Monsanto profit drops amid weak commodity markets, Bloomberg says

Monsanto Co., the world’s largest seed company, posted a decline in fiscal second-quarter profit after a global slump in agricultural commodities depressed demand for crop inputs.

Monsanto Co., the world’s largest seed company, posted a decline in fiscal second-quarter profit after a global slump in agricultural commodities depressed demand for crop inputs.

Net income was $2.41 a share in the three months ended Feb. 29, compared with $2.92 a year earlier, St. Louis-based Monsanto said in a statement Wednesday. Profit excluding one-time items was $2.42, matching the average of 20 analysts’ estimates compiled by Bloomberg. Sales fell to $4.53 billion from $5.2 billion a year earlier, trailing the $4.73 billion average estimate.

The company reiterated its full-year profit forecast of $4.40 to $5.10 a share.

Corn and soybean prices have posted three successive annual declines following booming harvests. Net farm income in the U.S. will probably drop a third straight year to $54.8 billion, the lowest level since 2002, the Department of Agriculture said in February. That’s hurting demand for everything from tractors and fertilizer to weedkiller.

“Seed pricing continues to be impacted by low crop prices,” Chris Shaw, a New York-based analyst at Monness Crespi Hardt & Co., said in a note Monday.

To diversify its crop-chemicals portfolio, currently dominated by the herbicide glyphosate, Monsanto continues to explore potential deals with BASF SE and Bayer AG, people with knowledge of the matter said in March. An unsolicited $43.6 billion proposal to acquire Syngenta AG, the world’s largest pesticide producer, was rejected by the Swiss company in August. Instead, China National Chemical Corp. said in February that it reached a deal to buy Syngenta.

The global seeds and pesticides industry is in the middle of a wave of consolidation: aside from the Syngenta deal, Dow Chemical Co. and DuPont Co. announced in December they would merge before breaking into three separate entities, including a Monsanto-size agriculture company.

To contact the reporter on this story: Lydia Mulvany in Chicago at [email protected]

To contact the editors responsible for this story: Simon Casey at [email protected]

Millie Munshi

© 2016 Bloomberg

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