Monsanto Company (MON) announced weak results for the fourth quarter and fiscal 2010.
Quarter
During the quarter, net loss was $143 million from a loss of $233 million in the corresponding quarter of 2009. Loss per share (excluding a restructuring expense) was 9 cents compared with an EPS (Earnings per share) of 2 cents in the year-ago quarter. It reported below the Zacks Consensus Estimate of a loss of 6 cents per share, but was at the lower end of the company’s guidance of $(0.09)-$0.11. The decrease was due to a fall in gross margin and simultaneously an increase in costs and expenses.
Revenues inched up 3.9% to $1,953 million from $1,879 million during the same period in the previous year. The growth in revenues was attributable to the 6.8% increase in revenues from Seeds and Genomics segment, which contributes approximately 50% of total revenues.
Seeds and Genomics’ revenue growth is driven by an increase in trait revenues for the company’s core crops, trait penetration in Latin America and the increase in cotton acres in the United States.
Roundup and other glyphosate-based herbicides revenues rose 1.0% to $786 million from $778 million in the fourth quarter of fiscal 2009. Revenues from all other agricultural products grew 2.1% year over year to $197 million.
Gross margin decreased from 44.1% to 45.6% in the reported quarter. Selling, general and administrative expenses (SG&A) and Research & Development (R&D) expenses based on revenues increased by 400 basis points and 300 basis points, respectively.
Annual
During the year, net income decreased to $1,109 million from $2,109 million in fiscal 2009. EPS (excluding a restructuring expense) almost halved to $2.41 from $4.41 in 2009. However, it was well within the company’s guidance of $2.40-$2.60.
Revenues declined 10.4% to $10,502 million from $11,724 million in the previous year and gross margin decreased by 930 basis points. SG&A and R&D expenses based on revenues topped by 300 basis points and 200 basis points, respectively.
At the end of the fiscal year, net cash by operating activities was $1.4 billion, a decrease from $2.2 billion the previous year. Free cash flow was negative $564 million from negative $1.5 billion at the end of fiscal 2009. One reason for the decrease was the huge fall in net income.
Outlook
For fiscal 2011, management expects EPS in the range of $2.72-$2.82 and anticipates free cash flows in the range of $800-$900 million. Based on the weak results, the stock currently retains its short term “Strong Sell” rating equivalent to a Zacks #5 Rank.
MONSANTO CO-NEW (MON): Free Stock Analysis Report
Zacks Investment Research
