April 6 (Reuters) – Monsanto Co, the world’s largest seed company, reported lower-than-expected quarterly profit and revenue, as it steeply discounted its seeds to cater to farmers who are cutting spending, sending its shares down about two percent in premarket trading.
Farmers in the U.S. have been spending less on everything from fertilizers to seeds as the prices of grains hover near five-year lows and incomes have fallen to their lowest since 2002.
This has forced companies including Monsanto and DuPont Pioneer to offer the steepest discounts in at least six years.
Monsanto has also been under pressure to look at acquisitions as the global seed and crop protection market continues to suffer from high inventories and low prices for agricultural commodities.
Monsanto had approached Bayer AG and expressed interest in its crop science unit, including a potential acquisition worth more than $30 billion, Reuters reported in March, citing sources.
Switzerland’s Syngenta AG, which rejected Monsanto’s takeover approaches last year, agreed in February to be acquired by ChemChina for $43 billion.
Monsanto raised its 2016 earning per share guidance on Wednesday to $3.72-$4.48 from $3.42-$4.29, primarily due to a change in timing for accounting restructuring expense. It reiterated its ongoing earning per share guidance of $4.40-$5.10.
Net income attributable to the company fell to $1.06 billion, or $2.41 per share, in the second quarter ended Feb. 29, from $1.43 billion, or $2.92 per share, a year earlier. Earnings on an ongoing basis were $2.42 per share.
Total net sales of the company, which is known for its genetically engineered corn, soybeans and the Roundup herbicide, fell 12.8 percent $4.53 billion.
Analysts on average had expected a profit of $2.44 on revenue of $4.76 billion, according to Thomson Reuters I/B/E/S.
Up to Tuesday’s close, Monsanto’s shares have fallen more than 25 percent in the last one year.
