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St. Louis, MissouriApril 25, 2001
Monsanto Company (NYSE: MON) today reported sales and earnings
for the first quarter of 2001. "Results were in line with expectations as our first-quarter work is largely in preparation for the
second quarter, which is our peak agricultural season in the Northern Hemisphere," said Hendrik A. Verfaillie, Monsanto
president and chief executive officer. "The Roundup herbicide business remains healthy as we head into the major use
season, and customers are continuing to choose seeds containing our biotechnology traits. We're also making steady
progress toward improving our working capital and cash positions."
Sales
First-quarter net sales decreased 1 percent, to $1.3 billion. Currency fluctuations negatively effected sales in the quarter by 2
percent. Global sales of Roundup herbicide were down 8 percent, while U.S. volumes and sales increased slightly in the
quarter. Sales for the seeds and genomics segment were up 2 percent compared with first-quarter 2000 results on the
strength of improved biotech trait revenue.
Reported Earnings
First-quarter 2001 net income improved 28 percent, to $55 million from last year's first-quarter income before the cumulative
effect of an accounting change, primarily because of lower interest expense. Earnings per share (EPS) for the quarter
increased 24 percent to 21 cents per share.
Monsanto recorded restructuring and special pretax items of $22 million in the first quarter. As previously stated, the company
expects to take $425 million to $475 million in total pretax restructuring and special items for the two-year period ending Dec.
31, 2001, of which $261 million was recorded during 2000.
2001 Earnings vs. 2000 Pro Forma Earnings
Monsanto's pro forma net income and earnings per pro forma share for 2000 have been adjusted to reflect the effect of a capital
contribution from Pharmacia Corporation and proceeds from the company's initial public offering (IPO). This adjustment is
reflected as of Jan. 1, 2000, for 2000 results. Special items also are excluded.
First-quarter net income increased to $68 million, from $67 million in the first quarter of 2000. EPS remained flat for the quarter
at 26 cents as lower expenses offset the effect of slightly lower sales. Total selling, general and administrative (SG&A) costs
were down 4 percent from SG&A first-quarter 2000 costs, while research and development (R&D) expenses decreased by 8
percent compared with R&D costs in the same period last year.
Segments
Monsanto reports its results in two segments: Agricultural Productivity and Seeds and Genomics. Sales for the Seeds and
Genomics segment increased $10 million to $498 million for the first quarter of 2001, with particularly strong results for
Monsanto's cotton and soybean technology traits. Increased demand for the company's cotton traits and Roundup Ready
soybeans is consistent with surveys showing that farmers receive better value and better insect or weed control when using
Monsanto's biotech traits as compared to the fields where they use a non-biotech system. Earnings before interest and taxes
(EBIT), if special items are excluded, improved for this segment by $45 million, to a loss of $23 million for the quarter, driven
by the increase in sales and lower SG&A and R&D expenses.
In the Agricultural Productivity segment, sales of Roundup decreased 8 percent worldwide, as increases in the U.S. and
Argentinean markets were more than offset by lower sales elsewhere. Sales of the family of Harness herbicides were higher in
first quarter 2000 because the company took advantage of a one-time market opportunity. The focus for the Roundup and
Harness businesses during the first quarter of 2001 was to be in position for the start of the North
American planting season, which normally begins in mid-April. A key driver for Roundup growth during 2001 will be its use in conjunction with conservation
tillage systems, which help farmers reduce soil erosion by replacing plowing with the judicious use of herbicides to control
weeds. EBIT, if special items are excluded, declined 22 percent to $152 million for the first quarter of 2001, primarily because
of lower overall sales in the segment.
Other Developments
During the first three months of 2001, progress also was made on the regulatory fronts in Japan and Europe. Monsanto's new
Roundup Ready corn product, different from that currently on the market, received Japanese import approval. This product had
previously received both U.S. food and feed approvals and will be available in limited quantities for planting this spring in the
United States. The European Union gave final approval to the "90/220" directive, which governs the
approval process for all biotechnology products. While the rules on traceability and labeling of biotechnology products are still not fully resolved, the
recent activity is an important step toward restarting the approval process in Europe.
In March, Monsanto and Aventis signed an agreement that will allow Aventis to offer cotton growers seeds containing
Monsanto's Bollgard and Roundup Ready technology in Aventis' FiberMax brand. The companies also settled two pending
lawsuits, thereby avoiding patent roadblocks to the development and commercialization of Monsanto's second-generation
Bollgard insect-protected cotton and future YieldGard insect-protected corn products.
Future Guidance
Monsanto's management continues to expect sales growth in 2001 to be similar to the 2000 revenue growth rate of 5 percent,
based on increased sales of Roundup and seeds, and higher revenues from biotechnology traits. Net income, when compared
with 2000 pro forma results that exclude special items, should increase between 9 percent and 13 percent. This growth is
expected to be driven by higher gross profit and continued cost management. Second-quarter 2001 EPS, excluding special
items, is expected to be flat to up 4 percent from second-quarter 2000 pro forma EPS, excluding special items, of $1.56.
Monsanto Company, an 85 percent-owned subsidiary of Pharmacia Corporation (NYSE: PHA), is a leading global provider of
technology-based solutions and agricultural products that improve farm productivity and food quality.
Roundup, Roundup Ready, Harness, Bollgard and YieldGard are trademarks owned by Monsanto Company.
FiberMax is a trademark of Aventis Crop Science.
Company news release
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