Monsanto Profit Falls, But Less Sharply Than Wall St. Expected

Although declines were expected, the 34% drop in quarterly profits that Monsanto reported for the quarter was less than what was feared by some analysts and shares rose two percent. The company is attributing the profit decline to a reduction in corn acreage in South America and a change in the timing of some sales.

For the first quarter ending November 30, net sales fell to $2.9 billion from $3.1 billion a year earlier after corn seed and genetic trait sales fell by 12% to $928 million. However, soybean seeds and traits jumped 48% to $396 million. First quarter earnings fell to $243 million (.50 cents per share) from $368 million (.69 cents per share) a year earlier - although a decline, it is not nearly as sharp as the 50% decline some analysts were expecting.

In the current fiscal year, the company sees soybean products as a key factor in fueling profits, with emphasis on its new ‘Intacta RR2 PRO’ genetically engineered soybean designed to resist damaging worms being marketed in South America, as both U.S. and global corn acreage are forecast to decline.

Because of the ongoing expectations of continued declines in corn acreage, Monsanto executives say the company’s earnings will likely fall between 5% and 10% in the second quarter.

Monsanto is forging ahead however, with new products in the pipeline. The company is working on advancing its disease resistance traits, its new insect control products, and its farm data services. It is also rapidly expanding its development of microbial strains to increase yields in major crops, with research in 2014 showing some strains providing an increase of four bushels per acre in corn, and an increase of two bushels per acre in soybeans.