Dive Brief:
- In its latest earnings report, Monsanto Co. announced a 7.7% sales increase for the third quarter, boosted in part by sales in the agricultural productivity segment, which includes crop-protection products and herbicides, having increased to $1.39 billion from $1.21 billion in last year's third quarter.
- Other markets were up as well, including corn seed and traits sales' increase to $1.52 billion from $1.3 billion last year, and soybean seed and traits' sales increase to $835 million from $816 million last year.
- While also seeing boosts in profit ($1.14 billion, or $2.39 a share — beating analyst estimates — over last year's $858 million, or $1.62 a share) and revenue (jumped to about $4.58 billion, below expectations, from $4.25 billion last year), Monsanto reaffirmed its full-year guidance.
Dive Insight:
Monsanto's profit rise this past quarter was driven in part by its deal with Scotts Miracle-Gro Co., which expanded the ways in which Scotts can sell Roundup. However, Monsanto did not see the same profit success in the previous quarter. The company had reported a 15% drop in profit on lower corn-seed sales and a stronger dollar, which made Monsanto's seeds and herbicides less affordable for Latin American and other farmers. The Scotts deal turned a lot of these issues around this quarter, making up for decreasing herbicide prices, the strength of the dollar, and lower grain prices.
At the same time, Monsanto is also tightening its belt to ensure better profit margins. "Monsanto, which kept operating costs almost unchanged, said it plans to cut expenses by as much as 5 percent this fiscal year and by as much as $500 million by fiscal 2017," Bloomberg reported.
The latest Monsanto earnings report wouldn't be complete without mention of the potential Syngenta AG acquisition, which Syngenta has twice turned down without deterring Monsanto's attempts.
"Equipping farmers with the right set of innovations that will help solve tomorrow’s food challenges today requires more than a new company - it requires a new vision and approach," Monsanto chairman and CEO Hugh Grant said in a statement. "Our proposal to combine with Syngenta is an exciting logical next step for our business, offering the opportunity to accelerate innovation and support a more diverse group of farmers around the world."
If the deal with Syngenta never pans out, Monsanto is thinking through other options as well, having also considered approaching Bayer to potentially acquire its crop chemicals business.
"There are other options to pursue from a chemical standpoint, and we will go after those," Monsanto COO Brett Begemann said. "I don't know what Bayer is going to do with their crop-protection business, whether they'll sell it or not, but I'm sure they'd be happy to talk about some other kind of marketing arrangement."