KANSAS CITY, Mo. (Reuters) – Leading chemical and biotech seed developer Monsanto Co. reported a higher fourth-quarter loss Oct. 7, though results slightly beat Wall Street estimates, as a downturn in its herbicide business and restructuring moves ate into revenues.
The company warned last month that results would be hard hit by a slide in its Roundup herbicide business tied to tough competition from China, and a global glut of glyphosate, the key ingredient in Roundup.
Analysts said the Roundup downturn was well known and the results held no surprises.
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“While the super spike they saw in Roundup was nice while it lasted, it is going to make for some nasty comparisons going forward,” said Morningstar analyst Ben Johnson. “The seeds business is really the long-term growth driver as a whole.”
Monsanto reported a net loss of $233 million US for the fourth quarter, compared with a loss of $172 million in the same period last year. Sales dropped to $1.88 billion from $2.05 billion.
The company reported a loss per share of 43 cents on an as-reported basis, compared to a loss of 31 cents per share a year ago. On an ongoing basis, the company reported earnings per share of two cents, compared to a loss of three cents per share a year earlier.
The results slightly beat estimates as analysts were looking for quarterly earnings on an ongoing basis of one cent a share, according to Thomson Reuters market reports.
Monsanto shares rose initially Oct. 7 but ended the day down at $74.33.
Monsanto has been shifting its focus away from the herbicide business, which is suffering from growing competition and price pressure, to its profitable seeds and traits business.
Roundup gross profit dropped seven percent for the year while gross profit for corn seeds and traits and soybean seed and traits grew 20 percent.
Company officials said net sales for the year hit a record $11.7 billion because of growth in global corn seed and genetic traits revenue, as well as increased soybean seed and traits revenue in the United States.
The company also said it was seeing revenue growth in its cotton seed and traits business in India and Australia.
Profits from seeds and genetic traits rose 17 percent from 2008. The segment made up more than 65 percent of total company gross profit in 2009.
Monsanto also said during the quarter it made “extraordinary” cost reduction actions. Restructuring charges totalled $290 million, or 52 cents per share, in the fourth quarter as the company closed inefficient facilities, pared certain seed lines and made other cost-cutting moves.
The company affirmed its full-year ongoing 2010 earnings guidance in the range of $3.10 to $3.30. Monsanto’s full-year 2010 EPS guidance on an as-reported basis ranges from $2.85 to $3.11.
