Monsanto Benefits from Booming Global Corn Market in Fiscal Third-Quarter 2013, Sees Opportunities in Soybeans

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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 mixed results in the third quarter of the company's fiscal year 2013 as growth in the Seeds and Genomics segment, particularly in the global corn market, mostly offset a slower Brazilian soybean market and the effects of last year's drought. Net income was reported to be $909 million, a 2.99% decrease from third-quarter 2012.

Net sales stood at $4.25 billion, an increase of less than 1% from the same period last year. Growth in the company's Seeds and Genomics segment was driven by corn seed sales, particularly in Latin America, where Monsanto's VT PRO 2 and Genuity VT Triple PRO have become more widely adopted, and in the U.S., where the Genuity product is expected to near its target of 38 million acres. In the soybean market, Monsanto is expected to reach its 41 million-acre target for Genuity Roundup Ready 2 Yield in the U.S.

Capital expenditures stood at $459 million in third-quarter 2013, compared with $376 million in the same period last year.

Industrial Info is tracking $565 million in active projects involving Monsanto, including the $35 million construction of the Blackfoot Bridge Phosphate Mine near Soda Springs, Idaho. The project involves building a 1 million-ton-per-year, open pit phosphate ore mining operation that will transport ores 10 miles to a sister processing plant in Soda Springs for elemental phosphorus production. Monsanto has P4 Production LLC (Soda Springs) on board as the project manager and director.

"This quarter reflects some of the expected effects of the Brazilian soybean business, lower overall planted cotton acres, and an overall more visible effect of the higher drought-related corn production costs," said Brian Hurley, the investor relations lead for Monsanto, in a conference call. "Those effects were partially offset, as we saw continued strength in agricultural productivity and the practical benefit as we had the full positive effect of a discrete tax item flow through into this particular quarter."

For the remainder of fiscal year 2013, Monsanto executives expect to see ongoing earnings growth of more than 20% from fiscal 2012, which they expect to build on in 2014. Growth in the global corn business is expected to continue, with strong prospects in the Americas corn germplasm business. Monsanto also has strengthened its investments in corn seed production in Eastern Europe. Company executives expect to see record total corn volumes for a third consecutive year, with the trend continuing into fiscal 2014.

The overall agricultural pricing environment also is forecast to show continued strength. Monsanto's Intacta RR2 PRO soybeans are to see a full-scale launch in Brazil, where the product is expected to significantly drive growth.

"With the approvals for Intacta now in hand, we have the catalyst for unlocking a completely new wave of growth in soybeans," said Hugh Grant, the chairman and chief executive officer of Monsanto, in the conference call. "It's much bigger than Brazil alone, and it sets up a target market opportunity across out total soybean trait portfolio of more than 200 million acres across the Americas as soybeans officially enter the multi-stack, multi-country opportunity more typically associated with corn. Second, an agreement we reached with DuPont (NYSE:DD) (Wilmington, Delaware) in the third quarter rewrites the soybean opportunity for us and replaces a difficult relationship with a much more positive dynamic that has the potential to extend beyond soybeans.

"Our international businesses have taken center stage this year, and now reflect a significant source of strategic and financial growth."

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