Monsanto fourth-quarter profit up as corn, soy seed sales jump

By Karl Plume

CHICAGO (Reuters) - U.S. seeds and agrochemicals company Monsanto Co, which is being acquired by Bayer AG, reported a quarterly profit on Wednesday, compared with a year-ago loss, as seed licensing deals in the typically low-revenue fourth quarter lifted sales.

Monsanto shares were up slightly at $119.88 after earlier touching a more-than-two-year high.

Sales of corn seeds and traits, Monsanto's biggest segment by revenue, rose nearly 16 percent while soybean seeds and traits sales climbed 22 percent in the quarter ended Aug. 31. Overall net sales for the company were up 4.8 percent at $2.68 billion, above estimates for $2.53 billion, according to Thomson Reuters I/B/E/S.

 

Net income attributable to Monsanto was $20 million, or 5 cents per share, in the fourth quarter ended Aug. 31, compared with a net loss of $191 million, or 44 cents per share, a year earlier.

Monsanto typically books the majority of its annual sales during the second and third quarters when farmers in North and South America, which account for more than three-fourths of total sales, purchase seeds and other crop inputs.

"Usually this is a quarter that falls between planting seasons and because of that you typically you see a small loss. But they were able to get some nice licensing deals across the table," said Matt Arnold, analyst with Edward Jones.

The higher sales came despite continued belt-tightening by farmers amid slumping commodity prices and a global oversupply of grain following four years of bumper crops.

Investors remain focused on the $128-per-share Bayer deal that is expected to close in early 2018.

The deal, if final regulatory approvals are won, would create a company commanding more than a quarter of the world market for seeds and pesticides.

The companies have made all key regulatory filings and secured approval from a third of those regulators, said Chief Executive Hugh Grant.

A unit of Brazil's competition regulator Cade said the takeover could affect competition and recommended "structural solutions" as a condition for final approval. Grant called it a "normal step" in the review process.

The company is also facing a barrage of lawsuits over the launch of dicamba-tolerant soybean seeds, known as Xtend soybeans. Dicamba herbicide has been blamed for moving off target and damaging crops that are unable to tolerate it, prompting calls for tighter restrictions on its use.

Monsanto expects U.S. plantings of Xtend soybeans to double next year to 40 million acres.

(Additional reporting by Karan Nagarkatti in Bengaluru; Editing by Savio D'Souza, Shounak Dasgupta and Jonathan Oatis)