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Monsanto net loss narrows, shares fall
Reuters
Monsanto has posted a narrower quarterly loss on higher seed sales even as
the agribusiness company struggled with stiff competition and looming legal
liabilities. Monsanto, whose shares fell 3 per cent, said its net loss for the
fiscal first quarter ended November 30 narrowed to $40 million, or 15 cents
per share, compared with $97 million, or 37 cents, in the year-earlier quarter.
Fulcrum Global Partners analyst Frank Mitsch said the results offered little
news, and that the stock fall was possibly attributable to profit-taking after
a strong run-up in 2004 and also disappointment that the results were not stronger.
Monsanto said the value of its seeds and genetically modified traits businesses
is growing globally and for the quarter, sales in the seed and biotech businesses
jumped 20 percent. Total net sales for the quarter grew 7 per cent to $1.09
billion, higher than analysts’ expectations for $1.064 billion, largely
because of strong sales of branded corn seed in Europe and Brazil and stronger
sales of genetically modified corn and soybean seeds in the United States and
biotech cotton in Australia. Monsanto said the results gave it confidence it
was on track for targeted fiscal-year 2005 net earnings of $1.56 to $1.71 per
share, or $1.85 to $2.00 on an operating basis. “The signs so far indicate
we are advancing as we’d hoped,” said Monsanto chief financial officer
Terry Crews in a conference call. “The first quarter is a great start in
the right direction.”
Competition has eroded Monsanto’s dominance in the herbicide business and
the St. Louis-based company has been focusing revenue growth efforts in the
seeds market, for both conventional and genetically modified crops. Monsanto’s
bioengineered traits help farmers protect crops from weeds, insects and disease.
The company said Wednesday it has a number of new traits - or genetic modifications
it sells to seed companies - in the pipeline and expected continued strong growth.
Results in the latest quarter included a $284 million charge, or $181 million
after tax, for liabilities tied to Monsanto’s former affiliate, Solutia
Inc a chemical concern now mired in bankruptcy. Last month, the company said
the reserve would be in the range of $285 million. The first-quarter results
also include a tax benefit of $106 million from losses incurred in a European
wheat and barley business that the company has been winding down. Excluding
the reserve and the tax benefit, operating income rose to 13 cents a share,
in line with analysts’ expectations, according to Reuters Estimates. That
compares with 4 cents a share for the first quarter of 2003.
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