orders in the United States that underscore our sustained momentum carrying into 2012," said Hugh Grant, chairman, president and chief executive officer for Monsanto.  "We are pleased growers have recognized the value of our products and the benefits they provide on farm.  Our pipeline progress continues to be a competitive differentiator, and that's ever more important as we put an even greater focus on delivering yield to growers."

Results of Operations

The company achieved a strong first quarter that reflected the expected structural change in its earnings pattern based on improved sales in the growing Latin America market.  Net sales increased 33 percent over the prior year's quarter to $2.4 billion, with significant gains in corn driven by the Latin America market.  Gross profit for the total company increased 33 percent to $1.1 billion, and gross profit as a percent of sales was even with the prior year at 45 percent.  

Selling, general and administrative (SG&A) expenses increased to $500 million as a result of inflation and commissions from higher sales.  R&D expenses increased to $351 million based in part on investments in breeding facilities to support international and U.S. corn.

The company's first quarter earnings per share (EPS) was $0.23 on an ongoing and as-reported basis. (For a reconciliation of ongoing EPS, see note 1.)

Cash Flow

The strong first quarter was evident in the company's free cash flow, which was $856 million compared to $500 million for the prior year first quarter.  The increase reflects growth in net income as well as an increase in customer prepayments ahead of the U.S. selling season. (For a reconciliation of free cash flow, see note 1.)

Net cash provided by operating activities was $1.1 billion, compared to $624 million in the first quarter last year. Net cash required by investing activities for the first quarter of fiscal 2012 was $254 million, compared with a use of $124 million for the year-ago quarter.  Net cash required by financing activities was $340 million, even with the prior year's first quarter.

Outlook

The company affirmed its guidance of free cash flow for fiscal year 2012 in the range of $1.3 billion to $1.5 billion, reflecting an investment of $600 to $700 million in capital expenditures.  The company expects net cash provided by operating activities to be $2.2 billion to $2.5 billion, and net cash required by investing activities to be approximately $900 million to $1 billion for fiscal year 2012. (For a reconciliation of free cash flow, see note 1.) 

The company guided to the high end of its full-year 2012 ongoing EPS mid-teens earnings growth guidance, expecting to achieve $3.39 to $3.44 of ongoing and as-reported EPS.  (For a reconciliation of EPS, see note 1.)


Seeds and Genomics Segment Detail

 

($ in millions)

 

Net Sales

 

Gross Profit

 

Seeds and Genomics

 

First

Quarter

2012

 

First

Quarter

2011

 

First

Quarter

2012

 

First

Quarter

2011

 

Corn seed and traits

$

895

$

614

$

531

$

339

 

Soybean seed and traits

 

242

 

226

 

173

 

153

 

Cotton seed and traits

 

194

 

112

 

135

 

74

 

Vegetable seeds

 

157

 

183

 

81

 

113

 

All other crops seeds and traits

 

46

 

28

 

(4)

 

 

TOTAL Seeds and Genomics

$

1,534

$

1,163

$

916

$

679

 

 

($ in millions)

Earnings (Loss) Before

Interest & Taxes (EBIT)

 

Seeds and Genomics

 

First

Quarter

2012

 

First

Quarter

2011

 

EBIT (For a reconciliation of EBIT, see note 1.)

$

147

$

(20)

 

Unusual Items Affecting EBIT: Restructuring

$

$

(11)

 

The Seeds and Genomics segment consists of the company's global seeds and related traits business.

Sales for Monsanto's Seeds and Genomics segment increased 32 percent in the first quarter to $1.5 billion, reflecting the strength of the Latin America business and some timing benefits from the Australian cotton business.

Corn seed and traits net sales increased 46 percent over last year's quarter to $895 million, driven by volume growth and a mix benefit that came from significant trait expansion in Brazil and Argentina.

Cotton seed and traits net sales increased 73 percent to $194 million based on a timing effect in Australia, where growers' decisions to purchase technology upfront advanced revenues to the first quarter that would traditionally have been expected following harvest based on growers' yields in the fourth quarter of this fiscal year. Higher planted hectares in Australia compared to the prior year also were a contributor.

In soybeans, seed and trait sales were up 7 percent to $242 million.  Vegetable sales were $157 million, a decrease from the prior year.

The company noted the pace of its U.S. order book is ahead of the same point in time last year and tracking well with 2012 targets.


Agricultural Productivity Segment Detail

 

($ in millions)

 

Net Sales

 

Gross Profit

 

Agricultural Productivity

 

First

Quarter

2012

 

First

Quarter

2011

 

First

 Quarter

2012

 

First

Quarter

2011

 

TOTAL Agricultural Productivity

$

905

$

673

$

180

$

145

 

 

($ in millions)

Earnings Before Interest & Taxes (EBIT)

 

Agricultural Productivity

 

First

Quarter

2012

 

 

First

Quarter

2011

 

EBIT (For a reconciliation of EBIT, see note 1.)

$

82

 

$

66

 

Unusual Items Affecting EBIT: Restructuring

$

 

$

4

 

The Agricultural Productivity segment consists of the crop protection products including Roundup® and other herbicides, and lawn-and-garden herbicide products.

Sales in the first quarter of fiscal 2012 for Monsanto's Agricultural Productivity segment increased 34 percent or $232 million. 

Webcast Information
In conjunction with this announcement, Monsanto will hold a conference call at 8:30 a.m. central time (9:30 a.m. eastern time) today. The call will focus on these results, future expectations and an update of projects within the company's R&D pipeline, including the 14 phase advancements. The call also may include a discussion of Monsanto's strategic initiatives, product performance and other matters related to the company's business.

Presentation slides and a simultaneous audio webcast of the conference call may be accessed by visiting the company's web site at www.monsanto.com and clicking on "Investor Information." Visitors may need to download Windows Media Player™ prior to listening to the webcast. Following the live broadcast, a replay of the webcast will be available on the Monsanto Web site for three weeks.

SOURCE

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