Monsanto Q1 Results Tops View, Backs 2014 Outlook

Monsanto MON 010814

Agricultural products giant Monsanto Co. (MON) reported Wednesday a profit for the first quarter that grew nine percent from last year, reflecting improved margins and revenue growth. Ongoing earnings per share and quarterly revenues topped analysts' expectations. The company also reaffirmed its ongoing earnings guidance for the full-year 2014.

"The first quarter demonstrated that our business performance is squarely on track with several key milestones and that we have the right growth strategy in place. The strength in our business is also seen in the record number of research and development advancements this year," Chairman and CEO Hugh Grant said.

The St. Louis, Missouri-based world's largest seed company reported net income of $368 million or $0.69 per share for the quarter, higher than $339 million or $0.63 per share in the prior-year quarter.

Excluding discontinued operations, ongoing earnings per share for the quarter was $0.67, compared to last year's $0.62. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.64 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 6.8 percent to $3.14 billion from $2.94 billion in the same quarter last year, and topped fifteen Wall Street analysts' consensus estimate of $3.07 billion.

Segment wise, seeds and genomics revenues decreased 4.5 percent to $1.68 billion, with corn seeds and traits sales accounting for more than half of it and declining 7.9 percent. In the agricultural productivity segment, net sales increased 24.6 percent to $1.47 billion from last year.

Gross profit margin for the quarter improved 200 basis points to 50 percent from last year's 48 percent, but was offset by a 100 basis points increase in each selling, general and administrative expenses as well as research and development expenses.

Looking ahead to fiscal 2014, Monsanto said it continues to expect ongoing earnings in a range of $5.00 to $5.20 per share. Street is currently looking for full-year 2014 earnings of $5.25 per share.

Monsanto confirmed its full-year 2014 free cash flow guidance of between $600 million and $800 million.

Further, Monsanto said it continues to expect strong operational growth from its core business, with global business on track to deliver mid-to-high teens operational growth.

The company noted the pace of its U.S. order book and strong pre-pays are tracking well with 2014 targets, reflecting a strong end to the U.S. harvest for its products.

In Wednesday's regular trading session, MON is currently trading at $115.71, up $2.47 or 2.18% on a volume of 0.96 million shares. The stock has been trading in a range of $94.00 to $117.50 in the past 52 weeks.

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