Monsanto Benefits from Strong Agricultural Demand in 2012, Expects as Much as $1 Billion in 2013 CapEx

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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 strong overall gains for the company's full fiscal-year 2012, despite some declines in the final quarter, as global corn seeds and traits revenue strengthened, as did soybean seeds and traits revenue in the U.S. The quarter showed a net loss of $229 million, compared with a net loss of $112 million in fiscal fourth-quarter 2011, but the full year showed a net income gain of $2.05 billion, a 27.26% increase from 2011.

Total net sales stood at $2.11 billion for the quarter, a 6.1% decrease from the same period last year, and $13.52 billion for the year, a 14.33% increase from last year. Branded seed volume in the U.S. saw its strongest growth in three years, while the company's DEKALB corn product and Genuity DroughtGard Hybrids product demonstrated significant competitive advantages in their fields. For the full year, Monsanto reported 27 million planted U.S. acres for its Genuity Reduced Refuge Family corn product, and 32 million U.S. acres for its Genuity Roundup Ready 2 Yield soybean product. However, vegetable sales were lower in the fourth quarter when compared with the same period last year, and cotton revenue declined as attention shifted to other crops.

Capital expenditures were reported to be $646 million for the year, compared with $540 million in fiscal year 2011.

Industrial Info is tracking $131 million in active projects involving Monsanto, including the $35 million construction of the Blackfoot Bridge aboveground phosphate mine in Soda Springs, Idaho. The project involves constructing a 1 million-ton-per-year open pit phosphate ore mining operation, which will transport ores 10 miles to a sister processing plant for elemental phosphorus production. There are also two other active Soda Springs projects; for more information, see June 28, 2012, article - Monsanto Shows Gains in Third-Quarter 2012 as Volumes Grow; Sees Continued Growth in Corn-Growing Regions.

"This year's terrible drought that underscores how stretched the world's grain resources are, and it reinforces that the drivers of agricultural productivity are real, and they're ongoing," said Hugh Grant, the chairman and chief executive officer of Monsanto, in a conference call. "The world needs sustainable productivity growth, and that creates a runway for agriculture."

Although both of Monsanto's segments reported lower sales for the quarter, results were stronger for the full year:

• The Seeds and Genomics segment reported $1.22 billion in sales for the quarter, a 10.07% decrease from fourth-quarter 2011, and $9.8 billion for the year, a 14.2% increase from 2011.
• The Corn Seed and Traits business reported $588 million in sales for the quarter, a 12.37% decrease from fourth-quarter 2011, and $5.81 billion for the year, a 21% increase from 2011.
• The Soybean Seed and Traits business reported $142 million in sales for the quarter, a 47.92% increase from fourth-quarter 2011, and $1.77 billion for the year, a 14.85% increase from 2011.
• The Cotton Seed and Traits business reported $29 million in sales for the quarter, compared with $181 million in fourth-quarter 2011, and $779 million for the year, an 8.03% decrease from 2011.
• The Vegetable Seeds business reported $284 million in sales for the quarter, a 6.37% increase from fourth-quarter 2011, and $851 million for the year, a 4.92% decrease from 2011.
• All other Crop Seeds and Traits businesses reported $172 million in sales for the quarter, a 26.47% increase from fourth-quarter 2011, and $586 million for the year, an 18.86% increase from 2011.
• The Agricultural Productivity segment reported $895 million in sales for the quarter, basically unchanged from fourth-quarter 2011, and $3.72 billion for the year, a 14.66% increase from 2011.

Monsanto executives expect the Latin American region to continue to demonstrate solid growth for the company in fiscal year 2013, particularly with improved corn demand in Argentina and Brazil, and expect U.S. businesses to continue to see growth as well. Following the growth in demand for its products in 2012, Monsanto is targeting between 36 million and 38 million planted acres for the Reduced Refuge Family corn product in fiscal year 2013, as well as between 39 million and 41 million acres for its Genuity Roundup Ready 2 Yield soybean product.

Capital expenditures for fiscal year 2013 are expected to be between $800 million and $1 billion.

"2013 is setting up nicely," Grant said in the conference call. "We're carrying good momentum in the U.S., we're on the front edge of some significant acceleration in Latin America, and the latest harvest data reinforces our confidence in our products."

He later added: "As our growth is global, we're adding a couple of new layers that are coming online each year. The intersection of our current business and our research and development pipeline gets even more exciting over the long term, as we roll out significant new platforms that reinforce our opportunities as a yield company."

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