Monsanto Shows Gains in Third-Quarter 2012 as Volumes Grow; Sees Continued Growth in Corn-Growing Regions

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Researched by Industrial Info Resources (Sugar Land, Texas)--Agricultural technology and product leader Monsanto Company (NYSE:MON) (St. Louis, Missouri) reported solid gains in sales and profits for the third quarter of fiscal year 2012, resulting from better-than-expected sales in the company's chemicals businesses and volume growth in the seeds and traits businesses during key seed selling seasons. Net income for the quarter was reported to be $937 million, a 35.4% increase from third-quarter 2011.

Total net sales stood at $4.22 billion, a 16.94% increase from the same period last year. A solid increase in acres of planted corn across the U.S. benefited the Seeds and Genomics segment, which saw a record season for seed sales volumes and strong sales in its U.S. corn and soybean businesses. The Seeds and Genomics segment also reported strong activity in the international markets, particularly in Latin America, where Brazil saw an increase in planted acres and higher-than-expected sales. The Agricultural Productivity segment, which manufactures crop protection and lawn-and-garden products, saw strong sales of its Roundup and herbicide products, which are part of the company's chemistry portfolio.

Industrial Info is tracking $138 million in active Monsanto projects, including the $45 million addition of a thermal oxidizer unit and the $25 million addition of a scrubber system at the Soda Springs Elemental Phosphates plant in Soda Springs, Idaho. The additions involve installing a direct-fired unit to eliminate approximately 1,600 tons per year of NOx particulate matter emissions from the plant, which produces 1.1 billion metric tons per year of phosphates. The projects are expected to reduce SO2 emissions by an estimated 95% to about 600 tons per year of NOx.

"This growth reflects the combination of mix improvement and volume expansion, as we step up the value of our product portfolio, increase our total corn volume, and saw particularly strong planted acres in nearly every key corn-growing region," said Brian Hurley, the vice president for Investor Relations at Monsanto, in a conference call. "This performance is flanked by good year-to-date performance in our soybean and cotton businesses, while softness in the vegetable business reflects the soft European economy, which continues to offset a portion of that strong Seeds and Genomics growth."

All but one of Monsanto's businesses saw sales growth from the same quarter in 2011, and all but two saw gross profit growth:

• Monsanto's Seeds and Genomics segment reported $3.13 billion in net sales, an 18.17% increase from third-quarter 2011, while gross profits stood at $2.02 billion, an 18.46% increase:
• The corn seed and traits business reported net sales of $1.52 billion, a 34.91% increase from the same period last year. Gross profits were $927 million, a 36.52% increase.
• The soybean seed and traits business reported net sales of $698 million, a 15.37% increase from third-quarter 2011. Gross profits were $463 million, a 19.95% increase.
• The cotton seed and traits business reported net sales of $490 million, a 0.62% increase from the same period last year. Gross profits were $385 million, a 0.26% decrease.
• The vegetable seed business reported net sales of $195 million, a 9.72% decrease from third-quarter 2011. Gross profits were $94 million, a 23.58% decrease.
• All other crop seeds and traits businesses reported net sales of $230 million, a 6.48% increase from the same period last year. Gross profits were $152 million, a 15.15% increase.
• Monsanto's Agricultural Productivity segment reported $1.09 billion in net sales, a 13.53% increase from third-quarter 2011, while gross profits stood at $342 million, a 28.09% increase.

In 2013, Monsanto executives expect to see growth from the same key core business drivers that are working in 2012, and expect GDP and population growth to continue to drive protein demand. In the U.S. and Brazil, the company expects to see further growth in the use of the Roundup label, particularly the Roundup Ready 2 Yield product. Worldwide, the company expects portfolio upgrades to drive growth in all major corn-growing regions. For full-year 2012, the Seeds and Genomics segment is expected to see about $6 billion in gross profits, while the Agricultural Productivity segment is expected to see $900 million in gross profits.

"With back-to-back years of across-the-board performance, and 20%-plus ongoing earnings growth, we're clearly in a growth mode," said Hugh Grant, the president, chairman and chief executive officer of Monsanto, in the conference call. "We've taken the business to a global stage; this was the first year our international business was roughly an equal contributor to our global growth."

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