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Monsanto Posts Higher Quarterly Profit

Reuters
Thursday, 4 Jan 2007 | 9:58 AM ET

Monsantoposted a higher-than-expected quarterly profit, citing strong sales of U.S. corn seed and herbicide as well as a reduced tax burden, but its shares fell as the company did not raise its fiscal-year earnings forecast.

Instead, Monsanto, a leader in genetically altering crops to resist pests and tolerate weed-killing treatments, said fiscal-year results should come in at the high end of its
previous outlook.

Argent Capital Management portfolio manager Tom Leritz said the company's unwillingness to further raise its forecast for the year was weighing on the stock.

"When the price continues to appreciate the way it has, the hurdle becomes higher and higher," Leritz said.

Net income rose 53 percent to $90 million, or 16 cents a share, in the first quarter ended on Nov. 30 from 59 million, or 11 cents a share, a year earlier. Analysts on average were expecting 10 cents a share, according to Reuters Estimates.

Sales rose to $1.54 billion from $1.41 billion.

Monsanto, which is locked in a tight competition for U.S. corn acres amid booming demand for corn-based ethanol, said its high-margin "triple-stack" corn product, which provides farmers
above- and below-the-ground insect resistance as well as herbicide tolerance, was seeing brisk sales ahead of the spring planting season.

Overall, sales of U.S. corn seed and genetic traits aimed at enhancing performance jumped 35 percent in the quarter, to $360 million, Monsanto said. Herbicide sales rose 18 percent to
$649 million.

However, sales of soybean seeds and traits, vegetable and fruit seeds and all other crops and traits fell 18% to $320 million.

Monsanto said total U.S. soybean acreage, where it has dominated the market for specialty seeds, may decrease slightly this growing season as farmers devote more land to corn
instead.

The company also reported reduced sales of cotton traits in Australia amid drought conditions and lower revenues from its Seminis vegetable and fruit seed business.

Monsanto's effective tax rate for the quarter fell to 10% from 37%, adding 4 cents a share to earnings. The company estimated its full-year tax rate at about 30%.

Monsanto forecast full-year earnings at the high end of its previous outlook of $1.50 to $1.57 per share. Analysts' estimated averaged $1.61.

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