Monsanto Co. (NYSE: MON): Q4 Earnings Preview 2010

Monsanto Co. (NYSE: MON), the world's biggest seed company, is scheduled to release fiscal fourth quarter earnings before the opening bell on Wednesday, October 6, 2010. Analysts, on average, expect the company to report a loss of 5 cents per share on revenue of $1.79 billion. In Q12009, the company reported earnings of $0.02 per share on revenue of $1.88 billion.

Monsanto Company along with its subsidiaries, is a worldwide provider of agricultural products for farmers. The Company’s seeds, biotechnology trait products, and herbicides provide farmers with solutions to produce foods for consumers and feed for animals.  It operates in two segments, Seeds and Genomics, and Agricultural Productivity.

In the preceding fiscal third quarter, the St. Louis, Missouri-based company's net income was $384 million or $0.70 cents a share, compared to $694 million or $1.25 a share in the prior-year quarter. On an adjusted basis, the company earned $0.81 cents a share in the latest quarter. Revenue declined to $2.96 billion from $3.16 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 80 cents per share on revenue of $3.17 billion.

Late in August, the company said it expects ongoing earnings per share for the fiscal year in the range of $2.40 to $2.45, at the low end of its previous guidance of $2.40 to $2.60 range. The company said that this expectation reflects strong quarterly seed and trait sales in Latin America and other international markets, solid fourth-quarter performance of Monsanto's crop-protection business, and the realization of discrete tax benefits. The company still expects free cash flow in the range of $400 million to $500 million for the fiscal year.

Monsanto is creating a separate division for its struggling herbicide business to help stabilize and "better align spending and working capital needs" around the unit, which has been hurt by  generic competition and price pressure. The company now anticipates a steady-state gross profit contribution of $250 million to $300 million from the Roundup and other glyphosate-based herbicide business.

Monsanto recently announced that it is extending its restructuring program to cover an estimated $180 million pre-tax costs to streamline the Roundup business. The restructuring will result in $180 million of pretax costs for severance and related benefits, facility closures and asset impairments.

The company expects to record $150 million restructuring charge related to its Roundup herbicide business in the fourth quarter of fiscal year 2010. The restructuring charge will affect as-reported EPS by approximately 22 cents and will be primarily reflected in fiscal year 2010 with the remaining charge in fiscal year 2011.

Monsanto is now trying to spur growth by focusing on its seeds-and-traits business, positioning it for mid-teens earnings growth going forward. However, the company is also facing stiff competition in biotech seed market as its chief rival DuPont (NYSE:DD) is fast grabbing market share by offering products with fewer traits and at better prices. In August, Monsanto announced that it will cut prices for for its most expensive crop seeds next year by as much as 75 percent after it failed to gain market share in the US corn and soybean markets for the second year in a row.

Among other developments, the company raised its quarterly dividend to $0.28 per share from $0.265 per share. The dividend is payable on Oct. 29, 2010 to shareowners of record on Oct. 8, 2010.

Full Disclosure: None.

Monsanto Co. (NYSE: MON): Q2 Earnings Preview 2010

Monsanto Co. (NYSE: MON), the world's biggest seed company, is scheduled to release financial results for the fiscal second quarter 2010 before the opening bell on Wednesday, April 7, 2010. Analysts, on average, expect the company to report earnings of $1.78 per share on revenue of $3.94 billion. In the year ago quarter, the company posted earnings of $2.16 per share on revenue of $4.04 billion.

Monsanto Company provides agricultural products for farmers in the United States and internationally. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. Monsanto has been named "2009 Company of the Year" by Forbes Magazine. In its fiscal 2009 Monsanto sold $7.3 billion of seeds and seed genes, versus $4 billion for second-place DuPont ( NYSE: DD) and its Pioneer Hi-Bred unit. Monsanto netted $2.1 billion on revenue of $11.7 billion for fiscal 2009 (ended Aug. 31). Its sales have increased at an annualized 18% clip over five years; its annualized return on capital in the period has been 12%. The company operates in two segments - Seeds and Genomic.

In the preceding fiscal second quarter, the St. Louis, Missouri-based Monsanto reported that its first-quarter net loss attributable to Company was $19 million, compared to net income of $556 million in the same quarter last year. On a per share basis, net loss was $0.03, compared to net income of $1.00 in the year-ago quarter. Quarterly revenue dropped 36% to $1.697 billion from $2.649 billion in the prior-year quarter. Analysts, on average, expected the company to report breakeven per share on revenue of $1.98 billion.

Last month, the agricultural products giant affirmed its earnings outlook for fiscal 2010. Monsanto continues to expect full-year 2010 earnings per share on reported basis in the range of $2.85 to $3.11. This outlook includes restructuring charges of $0.19 per share to $0.25 per share. Excluding this charge, Monsanto continues to expect fiscal 2010 ongoing earnings per share of $3.10 to $3.30.

According to company, it currently expects that about 50% of the full-year earnings guidance will be realized in the second quarter, reflecting potential timing shifts into the company's second half. This is related to the effect of the late 2009 harvest on soybean shipments, increasing contribution from international corn into the company's overall earnings mix and a return to historic seasonality in the earnings of the Roundup and other agricultural herbicides business.

The company is launching two game-changing new products, resetting its Roundup herbicide business, and implementing a restructuring plan to solidify operational leverage to create the right platform for growth going forward. Speaking at a conference, CFO Carl Casale said "If we achieve these three things, then this year will be a success in providing firm footing for our path to 2012. We're not playing for 2010 alone, but we recognize that the work we do in 2010 sets up the opportunity through 2012."

According to Casale, the company knew 2010 would be the toughest year in its plan, but it is committed to establishing a successful platform for the remainder of the plan. "This year has seen two of the largest product launches in our history on top of a significant restructuring, and I remain confident that we will learn and adjust and build on the momentum over the next two years," Casale stated.

Looking beyond 2012, Monsanto estimates that its R&D pipeline can deliver more than $8 billion in gross sales at the farmgate through biotechnology and breeding in 2020, with upside opportunity through product and geographic expansions. Monsanto has said new soybean seeds, led by Roundup Ready 2, will add $425 million to gross profit by 2012, and new corn seeds, led by SmartStax, will add $2 billion to profit.SmartStax allows farmers to cut their pest refuge, the zone in fields planted with corn not genetically programmed to kill pests, from 20 percent to 5 percent. Chief Executive Officer Hugh Grant is counting on the two new varieties to help boost seed earnings to as much as $7.5 billion in 2012 from $4.5 billion in 2009.

However, Casale recently revealed that the Roundup Ready 2 Yield soybeans may fall 20 percent short of the bottom of the company’s forecast of 8 million to 10 million planted acres. SmartStax corn seed may miss the St. Louis-based company’s 4 million-acre target by a similar percentage. The shortfall will reduce earnings less than 5 cents a share this year and won’t hurt long-term goals, Casale said. Farmers are trying the new products in the numbers expected, only on fewer acres, he said.

The company is creating a separate division for its struggling herbicide business to help stabilize and "better align spending and working capital needs" around the unit, which has been hurt by increased competition and price pressure. Monsanto officials said future gross profits from the Roundup herbicide business would drop by half to about $1 billion annually by 2012 from $2 billion in 2009 as the company grapples with increased competition in the sector. Roundup, once the flagship of Monsanto's agricultural chemicals business, in the future should amount to less than 15 percent of the company's total gross profit.

The company's stock currently trades at a forward P/E (fye 31-Aug-11) of 16.15 and PEG Ratio (5 yr expected)of 1.48. In terms of stock performance, Monsanto are down over 12% over the past year.

Full Disclosure: None.

Monsanto Company Inc. (NYSE: MON): First Quarter Earnings Preview 2010

Monsanto Company Inc. (NYSE: MON), the world's biggest seed company, is scheduled to release financial results for the fiscal first quarter on Wednesday, January 6, 2010. Analysts, on average, expect the company to report breakeven per share on revenue of $1.98 billion. In the year ago quarter, the company reported earnings of 98 cents per share on revenue of $1.98 billion.

Monsanto Company provides agricultural products for farmers in the United States and internationally. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. Monsanto has been named "2009 Company of the Year" by Forbes Magazine. In its fiscal 2009 Monsanto sold $7.3 billion of seeds and seed genes, versus $4 billion for second-place DuPont ( NYSE: DD) and its Pioneer Hi-Bred unit. Monsanto netted $2.1 billion on revenue of $11.7 billion for fiscal 2009 (ended Aug. 31). Its sales have increased at an annualized 18% clip over five years; its annualized return on capital in the period has been 12%.

Early in October, the company reported that its fourth quarter net loss widened to $233 million, or $0.43 per share, from $172 million, or $0.31 per share, in the prior year quarter. Revenue dropped to $1.88 billion from $2.05 billion in the previous-year quarter. Analysts, on average, expected the company to report earnings of $0.01 per share on revenue of $1.97 billion.

In December, agricultural products giant reaffirmed its forecast of a "small ongoing loss" in the first quarter and reaffirmed its fiscal year 2010 ongoing earnings per share outlook range. The company said it continues to expect ongoing earnings per share for the first quarter in a range of a loss of $0.05 or less, and reported earnings in a range of loss of $0.07 per share or less. The St. Louis, Missouri-based company projects free cash flow for the first quarter of $1.8 billion, primarily reflecting the year-over-year decrease in the glyphosate business.

For fiscal year 2010, Monsanto reaffirmed its outlook for ongoing earnings per share range of $3.10-$3.30, and reported earnings outlook range of $2.85-$3.11 per share. Analysts expect the company to report earnings of $3.29 per share for the year. The company also reiterated its outlook for free cash flow for the full year in a range of $900 million-$1 billion, including the after-tax cash effect from a restructuring of about $250 million. The company continues to expect net cash provided by operating activities for the year between $2 billion and $2.2 billion, and net cash required by investing activities to be about $1.1 billion to $1.2 billion.

The company is quite confident about its ability to attain its financial targets in 2012. Monsanto is focusing on three key elements that it expects will enable it to double its 2007 gross profit in 2012. The key elements are the launches and rapid penetration of Genuity SmartStax corn and Genuity Roundup Ready 2 Yield soybean products as well as rapid trait penetration in Brazil and Argentina. It plans to lower costs by as much as $250 million annually, with about one-third of that range realized in 2010. The full benefit of the savings is expected to be realized beginning in fiscal year 2011.

According to Monsanto, seeds and traits, targeted to account for 85% of the company's business in 2012, is expected to cross the $5 billion gross profit mark for the first time in 2010 by creating new value for growers and increasing their profitability on farm. Gross profit for corn is projected to be in the range of $3.1 billion to $3.2 billion. For soybeans, gross profit is expected to increase to about $950 million, driven in part by the full commercial launch of Genuity Roundup Ready 2 Yield and greater penetration of first-generation Roundup Ready in Brazil. Cotton, which experienced a better than expected gross profit result in 2009, is forecast to increase to about $375 million gross profit in 2010 with the launch of new varieties and penetration of second-generation Bollgard in India. Vegetable gross profit is estimated to increase to about $525 million.

In November, Monsanto said that it intends to accelerate the launches of its Genuity SmartStax corn and Genuity Roundup Ready 2 Yield soybean products. The company expects to launch Genuity SmartStax with initial commercial opportunity of more than 4 million acres in 2010. Monsanto expects an unconstrained supply by 2012, so as to enable the company to meet market demand a year earlier than originally anticipated. Monsanto also expects a more rapid conversion to the Genuity Roundup Ready 2 Yield soybean platform. The company had recently increased the launch-year expectation of the soybean platform for 2010 to 8 million to 10 million acres.

Looking beyond 2012, Monsanto estimates that its R&D pipeline can deliver more than $8 billion in gross sales at the farmgate through biotechnology and breeding in 2020, with upside opportunity through product and geographic expansions.

The company is creating a separate division for its struggling herbicide business to help stabilize and "better align spending and working capital needs" around the unit, which has been hurt by increased competition and price pressure. Monsanto officials said future gross profits from the Roundup herbicide business would drop by half to about $1 billion annually by 2012 from $2 billion in 2009 as the company grapples with increased competition in the sector. Roundup, once flagship of Monsanto's agricultural chemicals business, in the future should amount to less than 15 percent of the company's total gross profit.

The agribusiness company declared a dividend of 26.5 cents per share during fiscal first quarter.

In terms of stock performance, Monsanto shares have gained nearly 11% over the past one year.

Full Disclosure: None