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Monsanto Reports Fiscal 3Q16 Earnings: It’s a Negative Surprise

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Fiscal 3Q16 earnings per share

Monsanto (MON) reported its fiscal 3Q16 earnings on June 29, 2016, with an adjusted EPS (earnings per share) of $2.17. That missed analysts’ estimate of $2.42 per share, a -10.2% surprise.

MON shares rose 2.4% to $103.50 per share at the close of the June 29, 2016, trading session. However, it appears to be a correction following the Brexit shock after the United Kingdom voted to leave the European Union. This sent the company free falling to $99.90 per share. The company is still trading 5% below its pre-earnings and pre-Brexit level.

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YoY performance

YoY (year-over-year), Monsanto’s EPS declined 9.2%, making fiscal 3Q16 the worst third quarter since 2011. During the quarter, Monsanto’s earnings declined for the following reasons:

  • restructuring charges
  • tax-related charges of $217 million in Argentina
  • environmental and litigation-related charges

As the year rolls on, Monsanto faces risk from exposure to multiple currencies as the US dollar gets stronger. For fiscal 2016, management stated that it expects about an $0.85-per-share headwind from currency risk. This could come on the back of the Brexit, which created ripples in the currency market. For more on this, read Agricultural Chemicals Companies: The After-Brexit Impact.

Currency headwinds may likely also cast a shadow on agricultural companies (IYM) such as DuPont (DD), Dow Chemical (DOW), and Syngenta (SYT).

Series overview

In this snapshot series, we’ll look at Monsanto’s 3Q16 earnings results in detail. We’ll analyze what factors influenced the company’s results the most and take a look at management’s comments and guidance for the rest of the year.

Let’s start by seeing how Monsanto’s sales performed in fiscal 3Q16.

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