Global agribusiness group Monsanto Co. posted higher-than-expected quarterly profit on Wednesday as net revenue grew 17 percent on gains in sales of seeds and genetic traits and surprising strength in herbicides.
Shares rose nearly 3 percent in early trading after the company said sales of corn seed and genetic traits jumped 35 percent in the third quarter, ended May 31, while soybean sales rose 15 percent to $698 million. Net revenue totaled $4.2 billion.
Monsanto posted quarterly earnings of $1.63 a share on an ongoing basis that excludes one-time items, better than the $1.60 expected by analysts, and up from $1.28 a year earlier.
Monsanto, the world's largest seed company and a developer of genetically engineered corn, soybeans, and other crops, benefited from an increase in U.S. planted corn acres this spring, as farmers rushed to respond to strong global demand.
U.S. farmers planted an estimated 96 million acres of corn this spring, the most in 75 years, according to the U.S. Department of Agriculture.
Long term, the increasing global population spells an opportunity for rapid growth in Monsanto's agricultural seeds and traits business, said Monsanto Chief Executive Hugh Grant.
The company's efforts to develop seeds that perform better under adverse conditions and its work with herbicide-tolerant and insect-resistant crops position it well as demand grows for food, livestock feed and ethanol, he said.
"The global drivers of agricultural growth are real and they are ongoing," said Grant. "That creates a lot of opportunity for a long, long time."
Grant said two of the company's key new products were planted on the high end or above projected acres this year -- some 25 million acres for its Genuity reduced-refuge corn, up from the high end of 24 million acres initially projected, and about 30 million acres for its Roundup Ready 2 Yield soybeans, up from 17 million acres in 2011.
Some of its "most pronounced growth" is being seen in the corn market in Latin America, said Grant. Earlier this month, the company said it was investing $334 million in a corn seed development plant in Argentina, which is the second-largest corn exporter after the United States.
The company earned $1.74 per share on a net basis, versus $1.28 a year earlier. Net income totaled $937 million for the quarter, up 35 percent.
Monsanto reaffirmed its full-year ongoing EPS forecast to a range of $3.65 to $3.70 per share.
It forecast full-year 2012 EPS on a net basis from $3.73 to $3.78. The company said 2013 should see mid-teens earnings growth over that base.
Chemical sales came in better than expected, Monsanto said, increasing by $130 million over the same period last year on higher-than-expected sales in its Roundup, lawn-and-garden and selective herbicides businesses.