World Economic

Investors sent shares of Monsanto Co. on their steepest one-day climb in nearly six months on Tuesday after the biotech giant raised its full-year guidance for earnings and cash flow. Creve Coeur-based Monsanto said it expected strong results from its seed and Roundup herbicide businesses.

Monsanto said it would earn between $3.58 and $3.60 per share from continuing operations in the 2008 fiscal year, compared with previous guidance of $3.37 per share from ongoing operations.

Monsanto now expects its seeds and genomics segment — including corn, soybeans and vegetables — to generate more than $3.8 billion in gross profit for its 2008 fiscal year, up from the earlier expectation of $3.7 billion. The predicted haul would represent more than 25 percent growth compared to 2007.

Monsanto said Roundup and its other glyphosate-based herbicides are on track to contribute more than $1.9 billion of gross profit for the 2008 fiscal year, ahead of the previous forecast. The company said its corn business should exceed $2 billion in gross profits for the first time, and is expected to grow by 25 percent to 30 percent in 2009.
"The fundamentals of agriculture and our businesses are strong and getting stronger," chief financial officer Terry Crews said in a statement. "We continue to see strong adoption of our branded seed products, growing use of our trait technologies globally and remain focused on introducing new game-changing technologies for farmers that can increase yields and improve their productivity."

Monsanto’s stock rose $7.93 or 7.55 percent on Tuesday to close at $112.97 on the New York Stock Exchange.

U.S. farmers are on pace to reap record profits as demand for farm commodities spikes, according to the U.S pay day loan. Department of Agriculture. Monsanto is in fierce competition with rival DuPont to supply seeds that meet farmers’ need for high yield and other desirable traits.

Monsanto is "fundamentally different than fertilizer companies," Citigroup analyst P.J. Juvekar wrote in a research note. "A pound of fertilizer does the same thing it did a few years ago, while a pound of seeds brings a lot more value in terms of increased yield from biotech traits."

Monsanto now says it will generate approximately $750 million in free cash in the 2008 fiscal year, compared with previous guidance of $550 million, thanks to collection of more outstanding debt and clients’ prepayments.

Monsanto is "benefitting from the strong trends in agriculture," analyst John Roberts of Buckingham Research Group wrote in a note to clients. The company appears to "expect good performance for the foreseeable future."

Monsanto said its reported earnings per share will be different than the number generated by continuing operations. On an as-reported basis, the company will earn $3.49 to $3.51 per share, compared with its previously announced guidance of $3.63 per share.

The change in as reported guidance for the year now reflects the effect of income from discontinued operations, a settlement related to spinoff Solutia search and development from the acquisition of De Ruiter, a Dutch seed company.

jmcwilliams@post-dispatch.com | 314-340-8372

Source