06 Apr 2018 --- The world’s largest seed company, Monsanto has reported disappointing sales and earnings for its fiscal second quarter as it sold less corn in the US. The company has said that the results were partly due to the drop in planted acres in the US this season, as well as the impact of lower commodity prices in Brazil.
The company, whose US$66bn takeover by Bayer is in the process of clearing regulatory hurdles, struggled to deliver much top-line growth and maintained its non-specific outlook for “pre-tax income growth” in the 2018 fiscal year. Monsanto is confident the Bayer bid will get regulatory approval and be completed. Still, there’s a possibility that the deal could close later in the year, or not at all.
US farmers are set to plant 88 million acres this year, the Department of Agriculture projected in a report last week, down from 90.2 million in 2017. The reduction follows several years of bumper crops, a glut of grain and depressed commodity prices.
Monsanto saw net sales shrink 1.1 percent to US$5.02bn in the three months ended February 28 compared to a year earlier. That missed the median estimate of US$5.34bn among analysts. A US$181m drop in corn seed sales, which account for 54 percent of total group revenue, was the culprit, as all other seed and productivity segments squeezed out revenue growth compared to a year ago.
A 6.6 percent year-on-year rise in net income to US$1.46bn fell about US$90m short of market forecasts, while reported earnings per share of US$3.27, up from US$3.09 a year earlier, was 7 cents below what analysts expected.
The company managed to keep a lid on selling, general and administrative costs and the company expects its multiyear restructuring and cost savings initiative – now into its fourth year – should keep those costs for the full fiscal year slightly below those for 2017.
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