Global agribusiness company Monsanto Co (MON.N) posted a higher-than-expected quarterly profit on Thursday, driven primarily by expanding business in Brazil and Argentina and strong U.S. seed orders for spring planting.
Monsanto also announced 14 areas of advancement in its research and development platforms, noting progress in corn, soy, cotton, wheat and canola.
Shares rose more than 5 percent on the results, which came in above the company's raised forecast, offered last month.
Monsanto, the world's largest seed company, said net income for the first quarter ended November 30 totaled $126 million, up from $9 million a year before, while earnings per share came in at 23 cents, versus 2 cents a year earlier. Analysts had expected 16 cents per share.
The first quarter is typically the weakest for Monsanto, coming at the end of fall harvest and before spring planting gets under way. But the growing corn business in Latin America is giving the quarterly results a boost, Monsanto officials said.
Monsanto said it sees Brazil as a rapidly evolving opportunity for its biotech corn seed and trait adoption there moves more quickly than in the United States. As well, business in Argentina is expanding at a fast pace.
Total sales of Monsanto's specialized corn, soybean and cotton seeds and productivity products rose 33 percent to $2.4 billion in the quarter. Corn seeds and genetic traits sales jumped 46 percent to $895 million.
"We've seen a strong start to the year, with real growth in Latin America and early orders in the United States that underscore our sustained momentum carrying into 2012," said Monsanto Chairman Hugh Grant in a statement.
Monsanto said the pace of U.S. seed orders is ahead of that of a year ago at this time. The increase comes despite concerns raised last year about the efficacy of Monsanto's corn seed product engineered to resist rootworm.
Officials said Thursday that farmers are not shying away from its corn products because of the concerns, and emphasized that resistance problems were seen only on a small number of U.S. acres.
"The acreage involved in this is ... a very, very small area," Grant told analysts in a conference call.
An increase in customer prepayments ahead of the U.S. spring selling season helped lift free cash flow to $856 million, up from $500 million a year before.
"On the order book, we feel very good," said Grant.
Some suppliers are reporting a shortage of corn seed for next season following extended dry conditions in 2011, but Grant said that is not a problem for Monsanto.
One disappointment for the company is the performance of its vegetable seed business, which saw sales drop to $157 million from $183 million a year before despite efforts to expand that business into one of the company's top three platforms.
Grant said softness in the European market was primarily to blame, and he said the company's outlook for full-year vegetable seed business is "conservative."
"We still see this having the capacity to become our third-biggest platform. I think that is going to take time," he said.
Looking forward at new technology in its pipeline, Monsanto officials said they are hopeful of 2013 commercialization of the company's new drought-tolerant corn. They are currently pursuing international approvals after recently receiving U.S. regulatory approval.
The company affirmed its forecast of free cash flow for fiscal year 2012 in the range of $1.3 billion to $1.5 billion, reflecting an investment of $600 to $700 million in capital expenditures.
And Monsanto said it expects full-year earnings per share for 2012 to come in at the high end of its forecast for $3.39 to $3.44, reflecting 15-16 percent year-over-year growth.
Shares were up 5.6 percent at $76.703 in midday trading.
(Reporting by Carey Gillam in Kansas City; Editing by Gerald E. McCormick, Dave Zimmerman)