Monsanto Reports Steady Growth in Fiscal Second-Quarter 2011 as Sales, Volumes Improve

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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 steady gains for the second quarter of fiscal year 2011, as strong sales in the corn and cotton seed businesses and an improving agricultural market allowed growth from the first quarter to continue. Net income for the quarter was reported to be $1.02 billion, a 14.66% increase from second-quarter 2010.

Net sales for the quarter were reported to be $4.13 billion, a 6.14% increase from the same period last year. The Agricultural Productivity and Seeds and Genomics segments were boosted by global volume growth; in particular, Seeds and Genomics segments benefited from stronger corn sales in the U.S., Europe and Brazil. Monsanto executives also cited improved working-capital management and slightly lower selling, general and administrative expenses as factors.

"The positive overall ag climate has benefited our cash collections early in the season, which, in combination with our focus on working capital, puts us ahead of our plans," said Bryan Hurley, the investor relations lead for Monsanto, in a conference call.

All but one of Monsanto's businesses saw sales growth from the same quarter in 2010, and all but two saw gross profit growth:

• Monsanto's Seeds and Genomics segment reported $3.42 billion in net sales, a 5.33% increase from second-quarter 2010, while gross profits stood at $2.13 billion, a 5.91% increase:
• The corn seed and traits business reported net sales of $2.4 billion, a 6.68% increase from the same period last year. Gross profits were $1.51 billion, a 6.06% increase.
• The soybean seed and traits business reported net sales of $615 million, a 2.84% decrease from second-quarter 2010. Gross profits were $414 million, a 7.25% increase.
• The vegetable seed business reported net sales of $229 million, a 2.69% increase from the same period last year. Gross profits were $125 million, a 9.42% decrease.
• The cotton seed and traits business reported net sales of $67 million, compared with $34 million in second-quarter 2010. Gross profits were $42 million, compared with $15 million.
• All other crop seeds and traits businesses reported net sales of $113 million, a 1.8% increase from the same period last year. Gross profits were $44 million, a 16.98% decrease.

• Monsanto's Agricultural Productivity segment reported $708 million in net sales, a 10.28% increase from second-quarter 2010, while gross profits stood at $177 million, compared with $87 million in the same period last year.

The company expects to see a significant increase in selling, general and administrative expenses in the second half of the year, due to seasonal costs and new product launches in Latin America. However, third-quarter results are expected to be strong, partly due to peak Agricultural Productivity segment activity in the U.S. and Europe.

"The fourth-quarter contribution of Ag Productivity is expected to be considerably less than it has been over the past several years," said Pierre Courduroux, the senior vice president and chief financial officer of Monsanto, in the conference call. "For the full fourth quarter, we don't expect the Latin American growth to offset the decreased Ag Productivity contribution or the increase in selling, general and administrative expense."

Industrial Info is tracking 12 active Monsanto projects in the U.S. that are worth a total of more than $139 million, including the $45 million addition of a direct-fired thermal oxidizer unit at a phosphate plant in Soda Springs, Idaho. The unit is set to eliminate approximately 1,600 tons per year of nitrogen oxide emissions from the plant, which produces 1.1 billion metric tons per year of phosphates. For more information, visit Industrial Info's North American Chemical Processing Project Database.

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