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UPDATE 2-Monsanto ups guidance, cites South American sales
December 7, 2011 / 8:26 PM / in 6 years

UPDATE 2-Monsanto ups guidance, cites South American sales

* Raises 1st qtr guidance, holds full-year steady

* Free cash flow seen unchanged

* Results slated for release Jan. 5

* Shares down 2 pct

By Carey Gillam

Dec 7 (Reuters) - Monsanto Co. raised its outlook for first-quarter earnings on Wednesday, helped by strength in its seed businesses in Brazil and Argentina.

Shares in the agribusiness giant fell 2 percent, however, as the company said it was not raising full-year guidance, and concerns about the company’s insect-resistant corn product worried investors.

The company has been dogged by farmer complaints that pests that are supposed to be controlled by its biotech corn are instead becoming resistant to the corn’s embedded insecticide in at least four U.S. states. EPA last month criticized the company for inadequate monitoring of the situation and has demanded the company improve its practices.

Still, Monsanto on Wednesday reaffirmed that early orders of corn and soybean seeds for U.S. spring planting are strong.

Then company said it expects first-quarter ongoing and as-reported earnings per share in the range of 15 to 20 cents a share, up from the previous guidance of the high end of the 10 to 15 cents range.

SOUTH AMERICA BOOSTS EARNINGS

Though North American seed sales are a factor, and cotton sales in Australia also helped improve results, first quarter earnings are getting a large boost from rapid trait penetration of its biotech seed products in South America, Monsanto said.

First quarter results for the company are typically driven primarily by the performance in Brazil and Argentina, where corn and soybeans recently were planted for harvest in early 2012.

Chinese demand for soybeans and increasing global corn demand for livestock feed and biofuels are underlying supportive factors that have been driving seed product demand for Monsanto and its rivals.

Despite the stronger expected first quarter, the company did not alter is full-year guidance, reaffirming a range of $3.34 to $3.44 per share for fiscal 2012. Cash flow guidance was unchanged with free cash flow in the range of $1.3 billion to $1.5 billion for fiscal year 2012.

Monsanto updated its vegetable business as well on Wednesday and said it expects to expand the business globally with a focus on seven key crops. Tomatoes, peppers, cucumbers, onions, melons, broccoli, and lettuce should deliver 80 percent of net sales growth for the unit, Monsanto said.

In 2012 the company is planning the launch of its first biotech sweet corn and a “downy mildew-resistant” cucumber.

On Monday Monsanto approved a quarterly dividend on its common stock of 30 cents per share, related to the first quarter of the company’s 2012 fiscal year.

Monsanto will announce first-quarter results on Jan. 5.

Shares were off more than 2 percent at $70.86 in afternoon trading.

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