Monsanto (MON) Misses Q3 EPS Views; Offers Informal Update on Bayer Proposal
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Monsanto (NYSE: MON) reported Q3 EPS of $2.17, $0.23 worse than the analyst estimate of $2.40. Revenue for the quarter came in at $4.19 billion versus the consensus estimate of $4.49 billion.
“Our long-term optimism within agriculture and our business remains,” said Hugh Grant, chairman and chief executive officer. “Our industry is running at a low point in the overall agriculture cycle and we’ve experienced an unforeseen level of challenges affecting our business in fiscal year 2016. Today, however, we anticipate positive resolution on the horizon for several of these challenges, coupled with early signs of recovery in agriculture. With the strategic changes we’ve made to our business, we’re well positioned to further strengthen our leadership role in the agricultural space through financial discipline and steadfast commitment to serving growers with new innovation.”
“While there is no formal update on the Bayer proposal, I have been personally in discussions with Bayer’s management over the last several weeks, along with others regarding alternative strategic options,” added Grant. “We continue to recognize the potential value these types of combinations can create as they accelerate innovation and increase choice for farmers across a broader set of crops, geographies and production practices, while improving the sustainability of agriculture around the world. That is why we remain open and will continue to actively engage in constructive dialogue to pursue value enhancing strategic options.”
Fiscal Year 2017 and Beyond Outlook
Looking ahead to fiscal year 2017, assuming relatively stable currencies, the company expects a return to growth in EPS. Monsanto’s core business is expected to continue to drive the near-term growth opportunity, including the expected continued rapid adoption of the company’s latest soybean technologies, the durability of its global corn platform, continued financial discipline and an improved cost of goods outlook for corn and soybeans. From a year-over-year perspective, growth in fiscal year 2017 is expected to be partially offset by declines in glyphosate pricing, particularly in the first half of fiscal year 2017, by a lower level of non-core licensing deals, as well as by a slight increase in spend with inflation and expected increases in commissions and incentives. The company also expects a more normalized effective tax rate for the coming fiscal year.
Beyond fiscal year 2017, the opportunity is expected to accelerate with streamlined operations and portfolio advantages anticipated to drive Monsanto’s multilayered growth into 2021. This includes an expected target of mid-teens compounded annual EPS growth rate from the end of fiscal year 2017 to fiscal year 2021.
For earnings history and earnings-related data on Monsanto (MON) click here.
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