(Reuters) — Monsanto Co. reported a six percent drop in quarterly profit on Wednesday, but shares of the world’s largest seed company climbed more than five percent as it raised the low end of its fiscal-year outlook and said it planned to double earnings over the next five years.
The company also announced a $10 billion share repurchase authorization.
Monsanto, known for its development of genetically engineered corn, soybeans and other crops, as well as for the popular Roundup herbicide, said although earnings for the third quarter ended May 31 were down in the face of challenging market conditions, the overall outlook was bright.
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Chairman Hugh Grant said the company aimed by the end of fiscal 2019 to at least double full-year ongoing earnings, which exclude certain special after-tax items.
Monsanto said it had earned $858 million, or $1.62 a share, in the third quarter, down from $909 million, or $1.68 a share, a year earlier.
Analysts on average were expecting $1.56 a share, according to Thomson Reuters.
The company raised the low end of its full-year outlook for ongoing earnings to $5.10 a share from $5.00 while keeping the high end at $5.20.
Corn seed products, currently the company’s largest source of revenue, will remain a key growth driver at least through 2019, the company said. Corn contributed $1.3 billion this quarter to total net sales of $4.25 billion.
Monsanto said one of its most important areas of progress was with its new farm data business unit Climate Corp. The company has signed collaborations with a range of retail partners, and counts more than 40 million acres using its basic farm data tool and more than one million acres using a premium service.
The market penetration has been far greater than anticipated, and the company sees farm data as a multi-billion-dollar opportunity, said Monsanto President Brett Begemann.
“This is just a start,” said Begemann.
The company said a key priority is pursuing external growth opportunities, including technology investments and potential mergers and acquisitions.
Grant said the company was taking a “bolder approach” and would be using its capital structure more aggressively.
