Monsanto Reports FY4Q09 Results
[MON’s fiscal year ends on Aug 31. Most of MON’s earnings come in the second and third fiscal quarters when sales in the seeds & genomics business peak; the fiscal fourth quarter typically produces a small loss.
Inasmuch as MON preannounced a tight range for FY2009 EPS and had previously given EPS guidance for FY2010, there is little new news in this PR. A detailed report of trait acreage can be found at: http://www.monsanto.com/monsanto/layout/investor/company/crop.asp .]
http://finance.yahoo.com/news/Monsanto-Delivers-Earnings-prnews-2292847677.html?x=0&.v=1
›Farmers benefit from unprecedented seed technology pipeline
8:00 am EDT, Wednesday October 7, 2009
ST. LOUIS, Oct. 7, 2009 /PRNewswire-FirstCall/ --
Fourth Fourth Fiscal Fiscal
($in millions, except Quarter Quarter Year Year
per share amounts) 2009 2008 2009 2008
Net Sales by Segment
Corn seed and traits $387 $353 $4,113 $3,542
Soybean seed and traits 81 110 1,448 1,174
Cotton seed and traits 53 89 466 450
Vegetable seeds 236 223 808 744
All other crops seeds and
traits 151 166 462 459
--- --- --- ---
TOTAL Seeds and Genomics $908 $941 $7,297 $6,369
Roundup and other glyphosate-
based herbicides $778 $936 $3,527 $4,094
All other agricultural
productivity products 193 174 900 902
--- --- --- ---
TOTAL Agricultural
Productivity $971 $1,110 $4,427 $4,996
TOTAL Net Sales $1,879 $2,051 $11,724 $11,365
--------------- ------ ------ ------- -------
Gross Profit $857 $960 $6,762 $6,177
------------ ---- ---- ------ ------
Operating Expenses $1,109 $1,186 $3,659 $3,456
------------------ ------ ------ ------ ------
Interest Expense (Income), Net $34 $(14) $58 $(22)
Other Expense (Income), Net $16 $7 $78 $(183)
Net (Loss) Income $(233) $(172) $2,109 $2,024
----------------- ------ ---- ------ ------
Diluted (Loss) Earnings Per
Share (See note 1.) $(0.43) $(0.31) $3.80 $3.62
--------------------------- ------ ------ ----- -----
Items Affecting Comparability
- EPS Impact
Income on Discontinued
Operations -- $(0.01) $(0.02) $(0.04)
Acquired In-Process R&D -- $0.29 $0.19 $0.29
Solutia Claim Settlement -- -- -- $(0.23)
Sunflower Divestiture $(0.08) -- $(0.08) --
Restructuring(1) $0.53 -- $0.52 --
--------------- ---- ----
Diluted (Loss) Earnings per
Share from Ongoing Business
(For the definition of
ongoing EPS, see note 1.) $0.02 $(0.03) $4.41 $3.64
---------------------------- ---- ------ ----- -----
Effective Tax Rate
(Continuing Operations) 26% 21% 28% 31%
------------------------ --- --- --- ---
(1) FY09 Restructuring Charges consist of $361 million in SG&A and $45
million in cost of goods sold.
Fourth Fourth Fiscal Fiscal
Comparison as a Percent Quarter Quarter Year Year
of Net Sales: 2009 2008 2009 2008
Gross profit 46% 47% 58% 54%
Selling, general and
administrative expenses (SG&A) 25% 35% 17% 20%
Research and development expenses
(excluding acquired in-process
R&D) 15% 15% 9% 9%
(Loss) Income before income taxes
and minority interest (16)% (11)% 25% 26%
Net (Loss) Income (12)% (8)% 18% 18%
----------------- ---- --- --- ---
Comment from Monsanto Chairman, President and Chief Executive Officer Hugh Grant:
"Monsanto has now entered the next decade of global growth. Over the last 10 years, we emerged as the industry leader in the agricultural space based on a grower-oriented strategy of successfully introducing innovative solutions to increase yield for farmers across corn, soybean and cotton crops. The coming decade holds even greater promise as we commercialize the strongest pipeline of products ever seen on farm. Our success rests with four core beliefs: that our success is forever linked to the farmer's success; that our commitments are only as good as our ability to deliver new value on farm; that growth has to be funded, but prudently; and that the value we create must be shared with our customers and our owners."
Comment from Monsanto Chief Financial Officer Carl Casale:
"What has served us well through our first decade as a standalone company informs the second decade. We exist to serve the customer, and every financial choice we make should drive grower profitability. We must then execute to deliver consistent earnings growth as a commitment, not an aspiration. Growth comes with a price tag, but spending must be disciplined and the last dollar spent needs to bring as much value as the first."
Operations Update
Monsanto reported net sales of $1.9 billion for the fourth quarter of fiscal year 2009, a slight decrease over the same period of fiscal year 2008 due in large part to a sales decrease for Monsanto's Roundup® and other glyphosate-based herbicides as a result of pricing competition and a global glyphosate supply and demand imbalance. Positive drivers for the quarter included higher sales of corn seeds and traits as well as sales of vegetable seeds.
For the full year, company net sales and gross profit were up 3 percent and 9 percent respectively. Monsanto saw record net sales of $11.7 billion in the company's fiscal year 2009, driven by higher worldwide corn seed and traits revenue, increased soybean seed and traits revenue in the United States, and higher cotton seed and traits revenue driven by higher trait penetration in India and increased acres in Australia. Increased revenue from the company's vegetable seed portfolio also contributed to results in the year. Overall, seeds and traits profit made up more than 65 percent of total company gross profit, growing at a 17 percent rate over fiscal year 2008, and helped offset lower sales of Roundup and other glyphosate-based herbicides.
Monsanto reported a net loss of $233 million in the fourth quarter of fiscal year 2009, compared with a reported net loss of $172 million in the same period last year. For fiscal year 2009, Monsanto reported net income of $2.1 billion, which was a slight increase over last year's net income of $2 billion.
Monsanto delivered on its commitment to grow ongoing earnings per share (EPS), reporting a year-over-year increase of 21 percent to $4.41 (5 percent or $3.80 on an as-reported basis), driven by strong seeds and traits performance, the optimization of gross profit for Roundup and other glyphosate-based herbicides at $1.8 billion, and extraordinary cost reduction actions.
For the fourth quarter, the company reported a loss per share of $(0.43) on an as-reported basis, and income of $0.02 on an ongoing basis. As-reported EPS results for the fourth quarter and fiscal year 2009 reflect the effects of restructuring and the divestiture of the company's sunflower operations. Charges related to this restructuring are reflected in EBIT and include the costs of staff reductions, streamlining brands, office and facility consolidations and the realignment of resources of its global seeds and traits business. (For a reconciliation of ongoing EPS, see note 1.)
Cash Flow
For fiscal year 2009, net cash provided by operating activities was $2.2 billion, down $560 million from the prior year as a result of the net use of cash for changes in working capital. The primary drivers were lower accounts payable and other accrued liabilities and the timing of the high level of prepayments in Brazil in August 2008 instead of cash generated in the first quarter of fiscal year 2009.
Net cash required by investing activities was $726 million in fiscal year 2009, compared with net cash required of $2 billion for the same period last year. As a result, free cash flow was a source of $1.5 billion for fiscal year 2009, compared with a source of $772 million in fiscal year 2008. (For a reconciliation of free cash flow, see note 1.) Free cash flow in fiscal year 2009 included the investment of $411 million on acquisitions and investments and a reinvestment of an additional $916 million in capital expenditures. Net cash required by financing activities was more than $1 billion for fiscal year 2009, compared with net cash required of $102 million last year.
Outlook
Monsanto affirmed its full-year ongoing [i.e. non-GAAP] 2010 EPS guidance is in the range of $3.10 to $3.30. Monsanto's full-year 2010 EPS guidance on an as-reported [i.e. GAAP] basis is in the range of $2.85 to $3.11. (For a reconciliation of 2010 EPS, see note 1.)
Seeds and traits, which is targeted to account for 85 percent of Monsanto's business in 2012, is expected to cross the $5 billion gross profit mark for the first time in 2010 by creating new value for growers and increasing their profitability on farm.
The strength of the triple stack platform for corn, the launch of Genuity™ SmartStax™ in the United States and trait penetration in South America will be the key enablers for growth in 2010, when gross profit for corn is expected in the range of $3.1 billion to $3.2 billion. For soybeans, gross profit is expected to increase to approximately $950 million, driven in part by the full commercial launch of Genuity™ Roundup Ready 2 Yield® and greater penetration of first-generation Roundup Ready in Brazil.
Cotton, which experienced a better than expected gross profit result in 2009, is expected to increase to approximately $375 million gross profit in 2010 with the launch of new varieties and penetration of second-generation Bollgard® in India. Vegetable gross profit is expected to increase to about $525 million.
The company also confirmed guidance for free cash flow for fiscal year 2010 will be in the range of $900 million to $1 billion, including the after-tax cash effect from the restructuring of approximately $250 million. The company expects net cash provided by operating activities to be $2 billion to $2.2 billion, and net cash required by investing activities to be approximately $1.1 billion to $1.2 billion for fiscal year 2010. (For a reconciliation of free cash flow, see note 1.)
Seeds and Genomics Segment Detail
($in millions) Net Sales Gross Profit
Fourth Fourth Fiscal Fiscal Fourth Fourth Fiscal Fiscal
Seeds and Quarter Quarter Year Year Quarter Quarter Year Year
Genomics 2009 2008 2009 2008 2009 2008 2009 2008
Corn seed and
traits $387 $353 $4,113 $3,542 $161 $151 $2,606 $2,174
------------- ---- ---- ------ ------ ---- ---- ------ ------
Soybean seed and
traits 81 110 1,448 1,174 15 76 871 725
---------------- --- --- ----- ----- --- --- --- ---
Cotton seed and
traits 53 89 466 450 48 61 344 313
--------------- --- --- --- --- --- --- --- ---
Vegetable seeds 236 223 808 744 108 124 416 394
--------------- --- --- --- --- --- --- --- ---
All other crops
seeds and traits 151 166 462 459 90 97 267 251
----------------- --- --- --- --- --- --- --- ---
TOTAL Seeds and
Genomics $908 $941 $7,297 $6,369 $422 $509 $4,504 $3,857
--------------- ---- ---- ------ ------ ---- ---- ------ ------
($in millions) Earnings Before Interest & Taxes (EBIT)
Seeds and Fourth Fourth Fiscal Fiscal
Genomics Quarter Quarter Year Year
-------- 2009 2008 2009 2008
---- ---- ---- ----
EBIT (For a
reconciliation of EBIT,
see note 1.) $(426) $(443) $1,655 $1,200
------------------------ ----- ----- ------ ------
Unusual Items Affecting
EBIT
-----------------------
Acquired In-Process R&D(2) None $(161) $(162) $(161)
------------------------- ---- ----- ----- -----
Divestiture of sunflower $59 None $59 None
------------------------ --- ---- --- ----
Restructuring $(292) None $(292) None
------------- ----- ---- ----- ----
(2) Acquisition of Aly Participacoes Ltda. in fiscal year 2009 and De
Ruiter Seeds Group, B.V. in fiscal year 2008.
The Seeds and Genomics segment consists of the company's global seeds and related traits business, and genetic technology platforms.
Sales for Monsanto's Seeds and Genomics segment were $908 million for the fourth quarter of fiscal year 2009, or 4 percent lower than sales in the same period last year.
During the fourth quarter of fiscal year 2009, the company realized a 10 percent increase in sales from its corn seed and traits business. Results in the quarter also benefited from improved sales of vegetable seeds. The company's results were partially offset by declines in fourth-quarter sales from Monsanto's cotton and soybean seed and traits business partially driven by higher than expected soybean returns.
Monsanto realized record segment sales of $7.3 billion for fiscal year 2009, which were 15 percent higher compared with sales last fiscal year. The key driver for growth in the fiscal year was higher global corn seed and traits revenue, which increased 16 percent compared with the same period last year.
The company's performance in the year also benefited from improved soybean seed and traits revenue, as 16,000 farmers in the United States planted Genuity™ Roundup Ready 2 Yield® soybeans for the first time. Results in the year also benefited from improved sales of vegetables and cotton.
Agricultural Productivity Segment Detail
($in millions) Net Sales Gross Profit
Fourth Fourth Fiscal Fiscal Fourth Fourth Fiscal Fiscal
Agricultural Quarter Quarter Year Year Quarter Quarter Year Year
Productivity 2009 2008 2009 2008 2009 2008 2009 2008
Roundup and
other glyphosate-
based
herbicides $778 $936 $3,527 $4,094 $322 $417 $1,836 $1,976
------------- ---- ---- ------ ------ ---- ---- ------ ------
All other
agricultural
productivity 193 174 900 902 113 34 422 344
products --- --- --- --- --- --- --- ---
TOTAL
Agricultural
Productivity $971 $1,110 $4,427 $4,996 $435 $451 $2,258 $2,320
-------------- ---- ------ ------ ------ ---- ---- ------ ------
($in millions) Earnings Before Interest & Taxes (EBIT)
Agricultural Fourth Fourth Fiscal Fiscal
Productivity Quarter Quarter Year Year
-------- 2009 2008 2009 2008
---- ---- ---- ----
EBIT (For a
reconciliation of EBIT,
see note 1.) $142 $205 $1,352 $1,691
------------------------ ---- ---- ------ ------
Unusual Items Affecting
EBIT
-----------------------
Income on Discontinued
Operations None 8 $19 22
---------------------- ---- --- --- ---
Solutia Claim Settlement None None None $210
------------------------ ---- ---- ---- ----
Restructuring $(114) None $(114) None
------------- ----- ---- ----- ----
The Agricultural Productivity segment consists of crop protection products, and the lawn-and-garden herbicide business.
Sales for Monsanto's Agricultural Productivity segment were $971 million for the fourth quarter of fiscal year 2009, or 13 percent lower compared with sales in the same period last year. Sales for the segment were $4.4 billion for fiscal year 2009, or 11 percent lower compared with sales in the same period last year. Results in the quarter and fiscal year reflect the supply and demand imbalance in the global glyphosate industry.
Webcast Information
In conjunction with this announcement, Monsanto will hold a conference call at 8:30 a.m. central time (9:30 a.m. eastern time) today. The call will focus on these results and future expectations. The call may also include a discussion of Monsanto's strategic initiatives, product performance and other matters related to the company's business.
Presentation slides and a simultaneous audio webcast of the conference call may be accessed by visiting the company's web site at www.monsanto.com/investor/. Visitors may need to download Windows Media Player™ prior to listening to the webcast. Following the live broadcast, a replay of the webcast will be available on the Monsanto web site for three weeks.
About Monsanto Company
Monsanto Company (NYSE: MON - News) is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. Monsanto remains focused on enabling both small-holder and large-scale farmers to produce more from their land while conserving more of our world's natural resources such as water and energy. To learn more about our business and our commitments, please visit: http://www.monsanto.com/.‹
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