ST. LOUIS, April 4, 2012 /PRNewswire/ -- With half the fiscal year complete, Monsanto Company (NYSE: MON) executives today said the strong performance of the seeds and traits business and the timing of an early U.S. season drove a record quarter. In reporting earnings results, executives said the cumulative strength of the business, including the best second quarter for the company's seeds and genomics segment, translated to an increase in full-year ongoing and as-reported earnings per share guidance. The company also increased its free cash flow guidance for the full year.
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Second Quarter |
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Six Months |
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($ in millions) |
2012 |
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2011 |
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2012 |
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2011 |
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Net Sales By Segment |
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Corn seed and traits |
$ |
2,816 |
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$ |
2,397 |
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$ |
3,711 |
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$ |
3,011 |
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Soybean seed and traits |
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689 |
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615 |
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931 |
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841 |
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Vegetable seeds |
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215 |
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229 |
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372 |
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412 |
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Cotton seed and traits |
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66 |
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67 |
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260 |
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179 |
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All other crops seeds and traits |
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138 |
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113 |
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184 |
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141 |
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TOTAL Seeds and Genomics |
$ |
3,924 |
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$ |
3,421 |
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$ |
5,458 |
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$ |
4,584 |
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Agricultural productivity |
$ |
824 |
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$ |
710 |
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$ |
1,729 |
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$ |
1,383 |
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TOTAL Agricultural Productivity |
$ |
824 |
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$ |
710 |
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$ |
1,729 |
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$ |
1,383 |
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TOTAL Net Sales |
$ |
4,748 |
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$ |
4,131 |
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$ |
7,187 |
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$ |
5,967 |
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Gross Profit |
$ |
2,705 |
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$ |
2,310 |
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$ |
3,801 |
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$ |
3,134 |
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Operating Expenses |
$ |
896 |
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$ |
823 |
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$ |
1,747 |
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$ |
1,583 |
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Interest Expense Net |
$ |
27 |
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$ |
20 |
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$ |
62 |
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$ |
48 |
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Other Expense Net |
$ |
37 |
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$ |
11 |
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$ |
43 |
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$ |
23 |
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Net Income Attributable to Monsanto Company |
$ |
1,211 |
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$ |
1,018 |
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$ |
1,337 |
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$ |
1,027 |
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Diluted Earnings per Share (See note 1.) |
$ |
2.24 |
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$ |
1.88 |
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$ |
2.47 |
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$ |
1.89 |
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Items Affecting Comparability EPS Impact |
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Restructuring charges |
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0.01 |
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Income on discontinued operations |
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(0.01) |
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(0.01) |
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(0.01) |
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(0.01) |
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Nitro Claims Settlement |
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0.05 |
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0.05 |
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Diluted Earnings per Share from Ongoing Business (For the definition of ongoing EPS, see note 1.) |
$ |
2.28 |
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$ |
1.87 |
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$ |
2.51 |
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$ |
1.89 |
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Effective Tax Rate |
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31% |
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29% |
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31% |
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30% |
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Second Quarter |
Six Months |
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Comparison as a Percent of Net Sales: |
2012 |
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2011 |
2012 |
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2011 |
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Gross profit |
57% |
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56% |
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53% |
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53% |
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Selling, general and administrative expenses (SG&A) |
11% |
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12% |
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15% |
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16% |
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Research and development expenses |
7% |
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8% |
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10% |
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10% |
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Income from continuing operations before income taxes |
37% |
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35% |
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27% |
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25% |
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Net income attributable to Monsanto Company |
26% |
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25% |
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19% |
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17% |
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"Our strong U.S. selling season and growth from Latin America during the first six months have come together to set us up for a great 2012," said Hugh Grant, chairman, president and chief executive officer for Monsanto. "We've seen contributions from growth across crops and geographies, which position us well to deliver high-teens ongoing earnings growth this year. We're also pleased growers have recognized the value of our product portfolio and given us the opportunity to earn their business."
Results of Operations
Net sales increased $617 million or 15 percent in the three-month comparison driven by global gains in corn and a strong selling season in the United States. Second quarter gross profit rose 17 percent to $2.7 billion compared to the prior year second quarter. For the first six months, gross profit is up 21 percent or $667 million.
Operating expenses were up in the second quarter compared to the prior year, tracking with the increases the company would expect as it grows its business. In the three-month comparison, selling, general and administrative (SG&A) expenses increased to $543 million. R&D expenses increased to $353 million for the quarter based on investments to support future growth opportunities.
The company's second quarter earnings per share (EPS) was $2.28 on an ongoing basis, $2.24 on an as-reported basis. (For a reconciliation of ongoing EPS, see note 1.)
Cash Flow
For the first half of fiscal year 2012, cash flow from operations was a source of nearly $1.7 billion compared to $1.4 billion over the same period last year.
Net cash required by investing activities for the first half of fiscal year 2012 was $402 million, compared to $524 million for the same period of fiscal year 2011. Net cash required by financing activities for the first half of 2012 was $672 million, compared to net cash required of $668 million for the same period of fiscal year 2011.
Free cash flow was a source of nearly $1.3 billion for the first half of fiscal year 2012, compared to $917 million for the first half of fiscal year 2011. (For a reconciliation of free cash flow, see note 1.)
Outlook
The company raised its full-year ongoing EPS guidance to $3.49 to $3.54 per share. Full-year 2012 EPS guidance on an as-reported basis is expected in the range of $3.45 to $3.50. (For a reconciliation of EPS, see note 1.) The company also raised full-year free cash flow guidance to $1.6 to $1.8 billion. The company expects net cash provided by operating activities to be $2.5 billion to $2.8 billion, and net cash required by investing activities to be $900 million to $1 billion for fiscal year 2012. (For a reconciliation of free cash flow, see note 1.)
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Seeds and Genomics Segment Detail
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($ in millions) |
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Net Sales |
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Gross Profit |
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Second Quarter |
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Six Months |
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Second Quarter |
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Six Months |
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Seeds and Genomics |
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2012 |
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2011 |
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2012 |
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2011 |
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2012 |
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2011 |
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2012 |
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2011 |
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Corn Seed and Traits |
$ |
2,816 |
$ |
2,397 |
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$ |
3,711 |
$ |
3,011 |
$ |
1,847 |
$ |
1,506 |
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$ |
2,378 |
$ |
1,845 |
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Soybean Seed and Traits |
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689 |
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615 |
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931 |
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841 |
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443 |
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414 |
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616 |
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567 |
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Vegetable Seeds |
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215 |
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229 |
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372 |
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412 |
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85 |
|
125 |
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|
166 |
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238 |
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Cotton Seed and Traits |
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66 |
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67 |
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260 |
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179 |
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47 |
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42 |
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|
182 |
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116 |
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All Other Crops Seeds and Traits |
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138 |
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113 |
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184 |
|
141 |
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69 |
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44 |
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65 |
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44 |
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TOTAL Seeds and Genomics |
$ |
3,924 |
$ |
3,421 |
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$ |
5,458 |
$ |
4,584 |
$ |
2,491 |
$ |
2,131 |
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$ |
3,407 |
$ |
2,810 |
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($ in millions) |
Earnings Before Interest & Taxes (EBIT) |
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Second Quarter |
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Six Months |
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Seeds and Genomics |
2012 |
2011 |
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2012 |
2011 |
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EBIT (For a reconciliation of EBIT, see note 1.) |
$ |
1,699 |
$ |
1,403 |
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$ |
1,846 |
$ |
1,383 |
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Unusual Items Affecting EBIT: Restructuring |
$ |
$ |
(3) |
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$ |
$ |
(14) |
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The Seeds and Genomics segment consists of the company's global seeds and related traits business.
Sales in the Seeds and Genomics segment for the second quarter were $3.9 billion, representing an increase of $503 million over the same period last year and reaffirming the company's seeds and traits business as its central driver for growth in 2012. Gross profit in the second quarter was up $360 million or approximately 17 percent compared to the prior year second quarter. For the first six months, gross profit is up 21 percent over the same period last year.
Second quarter growth was led by the strength of Monsanto's corn business, with the strongest contributor being the U.S. corn business. The strong start to the U.S. season reinforces the company's confidence in its product and pricing strategy and its ability to build on the branded corn volume increase achieved in 2011. The company also saw higher corn sales in Latin America in the quarter.
The soy and cotton businesses also continue to perform well year-to-date. In soybeans, second quarter seeds and traits sales were up 12 percent driven by an increased trait mix of Genuity® Roundup Ready 2 Yield® soybeans in the United States.
With the strong U.S. results, sales are tracking well for the expected increase in the company's newest corn and soybean platforms in the United States. While still early in the season, Monsanto expects acres of its Genuity® Roundup Ready 2 Yield® soybeans and Genuity® reduced refuge corn family to increase by more than 10 million acres each. That step up is expected to allow the company to reach the projected 22 million to 24 million acre range for the Genuity® reduced refuge corn family and the 27 million to 30 million acre range for Genuity® Roundup Ready 2 Yield® soybeans in 2012.
Vegetable sales were down from the same quarter of the prior year due primarily to current market conditions in Europe. Vegetable gross profit was also down compared to the same quarter of the prior year reflecting the European market decrease, as well as an inventory write-off that will also help support the company's vegetable business growth strategy.
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Agricultural Productivity Segment Detail
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($ in millions) |
Net Sales |
Gross Profit |
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Second Quarter |
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Six Months |
Second Quarter |
Six Months |
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2012 |
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2011 |
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2012 |
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2011 |
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2012 |
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2011 |
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2012 |
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2011 |
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Agricultural Productivity |
$ |
824 |
$ |
710 |
$ |
1,729 |
$ |
1,383 |
$ |
214 |
$ |
179 |
$ |
394 |
$ |
324 |
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TOTAL Agricultural Productivity |
$ |
824 |
$ |
710 |
$ |
1,729 |
$ |
1,383 |
$ |
214 |
$ |
179 |
$ |
394 |
$ |
324 |
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($ in millions) |
Earnings Before Interest & Taxes (EBIT) |
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Second Quarter |
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Six Months |
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Agricultural Productivity |
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2012 |
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2011 |
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2012 |
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2011 |
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EBIT (For a reconciliation of EBIT, see note 1.) |
$ |
82 |
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$ |
62 |
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$ |
164 |
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$ |
127 |
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Unusual Items Affecting EBIT: |
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Restructuring |
$ |
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$ |
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$ |
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$ |
4 |
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EBIT from Discontinued Operations |
$ |
11 |
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$ |
4 |
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$ |
11 |
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$ |
4 |
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Nitro Claims Settlement |
$ |
(44) |
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$ |
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$ |
(44) |
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$ |
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The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products.
Sales in the second quarter for Monsanto's Agricultural Productivity segment increased $114 million over the same period last year due to strong volume and mix benefit.
Webcast Information
In conjunction with this announcement, Monsanto will hold a conference call at 8:30 a.m. central time (9:30 a.m. eastern time) today. The call will focus on these results and future expectations and may include a discussion of Monsanto's strategic initiatives, product performance and other matters related to the company's business.
Presentation slides and a simultaneous audio webcast of the conference call may be accessed by visiting the company's web site at www.monsanto.com and clicking on "Investor Information." Visitors may need to download Windows Media Player" prior to listening to the webcast. Following the live broadcast, a replay of the webcast will be available on the Monsanto Web site for three weeks.