U.S. News

Monsanto Shares Jump to Record High on Strong Corn Seed Sales


Monsanto surged to a record high after the seed company posted a higher-than-expected second-quarter profit. The results were driven by record revenues that included strong sales of its genetically modified corn and other seeds. Corn demand has increased as ethanol production has ramped up.

Monsanto also said it expects full-year 2007 earnings per share to range from $1.60 to $1.65, both on a reported and ongoing basis. Previously, the company's full-year 2007 EPS forecast was at the upper end of the $1.50 to $1.57 range.

The St. Louis-based company's shares jumped to an all-time high of $59.66 in response to the news.

"These are obviously good results... with respect to the number of acres planted and the market share trends," said Frank Mitsch, an analyst with BB&T Capital Markets. "We expect to see the third quarter be quite nice. There are a lot of positives for Monsanto."

The agricultural products company said it earned 98 cents a share for the second quarter, which ended Feb. 28, compared with 80 cents a share a year earlier. Analysts, on average,
were looking for 94 cents a share, according to Thomson Financial.

Monsanto, a global leader in development of biotech crops, said it expected to benefit from increased farmer interest in planting corn this spring. Corn demand has surged amid a rally in corn prices and strong demand from ethanol, food and livestock feed sectors.

Monsanto said its pre-season U.S. crop estimates were consistent with a U.S. Department of Agriculture forecast for corn to be planted on about 90 million U.S. acres this spring.

"The strong demand that we've seen for our higher-yielding corn seeds and our higher-margin, triple-trait corn technology has translated into an excellent second quarter and first half for our business," said Monsanto Chairman Hugh Grant in a statement.

Monsanto said its triple-trait corn technology, which combines pest protection with herbicide tolerance, was expected to be grown on an estimated 16 million acres, up more than 160%. Roundup Ready corn, which is resistant herbicide, was expected to be planted on more than 50 million U.S. acres, up from 32.7 million acres in 2006, Monsanto said.

Gains in corn seed and trait sales helped offset a decline in soybean seeds and traits, which dropped to $373 million from $449 million, according to the company.

The bottom line showed net income for the second quarter totaling $543 million, compared with $440 million a year ago.

Monsanto said it recorded record net sales of $2.6 billion for the second quarter, up 19 percent over the same period in 2006. Along with strong U.S. corn seed and traits revenues, the company saw increased sales of its Roundup herbicide and other glyphosate-based herbicides in Brazil, the Europe-Africa region and Argentina.

Monsanto's gains come at a time when the company is seeking U.S. approval to acquire Delta and Pine Land, a leading cotton seed company.

Monsanto announced the $1.5 billion deal to buy Delta and Pine in August, but competitors and farm groups have criticized what they say is Monsanto's growing dominance in U.S. agriculture.