Monsanto's Net Sales Down 10%, Net Income Halved
Thursday, October 7th, 2010
Monsanto reported net sales of $1.95 billion for the fourth quarter of fiscal year 2010, a 4 percent increase over the same period in fiscal year 2009.
The seeds and genomics segment represented more than 70 percent of the company's net sales for the year, which helped to offset the lower sales for the agricultural productivity segment.
Net sales for seeds and genomics increased 4 percent, boosted by higher corn and cotton revenues in the United States. Pricing actions for Roundup and other glyphosate-based herbicides had a significant effect on overall net sales and gross profit.
Net sales for the company decreased 10 percent in fiscal year 2010 to $10.5 billion as a result of a 35 percent decline in net sales for the agricultural productivity segment. Gross profit increased 1 percent for the quarter as compared to the prior year period, reaching $861 million for the quarter and $5.1 billion for the year.
Monsanto reported a net loss of $143 million in the fourth quarter of fiscal year 2010 compared with a net loss of $233 million in the same period last year. Net income for fiscal year 2010 was $1.1 billion, a decline from last year's net income of $2.1 billion.
The company's fiscal year 2010 earnings per share (EPS) was $2.41 on an ongoing basis ($2.01 on an as-reported basis). For the fourth quarter, the company reported a loss per share of $(0.09) on an ongoing basis (and $(0.26) on an as-reported basis). As-reported EPS results for the fourth quarter and fiscal year 2010 reflect the effects of restructuring and discontinued operations.
In fiscal year 2011, Monsanto expects 13 to 17 percent earnings growth off the $2.41 ongoing EPS base for a range of $2.72 to $2.82 EPS on an ongoing basis and $2.67 to $2.77 on an as-reported basis.
The company projects free cash flow in the range of $800 million to $900 million, which reflects an investment of $600 to $700 million in capital expenditures. The company expects net cash provided by operating activities to be $1.7 billion to $1.9 billion, and net cash required by investing activities to be approximately $900 million to $1 billion for fiscal year 2011.
The seeds and genomics segment, which will account for the bulk of Monsanto's business in fiscal year 2011 and beyond, is expected to deliver both single digit unit volume growth and mix improvement. The company expects global seed-and-trait unit volume growth in the single digits in 2011, with a mix benefit primarily driven by the U.S. corn product strategy, the expanded availability of Genuity Roundup Ready 2 Yield soybeans and the corn market in Latin America.
In Latin America, the company sees opportunity in both Brazil as more traits become available, and Argentina, where there has been an uptick in acreage as more growers move to double stacks.
In the United States, the company has newly positioned Genuity Roundup Ready 2 Yield soybeans to promote broader adoption and expects the on-farm experience base to increase from the six million acres planted in 2010 to mid-teens millions of acres in 2011. In corn, the company will execute on its plan to offer farmers more choices of products at more price points and expects to earn the farmer's business on mid-teens millions of acres total for Genuity SmartStax, Genuity VT Triple PRO and Genuity VT Double PRO in 2011. Together, the upcoming year's choices, which encompass trait upgrade potential and the continued enhancement of improved germplasm in Monsanto products, are expected to increase both corn gross profit and unit volume growth.
The company also expects steady growth in cotton and vegetables at a global level. In cotton, Monsanto will continue to upgrade its germplasm mix improvement and promote penetration of second generation stacked traits in the United States and move to second-generation traits in India.
The stabilized agricultural productivity segment is expected to deliver gross profit in the range of $550 million to $600 million in fiscal year 2011, reflecting the steady-state guidance for Roundup and other glyphosate-based herbicides as the company expects to sell between 250 million and 300 million gallons at an average gross profit contribution of $1 per gallon.
With the savings realized as part of Monsanto's restructuring actions, the company expects 2011 selling, general and administrative expenses to be a flat to inflationary increase over the 2010 base of $2.06 billion, representing a range of $2.06 billion to $2.16 billion. In 2011, the company projects a research and development spend of $1.25 billion to $1.3 billion as it continues to manage more products in the later phases of development.