Monsanto Announces Strong 3Q15 Performance



Better-than-expected results

Monsanto (MON) reported a better-than-expected profit for the third quarter of 2015. Its net sales for 3Q15 increased over 3Q14’s $4.6 billion. Its 3Q15 gross profit for the quarter also increased over 3Q14’s $2.7 billion. For the first nine months of 2015, Monsanto’s net sales were $12.6 billion and its gross profit was $7.2 billion. However, the company is aware of market challenges ahead and said it continues to pursue the acquisition of Swiss rival Syngenta AG.

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The company’s fiscal 2015 third-quarter earnings per share (EPS) were $2.39 on an ongoing and as-reported basis compared to EPS of $1.62 in the corresponding quarter last year. Monsanto’s EPS for the first nine months of fiscal 2015 were $5.75 on an ongoing basis and $5.80 on an as-reported basis, compared with EPS of $5.43 on an ongoing basis and $5.45 on an as-reported basis in the corresponding quarter last year.

Monsanto’s major competitors in the seeds and genomics space also include food processing and commodity trading firm Archer Daniels Midland Company (ADM) and multinational American giant Dow Chemical Company (DOW). Dow Chemical Company (DOW) recorded a positive year-to-date return of 1.80% while Archer Daniels and Monsanto recorded -10.44% and -13.80%, respectively. The SPDR S&P 500 ETF Trust (SPY) invests 0.16% of its holdings in ADM and the Consumer Staples Select Sector SPDR Fund (XLP) invests 1.80% in ADM.

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Strong expectations

Monsanto expects its third-quarter performance to drive growth and margin improvement. It has also initiated innovative solutions by committing to help farmers double their yields in every seed by 2030 and to protect that harvest.

Monsanto’s five-year growth strategy aims to deliver double the 2014 ongoing EPS by 2019 with the help of innovative techniques, a balanced portfolio, and financial discipline.

Challenges ahead

The company’s officials are expecting many challenges from the market ahead and a break-even result for the fourth quarter. They reaffirmed fiscal 2015 ongoing earnings per share guidance at the low end of the range of $5.75 to $6.00. As per Monsanto officials, the key challenges beyond the current year should be weakening foreign currencies and low commodity prices.

Hugh Grant, chairman and chief executive officer of Monsanto, stated, “The challenges facing the world’s food supply continue to evolve. The growing population, along with our volatile and changing climate, place ever-increasing burdens on sustainable global food production. Equipping farmers with the right set of innovations that will help solve tomorrow’s food challenges today requires more than a new company — it requires a new vision and approach.”


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