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Monsanto posts loss as corn seed sales fall

The entrance to the Monsanto Company headquarters in a St. Louis.

JAMES A. FINLEY/AP

Monsanto Co posted a bigger quarterly loss for a typically weak quarter on Wednesday, and the global agribusiness group offered a conservative outlook for its new fiscal year.

Shares of Monsanto, the world's largest seed company and a developer of genetically engineered corn, soybeans, and other crops, fell more than 1 per cent after it did not raise its fiscal 2013 earnings forecast.

Monsanto said it still expected a fiscal-year profit of $4.18 (U.S.) to $4.32 per share, but analysts were looking for it to boost its outlook to $4.38, according to Thomson Reuters I/B/E/S.

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Wells Fargo analyst Frank Mitsch called the fiscal fourth quarter, which ended on Aug. 31, "relatively unimportant." Generally the period is when farmers in the United States, the company's anchor market, are harvesting corn and soybean crops and not yet ramping up seed purchasing for next year.

Despite its conservative earnings forecast, Monsanto officials said the outlook was very bright, particularly for the company's specialized corn seeds and traits, which include a new drought-tolerant variation.

"Corn is the driver for Monsanto," said Chief Executive Officer Hugh Grant.

Monsanto said it was raising corn seed prices by 5 per cent to 10 per cent for the next planting season, and it forecast U.S. corn acres at about 96 million in 2013 after similarly aggressive planting in 2012.

The company said it expected seed sales to be strong this quarter as more farmers buy earlier than normal.

Officials reported 1 point share gains in 2012 in both branded corn and branded soybean sales.

Growing international demand for seeds and traits complemented the company's base business in the United States, executives said in a call with analysts.

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Latin America is a key driver of international sales, president Brett Begemann said on the call, and the profit margin for corn seed sales there is expanding.

Overall sales of corn seeds and traits dropped 12 per cent in the fourth quarter from a year earlier, and cotton sales were off 84 per cent. Meanwhile, soybean sales jumped 48 per cent, and vegetable seed sales rose 26 per cent.

The company said its fourth-quarter net loss had doubled to $229-million, or 42 cents a share, from $112-million, or 21 cents a share, a year earlier.

Excluding a restructuring charge, the loss was 44 cents a share.

Analysts on average were expecting a loss of 42 cents a share, according to Thomson Reuters I/B/E/S.

Earnings growth before special items hit 25 per cent in fiscal 2012, Monsanto said, but it forecast an increase at a mid-teens percentage rate for 2013.

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Revenue for the quarter fell to $2.11-billion from $2.25-billion on a decline in corn seeds and trait sales.

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