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Monsanto earnings jump, ups forecast

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Global agribusiness company Monsanto Co (MON-N) posted a nearly 80 percent jump in net income on Wednesday due to strong sales in its core seeds and genetic traits businesses.
    
Its shares jumped as the market applauded the company's sales strength in the United States and Latin America and an expanded earnings outlook for the full year. Total sales of Monsanto's specialized corn, soybean, cotton and other seeds and traits rose 12 percent to $2.6 billion US in the quarter.
    
Monsanto, the world's largest seed company, said new corn and soybean products were well received by farmers this spring. And Monsanto CEO Hugh Grant estimated the company may have gain a point in market share in both the U.S. corn and soybean seed markets.
    
"This was an important year for us... to demonstrate that we have the strategy right and more importantly we can deliver on that strategy," Grant said in a conference call with media and analysts. "Our engine is in place to continue that momentum into the next season."
    
Monness Crespi Hardt & Co analyst Chris Shaw said he would have liked to have seen significant market share gains in the U.S. corn and soybean markets, given the company's competitive pricing strategy. But he said overall, investors were rewarding the company for its solid performance.
    
"That is what they've done, setting reasonable expectations and then meeting or beating them," Shaw said.
    
Net income for the third quarter ending May 31 rose to $680 million from $384 million in the same period a year earlier, while earnings per share came in at $1.26, topping analyst estimates for $1.11. A year earlier the company reported earnings of 81 cents a share on an ongoing basis.
    
Also Wednesday, Monsanto raised its full-year earnings guidance, with full-year 2011 ongoing earnings now seen in the range of $2.84 to $2.88, up from $2.72-$2.82. Full-year 2011 EPS guidance on an as-reported basis is expected in the range of $2.82-$2.86, up from $2.66-$2.79.
    
Monsanto also said it was raising its expectations for free cash flow for 2011 to $1.1 billion-$1.3 billion from $900 million-$1.1 billion
    
SEC INVESTIGATES HERBICIDE INCENTIVES
    
The quarterly results were clouded partially by Monsanto's announcement that it was under investigation by the Securities and Exchange Commission regarding Monsanto's customer incentive programs related to its glyphosate products for fiscal years 2009 and 2010.
    
The company has been offering farmers who use Monsanto products cash incentives to help them battle weeds that have grown resistant to Monsanto's glyphosate products, namely Roundup.
    
Monsanto's Roundup Ready corn, soybean and cotton seeds, which are engineered to be resistant to the herbicide are popular with farmers, but they have contributed to the spread of herbicide-resistant weeds.
    
Grant on Wednesday declined to discuss details of the SEC probe but said the company was cooperating with a subpoena for documents.
    
"It's early days. We're cooperating to our full ability," he said.
    
Glyphosate, the key ingredient in Monsanto's Roundup herbicide, was once a key driver of revenues. But the company has been struggling with stiff competition and implementing programs as well as rolling out new products to try to boost sales even as it has shifted its focus to the seeds side of the company.
    
For this most recent quarter, the agricultural productivity segment, which includes herbicide products, saw sales rise 57 percent to $943 million. Segment earnings rose to 76 million from a loss a year ago of $175 million.
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