ST. LOUIS -- Monsanto said Wednesday that its profit sank 37 percent in the most recent quarter as sales of its seeds and weed-control products fell.
The agriculture products company also said that it is still in discussions with German drug and chemicals company Bayer AG about its $62 billion takeover bid, which Monsanto rejected last month. But the St. Louis company said it is also in discussions with "others" about strategic options.
For the fiscal third quarter, Monsanto reported net income of $717 million, or $1.63 per share. That compares with $1.14 billion, or $2.39 per share, in the same period a year before.
Earnings, adjusted for pretax expenses and nonrecurring costs, were $2.17 per share, falling short of Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $2.41 per share.
Revenue fell 8.5 percent to $4.19 billion in the period, which also missed forecasts. Four analysts surveyed by Zacks expected $4.43 billion.
Sales of its corn seed rose 5 percent. Soybean seed sales fell 17 percent, cottonseed sales fell 23 percent and vegetable seed sales fell half a percent. Sales of other crop seeds rose 60 percent. Sales of its weed-control and other agricultural products fell 29 percent.
The company said it expects its full-year adjusted earnings to come in at the lower end of its previously announced forecast between $4.40 and $5.10 per share. Analysts expected earnings of $4.64 per share for the year, according to FactSet.
Shares of Monsanto Co. rose $2.43, or 2.4 percent, to close Wednesday at $103.52. The stock has fallen 2 percent in the last 12 months.
Monsanto Chief Executive Officer Hugh Grant has been in discussions about "alternative strategic options," he said Wednesday.
The disappointing earnings undercut the company's argument that Bayer's proposed bid is less than adequate. Monsanto has been facing aggressive cutting of seed prices by competitors and falling prices for the herbicide glyphosate amid overproduction by Chinese generic producers.
"We remain open and will continue to actively engage in constructive dialogue to pursue value enhancing strategic options," Grant said in the earnings statement. "Our industry is running at a low point in the overall agriculture cycle and we've experienced an unforeseen level of challenges affecting our business in fiscal year 2016."
Bayer made an offer in May to acquire Monsanto for $122 in cash, which the U.S. company rejected as too low. Discussions between Bayer and Monsanto are presently at an impasse, with the German company seeking to do due diligence on Monsanto's books, while Monsanto is holding out for a higher bid first, people familiar with the matter said earlier this month.
In April, Grant said the company no longer saw "large-scale" mergers and acquisitions as a strategy, signaling the end of any lingering ambition to bid for another major crop-chemicals or seeds business.
Bayer's proposed bid adds to the wave of consolidation in the agricultural chemicals sector. Aside from Bayer's bid for Monsanto, China National Chemical Corp. said in February that it reached a deal to buy Syngenta AG, and Dow Chemical Co. and DuPont Co. announced in December they would merge before breaking into three separate entities.
European competition regulators will closely review a potential takeover of Monsanto if a deal were to be consummated, according to a letter released Wednesday.
In a letter to two German members of the European Parliament, Margrethe Vestager, the commissioner in charge of European competition policy, said the European Commission would consider concerns they had raised about the potential effect that a merger between Bayer and Monsanto might have on prices, on the availability of seed products and on research and innovation.
She said competition authorities would carefully examine other deals in the seed and agrochemical sector.
The letter to the German lawmakers, Martin Haeusling and Sven Giegold, was dated June 20 and released publicly Wednesday.
U.S. regulators would also examine any merger of the two companies.
Information for this article was contributed by The Associated Press, by Lydia Mulvany of Bloomberg News and by Chad Bray of The New York Times.
Business on 06/30/2016
Print Headline: Monsanto profit falls 37% in 3Q on slump in agricultural sales