ST. LOUIS, June 24, 2009 /PRNewswire-FirstCall/ --
($in millions) Third Third Nine Nine
Quarter Quarter Months Months
2009 2008 2009 2008
Net Sales by Segment
Corn seed and traits $1,020 $975 $3,726 $3,189
Soybean seed and traits 540 447 1,367 1,064
Cotton seed and traits 333 279 413 361
Vegetable seeds 206 185 572 521
All other crops seeds and traits 149 161 311 293
TOTAL Seeds and Genomics $2,248 $2,047 $6,389 $5,428
Roundup and other glyphosate-based
herbicides $614 $1,168 $2,749 $3,158
All other agricultural productivity
products 299 323 707 728
TOTAL Agricultural Productivity $913 $1,491 $3,456 $3,886
TOTAL Net Sales $3,161 $3,538 $9,845 $9,314
Gross Profit $1,834 $1,967 $5,905 $5,217
Operating Expenses $799 $866 $2,550 $2,270
Interest Expense (Income) - Net $18 $(4) $24 $(8)
Other Expense (Income) - Net $4 $(5) $62 $(189)
Net Income $694 $811 $2,342 $2,196
Diluted Earnings per Share (See
note 1.) $1.25 $1.45 $4.21 $3.93
Items Affecting Comparability -
EPS Impact
Loss (Income) on Discontinued
Operations -- $0.01 $(0.02) $(0.02)
Solutia Claim Settlement (after tax) -- -- -- $(0.23)
Acquired In Process R&D (Aly
Participacoes Ltda.) -- -- $0.19 --
Diluted Earnings per Share from
Ongoing Business (For the
definition of ongoing EPS, see
note 1.) $1.25 $1.46 $4.38 $3.68
Effective Tax Rate 30% 26% 28% 30%
Comparison as a Percent of Net Sales: Third Third Nine Nine
Quarter Quarter Months Months
2009 2008 2009 2008
Gross profit 58% 56% 60% 56%
Selling, general and
administrative expenses (SG&A) 16% 17% 16% 17%
Research and development expenses
(excluding acquired in-process R&D) 9% 7% 8% 7%
Income before income taxes and
minority interest 32% 31% 33% 34%
Net income 22% 23% 24% 24%
Comment from Monsanto Chairman, President and Chief Executive Officer Hugh Grant:
'Our 2009 fiscal year represents a milestone for our business as our seeds and traits business alone will deliver more gross profit than all of Monsanto did in 2007, a remarkable achievement in just two short years. Backed by continued strong farmer demand for our higher-yielding seed products and new pipeline technologies on the way, we remain committed to doubling gross profit for the entire company from the 2007 base of $4.2 billion to roughly $8.6-to-8.8 billion in 2012.'
Operations Update
Monsanto reported net sales of $3.2 billion for the third quarter of fiscal year 2009, which are 11 percent lower than sales in the same period in fiscal year 2008. Results in the quarter reflected decreased revenues from the company's Roundup and other glyphosate-based agricultural herbicides globally, partially offset by increased revenues from seed and trait products sold through the company's U.S. soybean, cotton, corn and vegetable businesses.
SG&A as a percent of net sales was just under 16 percent for the quarter, down 1 percentage point from the same period in fiscal year 2008. SG&A expenses were more than $100 million lower during the quarter.
Net sales in the first nine months of the company's 2009 fiscal year were $9.8 billion, which were 6 percent higher compared with sales in the same period last year. Results were primarily driven by increased revenues associated with the company's U.S. corn and soybean seed and traits businesses. These results were partially offset by lower global sales of Roundup and other glyphosate-based agricultural herbicides in the period.
Monsanto's net income for the third quarter of fiscal year 2009 was $694 million or 14 percent lower than net income in the same period last year. For the first nine months of fiscal year 2009, net income was 7 percent higher than net income in the same period last year.
Earnings per share (EPS) for the third quarter of fiscal year 2009 was $1.25 both on an as-reported basis and an ongoing basis. EPS was $4.21 on an as-reported basis and $4.38 on an ongoing basis for the first nine months of fiscal year 2009. (For a reconciliation of ongoing EPS, see page 1.)
Cash Flow
For the first nine months of fiscal year 2009, net cash provided by operating activities was $436 million, compared with $1.3 billion in the same period in 2008. Net cash required by investing activities was $588 million for the first nine months of 2009, compared with net cash required of $650 million for the same period last year. As a result, free cash flow was a use of $152 million for the first nine months of fiscal year 2009, compared with a source of $675 million in the same period in fiscal year 2008. (For a reconciliation of free cash flow, see note 1.) Net cash required by financing activities was $768 million for the first nine months of 2009, compared with net cash provided of $93 million for the same period last year.
Outlook
Monsanto's fourth quarter is largely influenced by its global cotton business and U.S. Roundup and other glyphosate-based agricultural herbicides business.
Monsanto continues to expect that its full-year 2009 ongoing EPS will be at the low end of its previously-announced range of $4.40 to $4.50. (For a reconciliation of ongoing EPS guidance, see note 1).
The company is now projecting its free cash flow will be approximately $1.4 billion for the year. The company expects net cash provided by operating activities to be in the range of $2.3 billion, and net cash required by investing activities to be approximately $950 million for fiscal year 2009. (For a reconciliation of free cash flow, see note 1.)
Monsanto Outlines New Strategic Actions:
Monsanto is creating a separate division for its Roundup and other herbicides business which is expected to enable the company to better align spending and working capital needs. This action is designed to enable Monsanto to stabilize the business and allow it to deliver optimal gross profit and a sustainable level of operating cash in the coming seasons.
In addition to the new division, Monsanto announced a planned restructuring that will include a reduction of approximately 900 employees across the entire company. The reduction will vary from country to country and will be less than four percent of the company's global workforce. The company anticipates the actions will require a one-time restructuring charge estimated at approximately $350 million to $400 million, or $0.41 to $0.47 per share to the company's fourth-quarter EPS in fiscal year 2009. The company expects to complete its restructuring in fiscal year 2010.
Comment from Hugh Grant:
'Over the last six years, Monsanto's business has undergone a dramatic transition from a company historically built on chemical innovations to one focused on delivering enhanced seed offerings that help farmers get more out of each acre of farmland while reducing the footprint of the inputs used on that land. The actions announced today will allow our company to better navigate in today's changing business environment and keep the company on a clear path for growth.
'We believe these steps are in the best interests of our shareowners, our customers and our employees. This is designed to bring more clarity and predictability to our Roundup business and greater focus to our growing seeds and traits business.'
Seeds and Genomics Segment Detail
($in
millions) Net Sales Gross Profit
Seeds Third Third Nine Nine Third Third Nine Nine
and Quarter Quarter Months Months Quarter Quarter Months Months
Genomics 2009 2008 2009 2008 2009 2008 2009 2008
Corn
seed
and
traits $1,020 $975 $3,726 $3,189 $630 $565 $2,445 $2,023
Soybean
seed
and
traits 540 447 1,367 1,064 338 269 856 649
Cotton
seed
and
traits 333 279 413 361 249 195 296 252
Vegetable
seeds 206 185 572 521 113 93 308 270
All
other
crops
seeds
and
traits 149 161 311 293 97 97 177 154
TOTAL
Seeds
and
Genomics $2,248 $2,047 $6,389 $5,428 $1,427 $1,219 $4,082 $3,348
($in millions) Earnings Before Interest & Taxes (EBIT)
Third Third Nine Nine
Quarter Quarter Months Months
Seeds and Genomics 2009 2008 2009 2008
EBIT (For a
reconciliation of EBIT,
see note 1.) $804 $586 $2,081 $1,643
Unusual Items Affecting EBIT
IPR&D resulting from
acquisition of Aly None None $162 None
The Seeds and Genomics segment consists of the company's global seeds and related traits business, and genetic technology platforms.
Sales for Monsanto's Seeds and Genomics segment were $2.2 billion for the third quarter of fiscal year 2009, or 10 percent higher than sales in the same period last year.
During the third quarter of fiscal year 2009, the company realized increased revenues from seed and trait products sold through the company's U.S. soybean and corn businesses, as well as through its global vegetable seed business. The company also realized increased revenues from its India and U.S. cotton seed and trait business.
In the United States, Monsanto estimates that some 16,000-plus farmers are using the Genuity brand Roundup Ready 2 Yield trait on approximately 1.4 million to 1.5 million acres this season.
