uploads///Monsantos Gross Margins by Segments

Analyzing Monsanto’s 1Q18 Gross Margin Performance


Jan. 5 2018, Updated 5:05 p.m. ET

Monsanto’s margins

Earlier in this series, we saw that Monsanto’s (MON) sales were broadly flat YoY (year-over-year). However, the company obtained higher gross margins during the quarter.

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Gross margins

During 1Q18, Monsanto’s overall gross margins expanded to 49.4%—compared to 47.5% in 1Q17. The Seed & Genomics segment contributed the most towards the margins. The segment reported a gross margin of 42.6%, which contracted slightly from 43% a year ago. The Agricultural Productivity segment’s margins stood at 6.8%, which expanded from 4.5% a year ago.

The Soybean Seed & Traits subsegment’s gross margins expanded YoY from 17% to 22%. All of the remaining subsegments under the umbrella of the Seed & Genomics segment saw their margins contract during this period. The Corn Seed & Traits subsegment’s gross margins contracted YoY from 20.2% to 15.6%. The Vegetable Seed subsegment’s margins contracted from 2.6% to 2.2%. The Other Seed subsegment’s margins contracted from 45 basis points to -8 basis points. The Cotton Seed & Traits subsegment’s gross margins were almost flat at 2.7%. For the subsegments, we calculated the gross margin of each subsegment over total sales.

The Corn and Soybean subsegments are Monsanto’s key operating segments. They generated better margins compared to the other segments. With companies (XLB) (MOO) like Syngenta’s (SYT) merger with ChemChina and the merger of DowDuPont (DWDP), Monsanto’s margins have come under pressure.

Next, we’ll discuss Monsanto’s profitability performance.


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