(Reuters) - Global agribusiness group Monsanto Co (MON.N) posted higher-than-expected quarterly profit on Wednesday as net revenue grew 17 percent on gains in sales of seeds and genetic traits and surprising strength in herbicides.
Shares rose more than 4 percent after the company said it saw ongoing strong growth momentum and reported sales of corn seed and genetic traits jumped 35 percent in the third quarter.
"Corn is the story," said Jeff Windau, analyst for Edward Jones. But there is positive momentum in the whole ag sector right now."
Monsanto said its sales overall totaled 4.2 billion for the quarter ended May 31, including a rise in soybean sales of roughly 15 percent and gains in chemical products of 16 percent.
Monsanto posted quarterly earnings of $1.63 a share on an ongoing basis that excludes one-time items, better than the $1.60 expected by analysts, and up from $1.28 a year earlier.
On a net basis, the company earned $1.74 per share, versus $1.28 a year earlier. Net income totaled $937 million for the quarter, up 35 percent.
Monsanto, the world's largest seed company and a developer of genetically engineered corn, soybeans, and other crops, said it benefited from an increase in U.S. planted corn acres this spring, as farmers rushed to respond to strong global demand.
U.S. farmers planted an estimated 96 million acres of corn this spring, the most in 75 years, according to the U.S. Department of Agriculture.
Long term, the increasing global population spells an opportunity for rapid growth in Monsanto's agricultural seeds and traits business, said Monsanto Chief Executive Hugh Grant.
The company's efforts to develop seeds that perform better under adverse conditions and its work with herbicide-tolerant and insect-resistant crops position it well as demand grows for food, livestock feed and ethanol, he said.
"The global drivers of agricultural growth are real and they are ongoing," said Grant. "That creates a lot of opportunity for a long, long time."
Grant said two of the company's key new products were planted on the high end or above projected acres this year -- some 25 million acres for its Genuity reduced-refuge corn, up from the high end of 24 million acres initially projected, and about 30 million acres for its Roundup Ready 2 Yield soybeans, up from 17 million acres in 2011.
Some of its "most pronounced growth" is being seen in the corn market in Latin America, said Grant. Earlier this month, the company said it was investing in a corn seed development plant in Argentina, which is the second-largest corn exporter after the United States.
Chemical sales came in better than expected, Monsanto said, increasing by $130 million over the same period last year on higher-than-expected sales in its Roundup, lawn-and-garden and selective herbicides businesses.
One disappointment was the company's vegetable seed sales, which declined about 10 percent year over year. The company last year launched a genetically altered sweet corn that tolerates treatments of Roundup herbicide but was met with consumer backlash.
Monsanto officials said they were eyeing price increases for seed of between 5 percent and 10 percent for 2013. Calling that a "rough guideline," Grant said the company saw more pricing strength in corn than in soybeans. He noted that commodity pricing for corn has been surging due to dry weather concerns and tight stocks of the key crop, but said the company's pricing strategy was decoupled from market prices for the commodity.
The company said it was continuing to look to invest in technology that helps farmers more precisely plant and manage their fields.
After closing on the purchase of a software and precision production equipment company earlier this month, the company will be investing more in the precision planting space, Grant said.
Monsanto reaffirmed its full-year ongoing EPS forecast to a range of $3.65 to $3.70 per share.
It forecast full-year 2012 EPS on a net basis from $3.73 to $3.78. The company said 2013 should see mid-teens earnings growth over that base.
Shares were up $3.17 to $81.04 in afternoon trading.
Reporting by Carey Gillam in Kansas City; editing by Jeffrey Benkoe, Sofina Mirza-Reid and M.D. Golan