Monsanto Turns To Profit In Q1; Says Remains Confident In FY17 Outlook

(RTTNews) - Agricultural products giant Monsanto Co. (MON) reported a profit for the first quarter of fiscal year 2017, compared to loss in the prior year. Earnings per share on an ongoing basis was $0.21, well above the prior year's ongoing loss of $0.11, driven by the expected strong start to the business in South America and currency effects. The company remains confident in its fiscal year 2017 outlook.

"We've been very pleased with the strong support - especially from shareowners and growers - for the agreement to combine with Bayer. We expect the combination with Bayer to amplify the rate of innovation faster than either company could achieve alone, which will be critical in helping to increase grower productivity to meet projected demand in the decades ahead," said Hugh Grant, chairman and chief executive officer."

For the second quarter of fiscal year 2017, the company expects as-reported and ongoing earnings per share that is approximately $0.20 to $0.50 better than the prior year.

The company sees this first half earnings improvement as a reflection of the benefit from the sale of the Latitude business and the absence of a significant portion of the Argentine peso devaluation from the prior year. In the second half of the fiscal year, the company expects roughly 40 cents less in earnings per share benefit from strategic deals versus the prior year in addition to a more challenging currency environment than in the first quarter.

Net Income attributable to the company for the first-quarter was $29 million or $0.07 per share, compared to a loss of $253 million or $0.56 per share in the prior year. The latest-quarter result included $0.19 per share of pending Bayer transaction related costs.

Net sales for the fiscal year 2017 first quarter increased to $2.65 billion versus $2.22 billion in the prior year period. Analysts polled by Thomson Reuters expected the company to report revenues of $2.27 billion. Analysts' estimates typically exclude special items. Gross profit for the quarter increased to $1.3 billion versus the prior year period of $0.9 billion.

With the expected strong start in the first quarter and continued focus on return on innovation and financial discipline, the company remains confident in its fiscal year 2017 outlook. Despite the fact that the year-over-year change in currency rates was modestly favorable in the first quarter of fiscal year 2017, the company continues to assume that the change in rates will have a relatively neutral effect on a full year basis given the recent strengthening of the U.S. dollar against several currencies.

The company expects fiscal year 2017 full-year as-reported earnings per share to be in the range of $3.97 to $4.45, compared to the prior estimate of $3.83 to $4.35 per share.

On an ongoing basis, the fiscal year 2017 earnings per share is still expected to be in the range of $4.50-to-$4.90, reflecting expected growth for the year. Analysts expect annual earnings of $4.71 per share.

The company expects roughly $100 million of gross profit from strategic licensing deals towards the end of the fiscal year which is anticipated to be roughly split between Seeds and Genomics and Ag Productivity.

The company expects global corn acres to be roughly flat, with declines in U.S. corn acreage offset by the early increases in South America.

The company adjusted Ag Productivity gross profit to the expected range of $850-to-$950 million, reflecting year-over-year price declines in glyphosate-based herbicides in the first half of the year, offset partially by the benefit of licensing opportunities and expected higher volumes. The adjustment in gross profit outlook is a result of the approximately $85 million benefit from the sale of the Latitude wheat fungicide business that was ultimately recorded in other expense, net for the segment, as opposed to gross profit as anticipated. The company's restructuring and cost savings initiatives remain on track, with the opportunity to deliver approximately $380 million in annual savings at the close of fiscal 2017 in operating expenses and cost of good sold, as compared to fiscal year 2015. However, setting aside pending Bayer transaction related costs and restructuring expenses, overall operating expenses in fiscal 2017 are expected to increase slightly with inflation and the costs associated with the return to growth of the business more than offsetting the savings.

In the Pre-Market trade, MON is currently trading at $105.45, up $0.40 or 0.38 percent.