Monsanto Reaps Rewards from Seeds Market, Bayer's Acquisition Set for Next Year

Researched by Industrial Info Resources (Sugar Land, Texas)--Despite lower expenses and higher corn seed volumes, including record volumes in the U.S., full-year net sales for Monsanto Company (NYSE:MON) (St. Louis, Missouri) fell slightly from those of fiscal 2015, mostly due to currency headwinds and price declines in agricultural productivity. But the company's narrower-than-expected declines were seen by executives and investors as a positive sign, going into a pending acquisition by Bayer AG (Leverkusen, Germany). Industrial Info is tracking $1.37 billion in active projects involving Monsanto.

This will be Monsanto's last full calendar year as a company. Bayer's $66 billion bid for Monsanto closed in September after months of negotiation; Bayer already has a substantial presence in the Crop Protection segment, which includes the production of pesticides and herbicides. The merger is expected to close by the end of 2017. For more information, see Industrial Info's September 15, 2016, article - Bayer-Monsanto Merger Encompasses $3.25 Billion of Projects.

Monsanto's capital expenditures for the year stood at $923 million, down from $967 million in fiscal 2015. Executives cited lower-than-expected expenses in a quarterly earnings conference call, citing cost-cutting efforts. Net sales stood at $13.5 billion, a 10% decline from last year, while net income was reported to be $1.34 billion, a 42.3% drop.

The largest Monsanto project under construction is the $200 million expansion of an agricultural research center in Chesterfield, Missouri. The 400,000-square-foot addition will include a research building, 36 greenhouses, 250 laboratories and 13 controlled-environment agricultural rooms, all to be added to the current 1.5 million-square-foot Seed Research Center. It is expected to meet Leadership in Energy & Environmental Design (LEED) standards. For more details, including contractor contact information, see Industrial Info's project report.

The company also is reorganizing its cotton seed production with another project under construction: a $140 million cotton seed-processing plant in Lubbock, Texas. Monsanto wants the 500,000-square-foot facility to serve as the U.S. hub for all commercial cotton seed operations. According to the Lubbock Avalanche-Journal, the finished facility could turn the Texas South Plains into "the cotton capital of the world." For more details, see Industrial Info's project report.

Much of Monsanto's silver linings for the year were attributed to a fourth-quarter resurgence in demand for corn seeds. In Iowa, the heart of the U.S. breadbasket, Monsanto is proposing a $12 million expansion of a corn seed-processing facility in Grinnell. As the first part of a two-phase expansion, Monsanto hopes to add a new building, dryer, huskers, receiving lines and dry bulk storage bins to the 200,000-square-foot facility. For more information, see Industrial Info's project report.

"No doubt it was a challenging year, but despite those challenges, we stayed the course on several key deliverables, including outstanding penetration of our Intacta Roundup Ready 2 PRO technology; the launch of Roundup Ready 2 Xtend Soybeans; our continued global corn germplasm upgrade, which resulted in record corn seed volumes in the U.S.; and our discipline to spend management," said Brett Begemann, the president and chief operating officer, in the earnings conference call.

For the near future, Monsanto is looking forward to the successful sale of its precision-planting equipment business and a renewed investment in its dicamba production facility. Executives did not mention any potential divestitures related to the Bayer deal in the earnings call, but said they were confident that the deal would meet any government regulations. For more information, see September 20, 2016, article - Senate Committee to Hold Hearings on Proposed Agricultural Mergers.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.