Monsanto's Earnings Down 81 Percent, Outlook Disappoints

Monsanto Co. (MON), the maker of RoundUp herbicide and bioengineered seeds, said Wednesday its third-quarter earnings fell 81 percent from last year due to a $248 million write-off of research and development related to acquisitions.

The St. Louis company also issued a full-year earnings outlook for fiscal 2005 that is below Wall Street's view.

Net income dropped to $47 million, or 17 cents per share, from $252 million, or 93 cents per share, in the third quarter a year ago. Excluding a charge of 91 cents and income from discontinued operations of 2 cents per share, Monsanto would have earned $1.06 per share in the latest quarter.

Sales rose 22 percent to $2.04 billion from $1.68 billion last year, with 12 percent of the growth coming from the addition of revenue from Monsanto's 2005 acquisitions of Seminis and Emergent and 10 percent from the company's core business.

The company's results beat estimates from analysts surveyed by Thomson Financial, who were looking for operating profit of $1.01 per share on sales of $1.73 billion.

Monsanto said sales were driven by higher revenue from its products used to alter corn, cotton and soybeans in the United States, increased U.S. corn-seed sales and higher sales for Roundup (search) and other herbicides in the U.S.

For the fourth quarter of 2005, Monsanto expects losses from continuing operations to be about 55 cents per share, compared with analysts' estimate for a smaller loss of 32 cents.

The company confirmed guidance for fiscal 2005, with operating profit from continuing operations expected to range between $2 to $2.05 per share — below Wall Street's current target of $2.18 per share. Including numerous items, Monsanto expects to post earnings of 82 cents to 87 cents per share for the full year.

The company also confirmed its previous earnings guidance for fiscal 2006 and 2007, expecting 17 percent growth in 2006 over the low end of 2005 guidance of $2 to $2.05 per share, and 20 to 25 percent growth for fiscal 2007 over 2006 results.

Analysts are currently predicting 2006 and 2007 profit of $2.59 per share and $3.26 respectively.