Monsanto Reports Profits of $1.67 Billion
3 April 2014 
Soy was a heavy driver of Q2 growth.
Monsanto reported growth and strong progress towards all of its yearly financial targets in the second quarter in its earnings report Wednesday.
Net profits for the second quarter were $1.67 billion, up from $1.48 billion in the same period of 2013.
Net sales for Monsanto’s agricultural productivity unit, which comprises its crop protection business, were $1.18 billion, up from $1.13 billion in the same period in 2013.
According to Monsanto, profits, margins and EBITDA increased in the second quarter due largely to the success of its core seeds and traits and division. Net sales in the corn seeds and traits segment were highest, followed closely by the soybean segment. In comparison to the second quarter 2013, sales increased in all segments except cotton.
While Monsanto anticipates a third quarter that will be slightly weaker as compared to last year, predictions are that 2014 will finish on a financially stronger note than 2013.
According to Monsanto President Brett Begemann, corn is likely to be the strongest continuous driver of profits because of increased farming in Eastern Europe, even though USDA predictions see American corn production decreasing in acreage by 4% in the coming year. He explained that Eastern Europe is one of the fastest growing of all of Monsanto’s geographical locations despite unrest in the Ukraine.
Even though bad weather posed logistical challenges early in the year, Monsanto was also able to carry out shipping processes without major disruptions towards the end of the quarter. The company was also able to invest more in precision agriculture, biologicals, increase its R&D budget by $44 million and spend more on general and administrative functions, increasing those expenditures to $625 million.
“Nearly 80% of our growth in the quarter came from our core seeds and traits business, providing an important proof point that our business is on track and positioned well to deliver the growth we anticipated for 2014, even against a backdrop of greater variability in the agricultural sector this year,” said Hugh Grant, chairman and chief executive officer.
Grant explained in a conference call that while industry realities including soft commodity prices, volatile global currencies, and decreasing corn markets in the Western hemisphere make Monsanto susceptible to market fluctuations, the company’s global portfolio is diverse enough to accommodate these challenges.
Grant described the current conditions as extreme due to 2012 droughts and supply pressures in recent years, but noted that long-term macroeconomic trends are stable. He predicted that over the next 10 years, Monsanto will not be able to increase acreage and will instead maximize productivity. He explained that the launch of Intacta RR2 PRO enhanced soybeans will be the most significant driver of future growth. Other main areas of focus over the next decade will be continuous upgrades to Monsanto’s corn seed portfolio, precision ag and biologicals.
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