Monsanto posted strong Q1 performance

Date:01-14-2013

Monsanto delivered strong results for the first quarter of its fiscal year 2013 which ended November 30th, 2012, reflecting contributions from the continued expansion of its Latin American corn business, early momentum in its U.S. seeds and traits business and performance of its agricultural productivity segment.
Executives said the cumulative strength of the company's broad business portfolio translated to an increase in full-year earnings per share and free cash flow guidance, even at this early point in the company's fiscal year. Monsanto also highlighted 18 phase advancements across its integrated yield pipeline, a record for its annual research and development update.

Monsanto’s sales result ($ million)
Q1 ended Nov. 30th	Q1 2013	Q1 2012	change%
Sales	2,939	2,439	+20.5
-seeds & traits	1,755	1,534	+14.4
-agrochemicals	1,184	905	+30.8
EBIT1	490	229	+114.0
-seeds & traits	220	147	+49.7
-agrochemicals	270	82	+229.3
Net income	339	126	+169.0
1 earnings before interest & taxes

Sales for the quarter increased 20.5% over the prior year's first quarter to $2,939 million. Gross profit increased 27% over the prior year period to $1,397 million.  The earnings before interest and taxes (EBIT) has more than doubled to $490 million. Net income for the Company was boosted by 169% to $339 million.

Sales for Monsanto's Seeds and Genomics segment, which consists of seeds and related traits business, increased 14.4% to $1,755 million, with corn seed and traits performance driving the first quarter strength. EBIT for this segment was up 49.7% to $220 million.

Corn seed and traits net sales increased 27% over last year's first quarter to $1,139 million, driven in part by the business strength in Brazil, Argentina and Mexico. The trait upgrade and expansion is on track in both Brazil and Argentina where the company is achieving strong demand for its corn products. In Brazil, farmers continue to upgrade from single trait corn products to the first double stack, VT PRO™ 2. In its second year of commercial sales, VT PRO™2 is the second-highest volume trait in the company's Brazil corn portfolio this year. Likewise, in Argentina, the company has also seen strong adoption of its Genuity® VT Triple PRO® product. The triple-stack corn product is on track to be 40% of the company's Argentine corn portfolio in just its second year on the market.

Complementing the corn performance in Latin America is the early momentum in the U.S. seeds and traits business. Backed by strong cash flow and customer prepayments, the company noted a positive U.S. order book, with the order pace ahead of the same point in time last year. With two years of strong performance, company executives said the U.S. business is in position to grow again in 2013. This includes another increase in acres for both its Genuity® Roundup Ready 2 Yield® platform in soybeans and the Genuity® reduced refuge family in corn.

Sales for Monsanto's agrochemical segment were increased by 30.8% to $1,184 million, reflecting the benefit of a favorable marketplace environment lifting the business in the near-term. EBIT of agrochemical business was boosted by 229.3% to $270 million. The company indicated it remains focused on its established strategy for Roundup® following the reset of that business in 2010.

Outlook

The company raised its full year ongoing EPS guidance to $4.30 to $4.40 per share, positioning the company for a third straight year of strong ongoing earnings growth. Full-year 2013 EPS guidance on an as-reported basis is expected in the range of $4.31 to $4.41 per share.

The company also raised full year free cash flow guidance to $1.8 billion to $2 billion. The company expects net cash provided by operating activities to be $2.9 billion to $3.3 billion, and net cash required by investing activities to be $1.1 billion to $1.3 billion for fiscal year 2013.

The updated EPS and free cash flow guidance does not include an estimated historical range of $0.20 to $0.25 of EPS contribution related to the Roundup Ready soybean business in Brazil given uncertainty in timing of resolution of ongoing business and legal developments.