Monsanto Reports $229 Million Net Loss Due To Weak Seed Sales

Monsanto Reports $229 Million Net Loss Due To Weak Seed Sales
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Monsanto Company (NYSE:MON), the world’s largest seed company and producer of genetically engineered crops, such as corn and soybeans, reported a sluggish financial performance during the fourth quarter of 2012. The company reported a net loss of $229 million, or 42 cents per share, 104 percent higher than the $112 million net loss, or 21 cents per share, during the same period in 2011.

Monsanto’s total revenue dropped to $2.11 billion, from $2.25 billion a year ago. During the fourth quarter, the company reported that its total sales in corn seeds and traits decreased by 12 percent. Its revenue from cottonseeds dropped by 84 percent due to shifts in acreage.

Monsanto Reports $229 Million Net Loss Due To Weak Seed Sales

On the other hand, Mosanto’s sales in soybeans increased by 48 percent, and vegetable seeds went up by 26 percent.

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The seed company’s gross profit declined by 9 percent to $881 million, from its $972 million gross profit last year. Its gross margin declined by 1 percentage point.

For the full fiscal year, Mosanto’s Company (NYSE:MON) revenue climbed by 14 percent to $13.5 billion compared with its $11.8 billion in 2011. Its fiscal 2012 net income was $2 billion, 27 percent higher than the $1.6 billion net income recorded in 2011.

Monsanto’s diluted earnings per share (EPS) for the full year 2012 increased by 25 percent to $3.70, compared with its $2.96 full year EPS in 2011.

In a statement, Monsanto Company (NYSE:MON) Chief Executive Hugh Grant said, “We’ve proven our business on a global stage, with back-to-back years of tremendous performance and momentum.”

The company’s full-year profit forecast was $4.18 to $4.32 per share.

A report from Reuters cited that the company plans to increase the price of its corn seeds by 5 to 10 percent during the upcoming planting season. The company also projected that the U.S. corn acres for 2013 would be approximately 96 million.

According to Monsanto Company (NYSE:MON), its Dekalb brand corn seed produced a good yield of eight bushels-per-acre in the United States this year. The company also said its new genetically modified, and drought tolerant corn seed demonstrated a five-bushel per acre advantage in the western part of the country.

Vincent Andrews, an analyst from Morgan Stanley (NYSE:MS), believes that Mosanto is “extremely well positioned” for the fiscal 2013, despite the weak performance during the fourth quarter. According to him, several notable factors negatively affected the company’s fourth quarter earnings, such as the timing of corn seed shipments in South America, and farmers in Brazil planted more soy than corn (negative mix shift).

In his research note to investors, Andrews cited that Mosanto’s SG&A and R&D increased year-over-year; the Dekalb corn showed positive yield results in a field trial, and the reduced refuge corn acreage in FY2012 was 27 million, higher than the projected 25 million. Andrews also noted that Mosanto’s 32 million RR2 soybeans acres for FY2012 was higher than Morgan Stanley’s (NYSE:MS) 30 million acres expectation.

Morgan Stanley’s FY2013 bull case target for Monsanto Company (NYSE:MON) is $4.60.

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