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Biotech / Medical : Monsanto Co. -- Ignore unavailable to you. Want to Upgrade?

To: Richard Singer who wrote (2353)	7/28/1999 10:01:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 2539

Richard and thread, this article from the St. Louis Post-Despatch explains why the Street hasn't reacted positively to MTC's earnings (St. Louis is the hometown of Monsanto): Monsanto's profit beats predictions By Robert Steyer Of the Post-Dispatch July 28, 1999 Led by strong growth of its Roundup herbicide and Celebrex arthritis drug, Monsanto Co. said Tuesday that second-quarter earnings exceeded securities analysts' predictions. The Wall Street consensus opinion was that Monsanto would produce earnings of 45 cents a share, but the company earned 53 cents a share for the three months ended June 30. Net income climbed 34 percent to $344 million; revenue rose 23 percent to a record $2.59 billion. "Our performance so far this year is further evidence that our strategies are valid and that we're executing them effectively in the marketplace," said Robert B. Shapiro, Monsanto's chairman and chief executive. But the company's stock gained only 37.5 cents, closing at $40.375 a share Tuesday. "The excitement in this quarter is moderated because the outlook for the rest of 1999 hasn't changed very much," said William Fiala, who tracks Monsanto for the Edward Jones brokerage. He was referring to previous company statements that 1999 is a transition year. Part of the reason is Monsanto's high debt load, caused by its flurry of seed company acquisitions last year. (Its bid for Delta & Pine Land Co., the world's biggest cotton seed company, has been under review by the U.S. Justice Department for more than 16 months.) Monsanto's debt-to-capital ratio is still an uncomfortable 60 percent, virtually unchanged from six months ago -- and well above the 33-to-37 percent goal the company has set for 2002. Debt-cutting speed depends, in part, on how fast Monsanto can sell several divisions -- including the NutraSweet sugar substitute business, food ingredients units and the Stoneville Pedigreed Seed Co., the second-largest U.S. cotton seed company. "If they sell them all by year-end, they should get the debt-to-capital ratio below 50 percent," Fiala said. "Finding the right buyer takes time. They were too optimistic when they first announced they would divest some businesses." Profits have declined sharply among units on the auction block. For the first six months, their earnings fell to $30 million from $63 million. A. Nicholas Filippello, Monsanto's chief economist, said he expects Stoneville and one food ingredients unit to be sold by year's end. Monsanto has gained about $440 million from selling several units this year, and it hopes to raise at least another $1.5 billion. Meanwhile, the Roundup herbicide juggernaut rolled on, leading Monsanto's farm products to second-quarter sales of $1.6 billion, up 12 percent. First-half revenue rose 19 percent to $3.07 billion. Filippello would not reveal Roundup revenue, but he said the company continues to sell about 20 percent more gallons of Roundup each year. Over the years, Monsanto has cut the price to attract more farmers and to produce higher revenue. And as it prepares for the September 2000 patent expiration for the key ingredient in Roundup, Monsanto has been making deals with competitors to supply them with this ingredient. Higher Roundup sales have coincided with greater use of the company's bioengineered seeds, creating crops that tolerate Roundup as well as fend off certain pests. This year, North American farmers planted 68 million acres of crops containing Monsanto's technology, up from 46 million acres last year. The most prominent product is Roundup Ready soybeans, which were planted on 37 million acres this year vs. 27 million last year. Celebrex continues to sell at a torrid pace, yielding $318 million in revenue in the second quarter. The drug, introduced in mid-January, had $279 million in sales for the previous three months. stlnet.com