Monsanto Company reported third quarter financial results. The company deliverd FY16 Q3 as-reported EPS of $1.63, $2.17 on an ongoing EPS basis.
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Net sales for the fiscal year 2016 third quarter were $4.2 billion versus $4.6 billion in the prior year period. Gross profit for the quarter decreased to $2.4 billion versus the prior year period of $2.7 billion.
For the first nine months of fiscal year 2016, net sales were $10.9 billion versus $12.6 billion in fiscal year 2015. Gross profit for the first nine months of fiscal year 2016 was $5.9 billion versus $7.2 billion in the prior year period.
Selling, general and administrative costs were $729 million, and research and development expenses were $387 million for the third quarter of fiscal year 2016.
The company's fiscal year 2016 third quarter EPS on an as-reported basis was $1.63. EPS on an ongoing basis was $2.17, which excludes $0.54 for restructuring charges, environmental and litigation matters and a net charge of $219 million for tax matters related to the Argentina business.
EPS performance for the quarter versus the prior year period was negatively affected by the absence of the Scott’s licensing agreement, glyphosate pricing declines, Roundup Ready 2 Xtend® launch delay costs and lower soybean volume due to the delay, and India cotton pricing regulations.
These factors were partly offset by the positive impact of share repurchases and increased row crop licensing gross profit.
The Argentina-related tax matters refer primarily to a valuation allowance against the company's deferred tax assets and are primarily driven by a recent history of cumulative losses in its Argentine subsidiary. With growth in the business, the company would expect to see this allowance reversed partially, or in full, over time.
EPS for the first nine months of fiscal year 2016 was $3.40 on an as-reported basis and $4.40 on an ongoing basis.
For the first nine months of fiscal year 2016, net cash provided by operating activities was $415 million, compared with net cash required by operating activities of $30 million in the first nine months last year.
Net cash required by investing activities for the first nine months of fiscal year 2016 was $639 million, compared to $759 million for the same period of fiscal year 2015.
Net cash required by financing activities for the first nine months of fiscal year 2016 was $2.2 billion, compared to net cash required of $143 million for the same period of fiscal year 2015.
Free cash flow was a use of $224 million for the first nine months of fiscal year 2016, compared to a use of $789 million for the same period of fiscal year 2015, reflecting strong working capital management.
The fiscal year 2016 full-year as-reported EPS guidance range has been adjusted to reflect the Argentina-related tax matters and a favorable change in the expected amount and timing of restructuring expense, and is now expected to be at the low end of the $3.36 to $4.14 adjusted range.
In response to today’s action by the European Commission to only temporarily extend the authorisation of glyphosate for 18 months, Philip W. Miller, Monsanto’s vice president of global regulatory and governmental affairs, released the following statement:
"Today’s decision by the European Commission to temporarily extend glyphosate’s authorisation by 18 months ensures that European farmers, municipalities, gardeners and other users will continue to have access to the herbicide glyphosate while a longer-term solution to the product’s reauthorisation is found.
"European farmers, municipalities, gardeners and other users have depended on glyphosate for 40 years as a safe, efficient and cost-effective tool for weed control. Glyphosate meets or exceeds all requirements for renewal under European law and regulation. The overwhelming majority of scientific evidence and the EU’s own regulatory agencies have declared glyphosate safe for use." ■