Agricultural products giant Monsanto Co. (MON: Quote) on Wednesday reported a loss for the fourth quarter that widened from last year, reflecting lower sales at its seeds and genomics segment and flat margins. The results for the quarter missed analysts' expectations. Looking ahead, Monsanto forecast earnings for fiscal 2014 below Street estimates.
Separately, Monsanto said it has agreed to buy farming software and data company Climate Corp. for about $930 million in cash. The company noted that the acquisition will combine its R&D capabilities with Climate Corp.'s expertise in agriculture analytics as well as risk-management and provide farmers access to more information about the many factors that affect the success of their crops.
The world's largest seed company's fourth-quarter net loss was $249 million or $0.47 per share, wider than prior year loss of $229 million or $0.42 per share.
Excluding special items, ongoing loss per share for the quarter was $0.47, compared to ongoing loss of $0.44 per share in the same period last year. On average, 21 analysts polled by Thomson Reuters expected the company to report loss of $0.43 per share. Analysts' estimates typically exclude special items.
Net sales for the quarter rose 5 percent to $2.20 billion from $2.10 billion in the previous-year quarter, but missed analysts' consensus estimate of $2.24 billion.
Segment wise, seeds and genomics revenues declined 1 percent from last year to $1.19 billion, as a 5 percent increase in corn seed and traits sales was offset by lower sales in soybean seed and traits as well as vegetable seeds. In the agricultural productivity segment, net sales grew 14 percent from the year-ago period to $1.02 billion.
The company's gross profit margin for the quarter was flat with the year-ago period at 42 percent.
For fiscal 2013, Monsanto's net income rose to $2.48 billion or $4.60 per share from $2.05 billion or $3.79 per share in the prior year. Ongoing earnings per share for the year were $4.56, compared to $3.70 in the previous year.
Net sales for the year increased 10 percent to $14.86 billion from $13.50 billion last year.
Street expected the company to report earnings of $4.58 per share on revenues of $14.95 billion.
Monsanto noted that in fiscal 2013, it used nearly 100 percent of its $2 billion in free cash flow to return cash to shareholders through buybacks and dividends. This includes the completion of its $1 billion share-repurchase authorization and the initiation of a new $2 billion, three-year repurchase program announced in June.
Looking ahead to fiscal 2014, Monsanto forecast earnings in a range of $5.00 to $5.20 per share, after dilution of about $0.14 per share related to the Climate Corp. acquisition. Analysts expect the company to earn $5.33 per share for the year.
Monsanto projects continued strong operational growth from its core business, reflected in mid-to-high teens growth in EBITDA and overall margin expansion.
Monsanto expects the Climate Corp. acquisition to expand on that company's leadership in the area of data science, which represents a potential opportunity of $20 billion beyond Monsanto's core focus today.
According to the company, the deal will immediately expand both the near- and long-term growth opportunities for Monsanto's business and Integrated Farming Systems platform.
Monsanto expects the acquisition to close in the first quarter of its fiscal year 2014. Following the acquisition, Climate Corp. will retain its distinct brand identity and continue to maintain headquarters in Silicon Valley. All of its employees will be offered continued employment.
Climate Corp. was founded in 2006 by a team of software engineers and data scientists formerly with Google Inc. (GOOG) and other Silicon Valley technology companies. The company's proprietary technology platform combines hyper-local weather monitoring, agronomic data modeling, and high-resolution weather simulations to deliver a suite of full-season monitoring, analytics and risk-management products.
In Wednesday's regular session, MON is trading at $102.84, down $2.21 or 2.10 percent on a volume of 1.15 million shares.
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by RTT Staff Writer
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