(Reuters) - Monsanto Co MON.N on Thursday reported weaker-than-expected earnings for a second straight quarter, saying its corn business dropped as U.S. farmers planted fewer acres this spring, while low crop prices continued to drag the sector.
The world’s biggest seed company, in the process of being acquired by Germany’s Bayer AG (BAYGn.DE), missed analysts’ quarterly profit estimates. Weakness in the corn business also was due to timing, as a cold spring in the United States delayed seed shipments, said Bernstein senior analyst Jonas Oxgaard.
“It hasn’t been a normal spring, and because of that, I think we could see farmers trying to switch some of their corn acres to soybeans, because you plant soybeans a month later,” Oxgaard said.
Sales in the corn seeds and traits business dropped 6.2 percent to $2.72 billion during the second quarter ended Feb. 28. Soybean business sales rose 6 percent to $912 million, Monsanto said.
The results come the day after China slapped an aggressive 25 percent retaliatory tariff against U.S. soybeans, farm country’s most valuable export to China last year.
Monsanto said demand has remained strong for its Intacta brand soybean seeds in South America, Roundup Ready 2 Xtend soybeans in the United States. It also reported better pricing of glyphosate, the key ingredient in its weed killer Roundup.
Monsanto said it was “optimistic” the Bayer deal would close, and added that the companies have seen “solid progress.”
Adoption of its latest commercialized biotech soybeans line continues to gain U.S. acreage, with farmers “on the way to planting nearly 50 million acres of dicamba-tolerant soy and cotton in 2018, nearly double last season’s acreage,” said Monsanto President Brett Begemann.
If that happens, it would mean Monsanto’s dicamba-tolerant seed traits would be on 48 percent of the total soybean and cotton acreage U.S. farmers expect to plant this spring, according to U.S. Department of Agriculture forecasts.
The company said it expects the number will increase to 60 million acres in 2019.
In March, Bayer won EU antitrust approval for its $62.5 billion bid to acquire Monsanto. Monsanto said it “continues to be confident” that U.S. and other needed regulatory approvals will be secured in the second quarter of this year.
Net profit attributable to Monsanto rose to $1.46 billion, or $3.27 per share, from $1.37 billion, or $3.09 per share, a year earlier.
On an adjusted basis, the St. Louis, Missouri-based company earned $3.22 per share, missing the average analyst estimate by 8 cents, according to Thomson Reuters I/B/E/S.
Net sales fell to $5.02 billion from $5.07 billion.
Monsanto also said it is restarting U.S. farm trials of NemaStrike, a controversial chemical designed to be applied to crop seeds to protect corn, soybeans and cotton from worms that reduce yields. The company said protective measures can prevent farm workers from getting a skin rash that caused objections to the chemical.
Additional reporting by Ahmed Farhatha in Bangalore and Mark Weinraub in Chicago. Editing by David Gregorio and Bernard Orr