Monsanto agchem sales down 14% in Q2 FY 2015

Monsanto’s sales decreased by 10.9% to $ 5,197 million in the second quarter ended Feb 28, 2015. Monsanto’s agrochemical sales dropped by 13.9% to $1,019 million in this quarter, mainly due to lower volumes, as the company continued to convert  from non-branded to branded volumes of Roundup®, which is shifting gross profit to the second half to support key application windows for over-the-top sprays. Net income for the quarter fell by 15.1% to $1,419 million. Earnings before interest & taxes (EBIT) for this quarter declined by 13.5% to $2,043 million.

For the six months of the year, the total sales were down by 10.1% to $ 8,067 million. Agrochemical sales recorded a 14.4% decrease to $2,268 million. The net income decreased by 18.7% to $ 1,662 million. Earnings before interest & taxes (EBIT) saw a decline of 15.3% to $2,470 million.

Sales in the Seeds and Genomics segment for the second quarter saw a 10.1% decrease to $4,178 million, reflecting the shift in profit of its Channel seed brand business to the third quarter and the impact of softening foreign currencies, offset by strong soybean sales. Offsetting that is the strong contribution from the company’s soybean business as it continues the momentum from a record fiscal year 2014 and strong first quarter 2015. The company noted it reached 15 million acres of Intacta RR2 PRO™ during its second year of launch, above the company’s initial estimates of 10 million to 12 million acres and five times the penetration in its first year of introduction. The company is expanding its production of Intacta RR2 PRO™ varieties for the third year of commercialization as it targets 30 million acres in 2016 with plans to offer more than 150 varieties for Brazil alone.

Within its U.S. soybean business, the company’s shipments and order book continue to point to expected growth in its Roundup Ready 2 Yield® platform again this season across its branded and licensing businesses. The company also continues to highlight progress on pre-commercial activities for Roundup Ready 2 Xtend™ soybeans in the United States as it remains on track for more than a three million acre launch in 2016 pending necessary regulatory approvals. Roundup Ready 2 Xtend™ soybeans are expected to be available in more than 60 varieties, which is more than six times the varieties offered in the launch year of Roundup Ready 2 Yield® soybeans.

Monsanto also noted it remains on track to hold or grow its branded corn share footprint in every major market in the face of declining corn acres. Additionally, exclusive of currency headwinds, the company expects to deliver positive germplasm price mix lift for the full year. In South America, the company achieved a more than two point increase in its branded corn share in Brazil following the first season, despite significantly reduced planted acres.

Within the U.S. corn seed business, the order book highlights that the Reduced Refuge family of products is maintaining its percentage of the portfolio from the prior year, with strong conversion to the company’s dual-mode of action products like SmartStax® and VT Double PRO®. The company has also seen increased demand for its Genuity® DroughtGard® Hybrids product.

In cotton, it is now expected to reach more than a half million acres of Bollgard II® XtendFlex™ cotton this spring in the United States as part of the company’s limited commercial introduction.

The Climate Corporation has rolled out its Climate PRO™ offering for this season in the United States, featuring advanced nitrogen and field health insights to support the important management decisions farmers make throughout the season.

Climate Basic™, the company’s free web and mobile app to help farmers optimize their daily decision making with field-level weather information, has also been upgraded this season with an even simpler user interface for farmers, an upgraded notifications system and added scouting functionality. The company continues to target to increase its Climate Basic™ users by 50 percent, from its fiscal year 2014 base of 30 million acres, as well as more than double its one million Climate PRO™ premium acres from fiscal year 2014.

Outlook

The Seeds and Genomics segment gross profit growth percentage for the full year is expected to be low-to-mid-single digits, while the company’s Agricultural Productivity gross profit is still expected to be down approximately 10 percent versus the prior year due to anticipated generic glyphosate price softening and an incremental 2-to-3 percent due to deteriorating currencies.