Monsanto reported a profit for the second-quarter that increased 6.7 percent from last year.
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That was driven by improved glyphosate pricing, as well as better pricing and increased acres from Intacta RR2 PROTM soybeans, offset by decreased corn volumes from the combination of timing and expected lower planted acres in the U.S., and from reduced corn prices from continued lower commodity prices in Brazil.
However, earnings per share as well as net sales for the quarter missed analysts' expectations. The company continues to expect pre-tax income growth for fiscal year 2018, on a stand-alone basis.
For the full year, the company continues to expect growth to be driven by pricing for glyphosate and the continued adoption of new technologies in Seeds and Genomics, such as Intacta RR2 PROTM soybeans, Roundup Ready 2 Xtend soybeans and Bollgard II XtendFlex cotton, as well as reductions in related launch costs for these products.
The company also remains diligent in its work to complete the restructuring and cost savings initiative that it began in fiscal year 2015. Selling, general and administrative costs and research and development expenses now are expected to be down slightly year over year.
In addition, the company expects that benefits related to strategic asset sales and licensing contributions should be about 30 percent below the roughly $350 million pre-tax average annual contribution for the last three years.
Overall, with the solid start to the first half of the year and considering these factors, Monsanto continues to expect pre-tax income growth for fiscal year 2018, on a stand-alone basis.
Including the effects of the recent U.S. tax reform legislation, the company expects the as-reported effective tax rate to be in the range of 23 to 25 percent, for the full fiscal year, as the Argentina valuation allowance is expected to increase during the second half of the year.
For fiscal year 2019, the company expects an as-reported effective tax rate in the range of 24 to 28 percent, reflecting the new lower corporate tax rate in the U.S., the loss of the U.S. domestic manufacturing deduction, and a lack of some of the discrete benefits from this year. ■