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Monsanto profits jump on corn seed upswing

/ Source: The Associated Press

Monsanto Co., the word’s biggest biotech seed company, on Wednesday said higher sales of corn seeds and its recently acquired fruit and vegetable seed business helped its profit grow 18 percent in its second quarter.

The company, whose Roundup product is the world’s No. 1 herbicide, said it earned $440 million, or $1.60 per share, for the three months ended Feb. 28 from $373 million, or $1.37 per share, a year ago.

Net sales totaled $2.20 billion, a 15 percent jump from $1.91 billion a year earlier. The rise was driven by improvement in its corn seed and traits segments and greater revenue from its Seminis acquisition, Monsanto said.

The consensus of analysts surveyed by Thomson Financial was for earnings of $1.52 per share on sales of $2.23 billion.

Chief Executive Officer Hugh Grant praised the company’s performance in the U.S. corn seed market during a conference call with stock analysts Wednesday morning. Grant said the year is shaping up to be a “blockbuster” as Monsanto takes market share from other seed companies.

Carl Casale, Monsanto’s executive vice president for U.S. seed sales, said Monsanto made market gains even as its competitors gave out unusually large amounts of free corn seed to win sales this year.

“It’s economically irrational to pass up great seed for free seed,” Casale said.

Not all analysts were convinced.

Kevin McCarthy with Bank of America Equity Research kept his rating of “neutral” on Monsanto. He cited growing competition from Pioneer Hi-Bred, a division of chemical giant DuPont Co. The company is developing its own genetically engineered seeds to compete with Monsanto’s.

Monsanto said its annual earnings would be at the high end of a prior forecast for $2.35 to $2.50 per share. That compares with the current analysts’ view of $2.61 per share.