(Adds 2017 outlook, updates share price, adds byline)
By Karl Plume
Oct 5 U.S. seeds and agrochemicals company
Monsanto Co, which agreed last month to be bought by
Germany's Bayer AG for $66 billion, reported a
surprise adjusted profit, helped by a drop in expenses and
higher corn seed volumes.
Monsanto agreed in September to a sweetened $128-per-share
offer from Bayer that, if approved by regulators, would create a
company commanding more than a quarter of the world market for
seeds and pesticides.
The St. Louis, Missouri-based company had been expected to
report a loss on an adjusted basis, reflecting a slump in
commodity prices and a fall in farm incomes.
However, net sales in the company's corn seeds and traits
business jumped 34 percent in the three months ended Aug. 31 as
corn seed volumes rose in the United States.
Monsanto's expenses also dropped, by nearly 10 percent, as
cost-cutting measures paid off.
It expects fiscal year 2017 earnings per share of $3.83 to
$4.35 on an as-reported basis, which included costs related to
the Bayer transaction of 27 to 34 cents. On an ongoing basis,
EPS was expected between $4.50 and $4.90 a share, assuming
stable currencies, the company said.
Monsanto, whose shares traded on either side of the previous
day's close on Wednesday, did not offer any update on potential
divestitures related to the Bayer deal but said it expects the
deal to close by the end of 2017 as previously stated.
Some farm groups, seed companies and lawmakers have raised
concerns about the deal, saying it could result in higher prices
and reduced choices for farmers.
Bayer and Monsanto have said they are confident that the
deal will pass regulatory muster. Bayer has said it is committed
to divest up to $1.6 billion of its portfolio to win approval.
The net loss attributable to Monsanto narrowed to $191
million, or 44 cents per share, in the fourth quarter ended Aug.
31 from $495 million, or $1.06 per share, a year earlier.
Excluding items, however, the company earned 7 cents per
share. Analysts had expected a loss of 3 cents per share on that
basis, according to Thomson Reuters I/B/E/S.
Net sales of the company, known for its genetically
engineered corn, soybean and the Roundup herbicide, rose 8.8
percent to $2.56 billion, beating the average estimate of $2.36
Up to Tuesday's close of $102.15, Monsanto's shares had
fallen about 4.3 percent since the Bayer deal was announced.
(Additional reporting by Arathy S Nair in Bengaluru; Editing by
Ted Kerr and Meredith Mazzilli)