Monsanto (MON) posted an EPS (excluding restructuring expense) of ($0.22) in the fourth quarter of fiscal 2011, better than the Zacks Consensus Estimate of a loss of ($0.27).
The company generated revenues of $2,247 million, down 37.4% sequentially but up 15.0% year over year and exceeded the Zacks Consensus Estimate of $2,034 million.
On a segmental basis, revenues from the Seeds and Genomics segment grew 39.0% year over year to $1,351 million. The growth in this segment was led by strong contribution from Latin America and gross profit increases in each of the company’s core crops — corn, cotton and soybeans as well as vegetables on a global basis.
Agricultural Productivity segment’s revenues came in at $896 million, in line with management’s expectations.
During the quarter, gross margin was 43.2%, slightly down from 44.0% in the year-ago quarter.
Selling, general and administrative expenses were up 14.7% year over year to $647 million. Research & Development (R&D) grew 13.1% year over year to $404 million.
For fiscal 2011, the company posted revenues of $11,822 million, up 12.5% year over year and exceeded the Zacks Consensus Estimate of $11,559 million. Sales for the Seeds and Genomics segment grew 13% year over year to $8,582 million driven by strong global growth in corn and cotton. The growth in this segment was sriven by strength in Latin America.
EPS for fiscal 2011 came in at $2.96 compared to $2.41 in fiscal 2010 and was better than the Zacks Consensus Estimate of $2.87.
During fiscal 2011, Monsanto generated a free cash flow of $1,839 million.
Outlook
Management noted that that the company gained improvement in its core U.S. business on the strength of new corn and soybean products and thereby seems to have captured global growth opportunities, most notably in Latin America. This in turn, should bode well for future growth.
The Seeds and Genomics segment will continue to be the growth engine for the company in fiscal 2012 and is expected to post single digit percentage unit volume growth and continued mix improvement in business.
Monsanto anticipates gross profit between $5.7 billion and $5.85 billion for this segment driven by volume growth and complemented by mix from both germplasm and trait upgrades on a global basis. Gross profit for the Agricultural Productivity segment is estimated to be approximately $800 million.
Selling, general and administrative expenses are expected between $2.25 billion and $2.35 billion primarily due to inflationary level increases.
Monsanto expects research and development spend around $1.4 billion to $1.45 billion.
Monsanto projects EPS between $3.34 and $3.44 for fiscal 2012. As the business continues to ascend, the company expects 2012 as the first year of some structural changes to its historical earnings pattern. For the first quarter of fiscal 2012, the company expects to see more contribution from the growth in Brazil and Argentina and estimates EPS between $0.10 and $0.15 on an ongoing basis.
The company expects free cash flows in the range of $1.3 billion to $1.5 billion in fiscal 2012.
Monsanto Company is a leading global provider of agricultural products for farmers, operating in Seeds and Genomics and Agricultural Productivity segments. Monsanto’s biotechnology research and innovations position it as a market leader above its peers, such as Syngenta AG (SYT), The Scotts Miracle-Gro Co (SMG), The Dow Chemical Company (DOW), BASF SE.
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