($ in millions) Second Second Six Six
Quarter Quarter Months Months
2007 2006 2007 2006
Net Sales by Segment
Corn seed and traits $1,192 $811 $1,552 $1,078
Soybean seed and
traits 373 449 543 622
Vegetable and
fruit seed 174 148 274 273
All other crops seeds
and traits 98 97 148 188
TOTAL Seeds and
Genomics $1,837 $1,505 $2,517 $2,161
Roundup and other
glyphosate-based
herbicides $530 $427 $1,179 $976
All other agricultural
productivity products 249 268 459 468
TOTAL Agricultural
Productivity $779 $695 $1,638 $1,444
TOTAL Net Sales $2,616 $2,200 $4,155 $3,605
Gross Profit $1,450 $1,240 $2,130 $1,874
Operating Expenses $623 $566 $1,189 $1,084
Interest Expense - Net $3 $20 $6 $38
Other Expense - Net $6 $18 $20 $22
Net Income $543 $440 $633 $499
Diluted Earnings per
Share (See note 1.) $0.98 $0.80 $1.14 $0.91
Items Affecting
Comparability - EPS
Impact
None - - - -
Diluted Earnings per Share
from Ongoing Business
(For the definition of
ongoing EPS, see
note 2.) $0.98 $0.80 $1.14 $0.91
Effective Tax Rate 34% 31% 31% 32%
Comparison as a Second Second Six Six
Percent of Quarter Quarter Months Months
Net Sales: 2007 2006 2007 2006
Gross profit 55% 56% 51% 52%
Selling, general and
administrative
expenses (SG&A) 17% 18% 20% 21%
Research and development
expenses 7% 8% 9% 9%
Income before income
taxes and minority
interest 31% 29% 22% 20%
Net income 21% 20% 15% 14%
Comment from Monsanto Chairman,
President and Chief Executive Officer Hugh Grant:
"While the 2007 agriculture
season is shaping up to be an outstanding one, the strong demand
that we've seen for our higher-yielding corn seeds and our
higher-margin, triple-trait corn technology has translated into
an excellent second quarter and first half for our business. For
the sixth straight year, our business is poised for market share
gains in the U.S. corn seed market. These results, which
underscore our continued ability to deliver a higher- yielding
corn product to farmers, highlight the value that each of our
six growth drivers can contribute to our overall business and,
ultimately, our growth trajectory through the end of the
decade."
Market Conditions
Farmers in the United States
are gearing up for the 2007 crop season as planting is already
underway in parts of the south. The 2007 season is shaping up to
be a strong one for both farmers and the companies that support
their business. During the next two months, U.S. farmers will
plant corn, soybeans and cotton. Monsanto's pre-season U.S. crop
estimates are consistent with the pre-season reports by the U.S.
Department of Agriculture and suggest that corn could be planted
on as many as 90 million acres, soybeans could be planted on 67
million acres, and cotton could be planted on 12 million acres.
Ultimately, the number of acres may change based on weather
conditions and other variables related to planting.
In the Southern Hemisphere,
combines are rolling through the fields and harvest is underway.
In Brazil, the soybean harvest is ahead of schedule and expected
to reach the mid-point during the next two weeks. Farmers in
Argentina have also started harvesting their soybeans as well as
this year's summer corn crop. Across the globe, farmers in
Australia are gearing to harvest this year's drought-limited
cotton crop while cotton farmers in India will begin planting in
earnest come May.
Operations Update
Monsanto reported record net
sales of $2.6 billion for the second quarter of fiscal year
2007, which were 19 percent higher than sales in the same period
in fiscal year 2006. Key drivers for the quarter were increased
corn seed and traits revenues in the United States, as well as
higher sales of Roundup and other glyphosate-based herbicides in
Brazil, the Europe-Africa region and Argentina. Increased sales
in the current quarter were partially offset by lower soybean
seed and traits revenues in the United States, as the total
number of soybean acres is expected to be reduced in favor of
corn.
Net sales in the company's
first half of fiscal year 2007 resulted in record year-to-date
sales of $4.2 billion, which were 15 percent higher compared
with sales in the same period last year. Key contributors to the
company's growth included higher U.S. corn seed and traits
revenues, and higher sales of Roundup and other glyphosate-based
herbicides in Brazil, the United States, Argentina and the
Europe-Africa region.
Monsanto's net income for the
second quarter of fiscal year 2007 was 23 percent higher than
net income in the same period last year. For the first six
months of fiscal year 2007, net income was 27 percent higher
than net income in the same period last year.
Earnings per share (EPS), both
on an as-reported and ongoing basis, was $0.98 for the second
quarter and $1.14 for the first six months of the 2007 fiscal
year.
Cash Flow
For the first half of fiscal
year 2007, net cash provided by operating activities was $520
million, compared with $331 million in the same period in 2006.
Net cash required by investing activities was $230 million for
the first six months of 2007, compared with net cash required of
$466 million for the same period last year. As a result, free
cash flow was $290 million for the first half of fiscal year
2007, compared with a use of $135 million in the same period in
fiscal year 2006. (For a reconciliation of free cash flow, see
note 2.) Higher net income and lower spending compared to the
first half of fiscal year 2006, which included payments for a
license agreement related to the animal ag business and a
contingency payment related to the Seminis acquisition,
contributed to the increase in free cash flow in the first half
of 2007. Net cash required by financing activities was $200
million for the first six months of 2007, compared with net cash
provided of $191 million for the same period last year.
Outlook
Monsanto now expects its
full-year 2007 EPS guidance will be in the range of $1.60 to
$1.65, both on a reported and ongoing basis. Previously, the
company's full-year 2007 EPS guidance was at the upper end of
the $1.50 to $1.57 range.
The company continues to expect
free cash flow for fiscal year 2007 to be in the range of $875
million to $950 million. The company expects net cash provided
by operating activities to be in the range of $1.425 billion to
$1.5 billion, and net cash required by investing activities to
be approximately $550 million for fiscal year 2007. (For a
reconciliation of free cash flow, see note 2.)
The company's second and third
quarters of fiscal year 2007 historically serve as the primary
drivers for the company's fiscal year 2007 EPS results. The
company historically records a loss in the fourth quarter.
Seeds and Genomics Segment Detail
($ in millions) Net Sales Gross Profit
Second Second Six Six Second Second Six Six
Seeds and Quarter Quarter Months Months Quarter Quarter Months Months
Genomics 2007 2006 2007 2006 2007 2006 2007 2006
Corn seed
and traits $1,192 $811 $1,552 $1,078 $790 $538 $1,013 $691
Soybean seed
and traits 373 449 543 622 256 338 378 452
Vegetable and
fruit seed 174 148 274 273 87 86 138 149
All other
crops seeds
and traits 98 97 148 188 62 47 80 103
TOTAL Seeds
and Genomics $1,837 $1,505 $2,517 $2,161 $1,195 $1,009 $1,609 $1,395
($ in millions) Earnings Before Interest & Taxes (EBIT)
Second Second Six Six
Seeds and Genomics Quarter Quarter Months Months
2007 2006 2007 2006
EBIT (For a reconciliation
of EBIT, see note 2.) $744 $615 $745 $634
Unusual Items Affecting EBIT None None None 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 $1.8 billion for the second quarter of
fiscal year 2007, or 22 percent higher than sales in the same
period last year.
During the second quarter of
fiscal year 2007, the company realized increased U.S. corn seed
and traits revenue. Strong customer demand for its branded corn
seed products contributed to the increase in the quarter. This
year, the company's national corn seed brands are poised to gain
market share in the United States for the sixth consecutive
year. In fact, the increase could be 3 or more percentage
points, which would be the largest one-year gain for Monsanto
brands in the corn seed market. Growth in the quarter was also
driven by strong adoption of its higher-margin triple-trait corn
technology, which the company effectively sold out in its
national and regional corn seed brands. Monsanto technology
trait acres were up across the board, with triple- trait corn
technology expected to be grown on an estimated 16 million
acres, or up more than 160 percent when compared with the 6
million acres the technology was planted on in 2006. The company
also expects Roundup Ready corn to be planted on more than 50
million U.S. acres, with YieldGard Rootworm and YieldGard Corn
Borer expected to be planted on more than 19 million U.S. acres
and 40 million U.S. acres, respectively.
Results in the quarter were
partially offset by lower soybean seeds and traits sales driven
by an anticipated decrease in U.S. soybean acres.
Sales for the segment were also
higher for the first six months of the 2007 fiscal year compared
with sales in the same period last year. First-half segment
sales were $2.5 billion, or 16 percent higher than first-half
segment sales in fiscal year 2006. The key drivers for growth in
the second quarter were also the primary contributors to growth
in the first-half of the fiscal year. Results in the first half
were partially offset by lower cotton traits sales as farmers in
Australia planted fewer cotton acres in the face of a severe
drought.
Agricultural Productivity Segment Detail
($ in millions) Net Sales Gross Profit
Second Second Six Six Second Second Six Six
Agricultural Quarter Quarter Months Months Quarter Quarter Months Months
Productivity 2007 2006 2007 2006 2007 2006 2007 2006
Roundup and
other
glyphosate-
based
herbicides $530 $427 $1,179 $976 $155 $104 $349 $286
All other
agricultural
productivity
products 249 268 459 468 100 127 172 193
TOTAL
Agricultural
Productivity $779 $695 $1,638 $1,444 $255 $231 $521 $479
($ in millions) Earnings Before Interest & Taxes (EBIT)
Second Second Six Six
Agricultural Quarter Quarter Months Months
Productivity 2007 2006 2007 2006
EBIT (For a reconciliation
of EBIT, see note 2.) $78 $40 $181 $133
Unusual Items Affecting EBIT None None None None
The Agricultural Productivity
segment consists primarily of crop protection products, the
lawn-and-garden herbicide business, and the company's animal
agricultural business.
Sales for Monsanto's
Agricultural Productivity segment were $779 million for the
second quarter of fiscal year 2007, or 12 percent higher
compared with sales in the same period last year. Higher sales
of Roundup and other glyphosate-based herbicides in Brazil, the
Europe-Africa region and Argentina contributed to the results in
the quarter.
Sales for the segment were
higher for the first six months of the 2007 fiscal year compared
with sales in the same period last year. First-half segment
sales were $1.6 billion or 13 percent higher than first-half
segment sales in fiscal year 2006. Improved sales of Roundup and
other glyphosate- based herbicides in Brazil, the United States,
Argentina and Europe-Africa regions were key drivers for growth
in the first half of the fiscal year.
Full report:
http://monsanto.mediaroom.com/index.php?s=43&item=478
Monsanto Company (NYSE: MON)
is a leading global provider of technology- based solutions and
agricultural products that improve farm productivity and food
quality. |