Commodities & Metals
Monsanto Earnings Soft in Tough Ag Market
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Monsanto Co. (NYSE: MON) reported fiscal third quarter 2016 results before markets opened Wednesday morning. The fertilizer and seed maker reported adjusted diluted earnings per share (EPS) of $2.17 on revenues of $4.19 billion. In the same period a year ago, Monsanto reported EPS of $2.51 on revenue of $4.58 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $2.40 and $4.49 billion in revenue.
On a GAAP basis Monsanto posted EPS of $1.63 compared with year-ago earnings of $2.39 per share. Tax matters related to the company’s business in Argentina cost Monsanto $0.50 a share in GAAP earnings.
For fiscal year 2016 Monsanto is forecasting adjusted EPS at the low end of its estimated $4.40 to $5.10 range. The company said the forecast “incorporates the anticipated continuation of several global and industry headwinds, including approximately $0.85 expected related to currency.”
The current consensus estimate for the fourth fiscal quarter calls for a net loss per share of $0.07 compared with a net loss of $0.19 per share a year ago. Analysts are looking for fourth-quarter revenues of $2.39 billion, up about 1% compared with revenues in the fourth quarter of fiscal 2015. The consensus estimate for 2016 full-year adjusted EPS is $4.61 and revenues are estimated at $13.69 billion.
Regarding the proposed acquisition by Bayer AG, CEO Hugh Grant said:
While there is no formal update on the Bayer proposal, I have been personally in discussions with Bayer’s management over the last several weeks, along with others regarding alternative strategic options. We continue to recognize the potential value these types of combinations can create as they accelerate innovation and increase choice for farmers across a broader set of crops, geographies and production practices, while improving the sustainability of agriculture around the world. That is why we remain open and will continue to actively engage in constructive dialogue to pursue value enhancing strategic options.
Grant also commented on Monsanto’s performance and prospects:
Our industry is running at a low point in the overall agriculture cycle and we’ve experienced an unforeseen level of challenges affecting our business in fiscal year 2016. Today, however, we anticipate positive resolution on the horizon for several of these challenges, coupled with early signs of recovery in agriculture. With the strategic changes we’ve made to our business, we’re well positioned to further strengthen our leadership role in the agricultural space through financial discipline and steadfast commitment to serving growers with new innovation.
Monsanto’s shares traded up about 0.1% in premarket trading Wednesday morning, at $101.20, in a 52-week range of $81.22 to $114.26. Thomson Reuters had a consensus analyst price target of $107.00 before the earnings report.
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