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By Carey Gillam
June 25 (Reuters) - Monsanto Co reported a 6 percent drop in quarterly profit on Wednesday, but shares jumped more than 5 percent as the world's largest seed company beat forecasts, improved its near-term outlook and said it planned to double earnings over the next five years.
The company, known for its genetically engineered corn, soybeans and other crops as well as the popular Roundup herbicide, also announced authorization of a $10 billion share repurchase and cited strong progress on a new farm data business platform.
Monsanto said that although earnings for the third quarter ended May 31 were down in the face of challenging market conditions, the overall outlook was bright.
"We're on track for seeds and traits to drive a majority of our full year growth," said Chairman Hugh Grant. "That performance in a more challenging agricultural environment speaks to the breadth and customer value of our product portfolio."
Grant said that by the end of fiscal 2019, the company aimed to at least double full-year ongoing earnings, which exclude certain special after-tax items. More than $4 billion of total gross profit growth will come from its core seeds and traits unit, the company said.
The company also raised the low end of its full-year outlook for ongoing earnings to $5.10 a share from $5.00 while keeping the high end at $5.20.
"The confidence level is off the charts," said John Roberts, executive director of U.S. chemical equity research at UBS. "They feel they have as deep a growth pipeline as they've had in a long time."
Monsanto said it had earned $858 million, or $1.62 a share, in the third quarter. That was down from $909 million, or $1.68 a share, a year earlier, but it beat the average forecast of $1.56 a share from analysts surveyed by Thomson Reuters I/B/E/S.
Corn seed products, the company's largest revenue source, will remain a growth driver, the company said. Corn contributed $1.3 billion this quarter to total net sales of $4.25 billion.
The company said the outlook for its glyphosate-based Roundup herbicide business was flat to lower going forward.
Monsanto said one of its most important areas of progress was with its new farm data business unit, The Climate Corp. The company has signed collaborations with retail partners, and expects penetration on more than 40 million U.S. acres using its basic farm data tool and more than 1 million acres using a premium service.
"This platform is demonstrating that it can be the integrator, bringing together decisions around how the farmer manages his land, his seed choices, his crop protection choices, his fertility programs, his equipment, etc..," said Monsanto President Brett Begemann.
Monsanto would not provide near-term revenue estimates for Climate Corp, but has said it will be a "meaningful" contributor. Roberts estimated revenue could hit $1 billion by 2018. Anything less would not likely be "meaningful" to Monsanto, he said
The company said a priority is pursuing external growth opportunities, including technology investments and potential mergers and acquisitions.
Monsanto shares rose more than 5 percent and were trading at $126.78 at 12:58 p.m. EDT (1658 GMT).
(Reporting by Carey Gillam in Kansas City; Editing by Lisa Von Ahn, Meredith Mazzilli and David Gregorio)