Monsanto Co., the world’s largest seed company, posted its smallest fiscal second-quarter profit since 2011 as a global slump in agricultural commodities depressed demand for crop inputs.
Net income fell to $1.06 billion, or $2.41 a share, in the three months through February, from $1.43 billion, or $2.92, a year earlier, the St. Louis-based company 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 forecast for full-year profit, excluding one-time items, of $4.40 to $5.10 a share. The shares fell 1.2 per cent in pre-market trading.
Corn and soybean prices have posted three successive annual declines following booming harvests. Net farm income in the US 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.
Monsanto dropped to $85.04 at 8:34 am before the start of regular trading in New York.
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