UPDATE 3-Monsanto outlook, quarterly loss knock shares

Wed Oct 3, 2012 3:31pm EDT

* Quarterly loss worse than year ago

* Corn, cotton sales down; soybeans, vegetables up

* Sees U.S. corn acres steady at 96 million in 2013

* Shares drop 2 percent

By Carey Gillam

Oct 3 (Reuters) - Monsanto Co offered a conservative outlook for its new fiscal year on Wednesday as it posted a bigger quarterly loss for a typically weak quarter, disappointing investors.

Shares of Monsanto, the world's largest seed company, fell over 3 percent and were down 2 percent in afternoon trading after it failed to raise its fiscal 2013 earnings forecast that calls for mid-teens earnings growth.

The developer of genetically engineered corn, soybeans, and other crops said it still expected a fiscal-year profit of $4.18 to $4.32 per share. Analysts were looking for it to boost its outlook to $4.38, according to Thomson Reuters I/B/E/S.

The market was less focused on Monsanto's fourth quarter, a period when farmers in the United States, the company's anchor market, are harvesting corn and soybean crops and not yet ramping up seed purchasing for next year.

Wells Fargo analyst Frank Mitsch called the fiscal quarter, which ended on Aug. 31, "relatively unimportant".

Despite its conservative earnings forecast, Monsanto officials said the outlook was very bright, particularly for the company's specialized corn seeds and traits, which include a new drought-tolerant variation.

"Corn is the driver for Monsanto," said Chief Executive Officer Hugh Grant.

Monsanto said it was raising corn seed prices by 5 percent to 10 percent for the next planting season, and it forecast U.S. corn acres at about 96 million in 2013 after similarly aggressive planting in 2012.

The company said it expected seed sales to be strong this quarter as more farmers buy earlier than normal.

Officials reported 1 point share gains in 2012 in both branded corn and branded soybean sales.

Growing international demand for seeds and traits complemented the company's base business in the United States, executives said in a call with analysts. Officials said they see evenly divided growth going forward between the United States and international markets.

Latin America is a key driver of international sales, Begemann said on the call, and the profit margin for corn seed sales there is expanding.

"We expect a continued ramp up of the corn opportunity in Brazil and Argentina (to) become one of the single largest sources of growth in the next few years," said Begemann.

Overall sales of corn seeds and traits dropped 12 percent in the fourth quarter from a year earlier, and cotton sales were off 84 percent. Meanwhile, soybean sales jumped 48 percent, and vegetable seed sales rose 26 percent.

The company's agricultural productivity segment, which includes sales of its Roundup herbicide, saw nearly flat quarterly results. Sales for the quarter were $895 million, compared to $896 million a year ago.

The company said its fourth-quarter net loss had doubled to $229 million, or 42 cents a share, from $112 million, or 21 cents a share, a year earlier.

On an ongoing basis, excluding a one-time item, the loss was 44 cents a share.

Analysts on average were expecting a loss of 42 cents a share, according to Thomson Reuters I/B/E/S.

Earnings growth before special items hit 25 percent in fiscal 2012, Monsanto said, but it forecast an increase at a mid-teens percentage rate for 2013.

Revenue for the quarter fell to $2.11 billion from $2.25 billion on a decline in corn seeds and trait sales.

Shares of Monsanto were down 2 percent at $88.68 in afternoon trading.

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