Monsanto Sees Big Spurts in Corn, Soybean Profits in Fiscal Second Quarter, Expects 2014 Capex Up to $1.2 Billion

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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 improved sales volumes and profits for the second quarter of its 2014 fiscal year, as the company saw solid growth in its core businesses, particularly those in its Seeds and Genomics segment, and expanded its presence in the global corn and soybean markets. Net income was reported to be $1.67 billion, a 12.61% increase from the second quarter of fiscal year 2013.

Total sales stood at $5.83 billion, a 6.58% increase from the same period last year. Almost 80% of the quarter's growth came from the Seeds and Genomics segments' corn seeds and traits business, while the company saw record sales in its soybeans business. Monsanto's results in Latin America were significantly strengthened by its Intacta RR2 PRO soybean product, which reached 3 million acres of application. In North America, the company ran into logistical delays early in the quarter due to harsh winter weather, but shipment numbers soon recovered. Sales also improved in the Agricultural Productivity segment, which includes crop protection and lawn-and-garden herbicide products.

Capital expenditures were reported to be $471 million for the first six months of the 2014 fiscal year, compared with $261 million in the same period in 2013.

Industrial Info is tracking $452 million in projects involving Monsanto, including $7 million in planned upgrades at an elemental phosphates plant in Soda Springs, Idaho. The project involves replacing 18-foot and 30-foot sections in the rotary kiln, which has incurred cracks and fatigue, and completing tie-ins at the plant, which produces about 1.1 million metric tons per year of phosphates.

"On the [macroeconomic] side, I think of 2014 as a transition year," said Hugh Grant, the chairman and chief executive officer of Monsanto, in a conference call. "With the effect of the severe drought of 2012, and the effect of the supply-side pressures over the past few years, we've come through an abnormal period of some extreme conditions, and some inflated commodity prices."

Grant later lauded the record soybean business growth: "With its launch this year, we have the data to say that not only is Intacta out of the gate, but it started a leapfrog pace at the beginning of a 100 million-acre market that we expect will rewrite our soybean growth opportunities."

Monsanto executives continue to anticipate capital expenditures for the full 2014 fiscal year to be between $1 billion and $1.2 billion. They expect numerous challenges for the remaining two quarters of fiscal 2014, including lower corn acreage in several major markets and negative impact from currency fluctuations. However, company executives still expect to see strong operational growth in core businesses, such as corn seeds and traits.

"The hallmark of the next 10 years is that demand cannot be met with increasing acres, as we have over the past 10, so we see no real alternative other than boosting productivity," Grant said. "That's the concept of sustainable intensification."

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