Monsanto Q3 Profit Beats View, Lifts Outlook; Sets $10 Bln Share Buyback

(RTTNews) - Agricultural products giant Monsanto Co. (MON) on Wednesday reported a 6 percent decline in profit for the third quarter from last year, reflecting lower revenues in the seeds and genomics segment, particularly its corn seeds and traits business.

However, ongoing earnings per share for the quarter beat analysts' expectations, while revenues missed their estimates. Looking ahead, the world's largest seed company raised the lower end of its fiscal 2014 earnings guidance.

Monsanto also said it plans to at least double full-year ongoing earnings per share by the end of fiscal year 2019, based on its core business and the transformational potential of its new platforms. In addition, the company unveiled a new two-year $10 billion share repurchase program.

St. Louis, Missouri-based Monsanto reported net income for the third quarter of $858 million or $1.62 per share, down from $909 million or $1.68 per share in the prior-year quarter.

Excluding items, ongoing earnings for the quarter was $1.62 per share, compared to $1.66 per share in the year-ago period. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.56 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter edged up to $4.250 billion from $4.248 billion in the same quarter last year, but missed analysts' consensus estimate of $4.40 billion.

Segment wise, seeds and genomics revenues for the quarter declined less than 1 percent from last year to $3.04 billion. Of this, corn seeds and traits sales decreased almost 17 percent to $1.30 billion, while sales for soybean seed and traits grew 24 percent to $816 million.

In the agricultural productivity segment, which consists of the crop protection products and lawn-and-garden herbicide products, net sales increased 1 percent from last year to $1.21 billion.

Monsanto's gross profit margin for the quarter improved 200 basis points from the year-ago period to 55 percent.

Looking ahead to fiscal 2014, Monsanto now forecasts ongoing earnings per share of $5.10 to $5.20, and as-reported earnings in a range of $5.12 to $5.22. Earlier, the company forecast ongoing earnings per share of $5.00 to $5.20, and reported earnings of $5.02 to $5.22.

Street expects the company to earn $5.25 per share for the year.

Monsanto now projects fiscal 2014 free cash flow in a range of $700 million to $800 million, at the upper end of its prior range of $600 million to $800 million.

Monsanto said its new long-term target to at least double full-year ongoing earnings per share by the end of fiscal 2019. The company expects the largest driver of the overall growth over the next five years to come from its established core seeds and traits business, with an expected contribution of more than $4 billion in total incremental gross profit growth during that period.

At the same time, Monsanto said it continues to make strong progress with new platforms, including its Climate Corporation platform that is expected to contribute a key part to the company's strategy and earnings profile during this five year growth horizon.

With about $1.1 billion remaining in its current share repurchase program, Monsanto announced a new two-year $10 billion share repurchase authorization. Using cash on hand and access to debt, the company intends to use about $6 billion in an accelerated share repurchase in the near term.

In a separate statement, Monsanto said it plans to begin a public offering of senior notes in the near term, subject to market and business conditions and other prevailing factors. The company intends to use net proceeds from the debt offering to repurchase its common shares pursuant to its existing and recently announced share repurchase programs.

MON is currently trading at $126.93, up $6.30 or 5.22 percent on a volume of 2.95 million shares.