Monsanto Profit Trails Estimates Amid Weak Global Farm Markets
(Bloomberg) -- Monsanto Co., the world's largest seed company, posted worse-than-expected fiscal third quarter earnings amid continued pressure from weak global agricultural markets.
Net income was $717 million, or $1.63 a share, in the three months ended May 31, compared with $1.14 billion, or $2.39, a year earlier, St. Louis-based Monsanto said in a statement Wednesday. Profit excluding one-time items was $2.17 a share. That's lower than the $2.42 average of 17 analysts' estimates compiled by Bloomberg. Sales fell to $4.19 billion from $4.58 billion a year earlier, trailing the $4.49 billion average estimate.
The worse-than-expected results undercut the company's argument that Bayer AG's proposed $53.7 billion bid is less than adequate. Monsanto has been facing aggressive cutting of seed prices by competitors and falling prices for the herbicide glyphosate amid overproduction by Chinese generic producers.
“As to seed pricing, there's been mixed signals about how this year has been unfolding, and glyphosate pricing is likely to continue to be weak,” Matt Arnold, a St. Louis-based analyst at Edward Jones & Co., said before the earnings were released.
Bayer made an offer in May to acquire Monsanto for a $122-a-share, all-cash offer, which the company rejected as too low. Discussions between Bayer and Monsanto are at an impasse at the moment, with the German company seeking to do due diligence on Monsanto's book, while Monsanto is holding out for a higher bid first, people familiar with the matter said earlier this month.
The bid adds to the wave of consolidation in the agricultural chemicals sector. Aside from Bayer's bid for Monsanto, China National Chemical Corp. said in February that it reached a deal to buy Syngenta AG, and Dow Chemical Co. and DuPont Co. announced in December they would merge before breaking into three separate entities.
To contact the reporter on this story: Lydia Mulvany in Chicago at lmulvany2@bloomberg.net. To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Millie Munshi, Robin Saponar
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