Earnings Preview: Monsanto Co. to report fiscal 1Q

Monsanto expects higher seed growth from emerging markets in fiscal 1st quarter

Associated Press

ST. LOUIS (AP) -- When Monsanto Co. reports its fiscal first-quarter results Tuesday, it will shed light on how the company's biotech seed business is performing in international markets, including South America.

WHAT TO WATCH FOR: Signs that Monsanto is accelerating sales in emerging markets like Argentina, Brazil and other South American countries.

Monsanto, which has dominated the bioengineered-seed business for more than a decade, has said it expects international sales to account for half of its growth in biotech seeds for fiscal 2013. Its corn and soybean seeds have genetically engineered traits that the company says benefit farmers enough that they come out ahead, despite the seeds' high cost.

In Brazil, the company's VT Pro 2 corn seeds sell for 75 percent more than conventional corn seeds, according to Susquehanna Financial Group analyst Don Carson. He expects the company to report better-than-expected earnings for the quarter due to strong growth in South America.

WHY IT MATTERS: Monsanto is betting its future on biotech seeds.

The company historically sold chemicals, from pharmaceuticals to pesticides, and most of its agricultural business used to be driven by chemicals like the herbicide Roundup. But Roundup isn't the cash cow it used to be, in part because competition from generic products from China and other nations has dragged down the price Monsanto can charge.

WHAT'S EXPECTED: Analysts polled by FactSet expect Monsanto to report earnings of 36 cents per share on sales of $2.64 billion in revenue for the quarter.

LAST YEAR'S QUARTER: The St. Louis-based company posted net income of $126 million, or 23 cents per share, on revenue of $2.44 billion.

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