October 7, 2010
Monsanto rally fades as earnings miss expectations
Monsanto risked getting further into investors'' bad books by unveiling wider-than-expected losses for its latest financial quarter and a target for 2011 which fell short of Wall Street forecasts.
The seeds and sprays giant also bowed to the concerns over its top-of-the-range genetically-modified (GM) corn seed, stating that the Genuity SmartStax line had "not demonstrated yield advantages" over a lower-range seed.
Investors'' fears over Genuity SmartStax were blamed for a 13% slide in the group''s share price last week.
However, Monsanto added that the seed had been planted mostly in northern US Corn Belt areas, where harvest is in its early stages, meaning there was "no projectable data" as yet.
The comments came as the group unveiled a loss of US$143 million for the June-to-August period, the last quarter of the company''s financial year, on revenues up 3.9% at US$1.95 billion.
While the loss, reflecting in the main spiking competition in the market for generalist glyphosate weedkillers, was narrower than the US$233 million a year before, on a per share basis, at US$0.06, it fell short of Wall Street hopes of a US$0.09-a-share loss.
Although Monsanto restated hopes of slight growth for the new financial year, led by its seeds division, its forecast of full year earnings of US$2.67-2.77 a share also fell short. Monsanto shares initially jumped 5% to US$51.26 in New York.
The group''s revival hopes for next year were based on expectations of a more than doubling to "mid-teens millions of acres" in areas of US soy planted to the key GM brand.
The target was the same for sowings of Monsanto''s cutting-edge corn products, which are to be boosted by a reworking of pricing structure, following widespread farmer complaints earlier this year over seed costs.
The group also said it saw "opportunity" in both Argentina and Brazil, big growers of both crops. Plantings of GM soy will account for an estimated 78% of Brazilian sowings in 2010-11, according to an USDA report earlier this week.