USAgNet - January 09, 2013
Monsanto Co.'s fiscal first-quarter profit nearly tripled on sales of corn seed to South America and climbing herbicide prices. The world's largest seed company has traditionally reported a quiet first quarter, as most U.S. customers are inactive, but Monsanto's growth in South America is now making it a
year-round business. Monsanto said corn seed sales jumped 27% in the quarter versus a year ago, due largely to South America.
The company also said that U.S. sales were ahead of last year's pace, and it boosted its 2013 earnings guidance. The St. Louis-based company now sees earnings of $4.30 to $4.40 a share, up from its previous view of $4.18 to $4.32.
The company doesn't typically alter guidance so early in the year, but it has "better line of sight than in a typical year," Chief Executive Hugh Grant told investors in a conference call. He said the quarterly results came in stronger than initially expected.
"It's strength that comes from across our business portfolio, so the key areas that we're looking to drive our performance are firing on all cylinders," he said.
Shares rose to their highest level in more than four years after the company easily beat market expectations for both earnings and revenue. They were up 2.8% to $98.60 in midday trading Tuesday on the New York Stock Exchange. As of Monday's close, the stock was up 4.7% over the past three months.
While farmers across the U.S. corn belt suffered from poor yields last year because of drought, that has driven up prices for corn and soybeans, and along with it seed demand, in the U.S. and South America.
Monsanto had said it expected to realize a 5% to 10% increase in corn prices for 2013 as farmers seek premium, better-performing seeds within the company's portfolio.
In South America, which is rapidly adopting genetically modified seeds, the company benefited both from increased volumes and from higher selling prices, as farmers "trade up" to new seed products that have more than one genetically modified trait.