Monsanto Seeds and Traits Sales 2017
Seeds & Traits Regional Sales
Seeds and Traits sales grew 11.6% for the Q4 fiscal/Q3 calendar period; 9.3% for the fiscal year 12 months and grew 5.5% for the calendar 2017 9-month period. Seeds and traits sales for the quarter were up by 11.6% with volume +8.4%, price +3.2% and no change in currency rates. For the fiscal 2017 12-month period sales increased 9.3% through volumes +4.2%, price +4.6% and currency +0.5%. Sales for the calendar 9-month 2017 period grew +5.5% of which, volumes +3%, price +2% and currency +0.5%.
North American sales grew 24.5% for the quarter largely from soybean and corn seeds, 6.1% for the fiscal year 2017 and 5.6% for the calendar 2017 9-month period. Farmers were keen to try out the new XtendiMax™ technology on crops designed to tolerate over-the-top sprays of glyphosate + dicamba.
Precision Ag (Climate Fieldview Platform) has been separated from the Seeds and Traits sales reported for the paid services, as the majority of services still remain subscribed but not paid. These are Cropnosis’ calculated estimates– currently for North America and small part of Europe through recent acquisitions.
Revenues grew 100% during the fiscal Q4/calendar Q3 period, and 29.8% for the fiscal year 2017, as well as the calendar 2017 9-month period. Their Precision Ag Services are expected to grow rapidly in Latin America, mainly Brazil and in Europe – UK, France, Germany over the next 2 years as the company has acquired smaller local data providers, or has entered into collaborative agreements with them.
Sales growth was offset by divestment of their alfalfa business in North America and the reduced corn hectares though soybean and cotton seeds were drivers of growth in the US markets, the reduction in corn also affected their profitability.
Latin American sales grew 3.3% for the quarter and 18.4% for the fiscal year 2017. Sales for the calendar 2017 9-month period grew 6.3% as well.
Monsanto is strongly positioned in Brazil and surrounding areas, not so strongly in Argentina, with their double-stacked soybean seeds -IntactaRR2™, and hybrid corn seeds which had grown strongly over the previous year’s corresponding quarter due to extended safrinha planting. Licensing deals with other local seed producers and double-digit price increases helped drive growth.
Farmers are expected to plant an estimated 23 million hectares of IntactaRR2 soybeans seeds during fiscal 2018 Q1/calendar Q4 2017, a 15% growth over last year, while corn acres may remain static or reduce slightly this season. Revenue gains were also supported by higher prices for their newer germplasm, a stronger Real and better negotiations with local distributors.
In Europe, seed sales growth during fiscal Q4/calendar Q3 was flat with fiscal 12-month sales increasing 8%, while 2017 calendar Q3 sales grew 6.4%.
In the EU-28 region their sales of Bt-trait seeds remain restricted to parts of Spain and niche markets of eastern/western European Union member states. Eastern Europe, especially Ukraine, has seen sales picking up from unknown sources. This area is already showing potential from the apparent “illegal” sales of maize seeds imported from North America.
The Asia-Pacific region declined (2.6%) during fiscal Q4/calendar Q3 due to delayed sales in the Far/South Eastern countries and Bt-cotton licensing and pricing problems in the Indian subcontinent carrying over from last season.
The 2017 fiscal 12-m period however showed +14.2% growth largely due to Australian sales of cotton and canola hybrids. Calendar 9-months sales in 2017 were lower (17%) due to problems in India.
Monsanto claims to be #1 in most regions but this depends on the perspective: Market share is now 2-3 points higher than DuPont in North America for corn/maize, lower than Vilmorin in Europe, with a slight lead in Latin America. Cropnosis expects that the EU companies are already dominant in major parts of Eastern Europe and will offer very stiff competition to US-based companies both in seeds and CP chemicals as well as farm machinery.
Seeds & Traits Product Sales
Sales for the quarter and year-to-date were driven by corn (maize) and soybean seeds and traits.
Corn/maize seed sales increased 15.9% for the quarter, with gross profit growing 15%. Sales for the 2017 fiscal year grew 7.6%, while growing 4.7% for the calendar 9-month period.
This was largely due to safrinha season seed sales in Q2-Q3 fiscal 2017 and also new licensing agreements in Q4 fiscal 2017 with 2-3 major seed growers in Argentina and Brazil. The company also managed to raise prices by double-digits for new germplasm introduced into the market.
Gains occurred also through trait licensing revenues in North America for their new dicamba-tolerant varieties/hybrids. Monsanto managed to gain share despite many farmers going in for lower cost options, planting conventional hybrids rather than genetically engineered ones to save on margins for the harvest prices in September-December 2017.
Soybean seed sales increased +22.1% for the quarter and +23.1% for the fiscal year 2017. For the calendar 9-month period, sales increased +19.6%. Gross profit grew by 35% compared to fiscal 2016.
These increases were due to several factors. Having received approval for their Roundup ReadyXtend® Crop System from the EPA they were able to supply over 120 varieties across different latitudes and maturity groups through own sales and partners. These are expected to reach 16 million hectares in 2018 in North America.
In Latin America, sales are expected to grow by 20% from 20 million hectares to 24 million hectares starting October-November 2017 during fiscal 2018.
Cotton seed sales declined (24.3%) during fiscal Q4/calendar Q3 2017, although fiscal year 2017 showed a strong performance with 39.8% growth over 12 months, while the calendar 2017 9-month period showed growth of 27.3%.
The main reasons for the growth were their launch of the Bollgard XtendPlus/XtendFlex™ varieties with the XtendiMax™ herbicides system occupying nearly 6m acres (2.4 m ha) of cotton and increased area of upland cotton overall.
Outlook for the Xtend technology and related herbicide-tolerant seeds is positive despite the injury claims, as weed control has been shown to be better than in current systems. Monsanto has also entered into tank-mix arrangements with companies like FMC to spread the use of their proprietary formulations.
Vegetable seeds sales improved, with growth of 6.2% for the quarter. Sales for the fiscal 2017 12-month period grew by 1.7%, while increasing 3.1% during the calendar 2017 9-month period.
Other Seeds & Traits
Other Seeds and Traits sales declined (3%) during the quarter and (32.1%) for the fiscal 2017 12 months; the calendar 2017 9-month period saw a decline of (36.8%). This was reported by Monsanto as loss of revenues in excess of $200 million, for not having royalty or other agreements for alfalfa and other seeds divested to 3rd parties – this is a rather dubious reason and explanation for a corporation like Monsanto.
Precision farming sector (Climate Fieldview) sales grew +100% for the quarter and +29.8% for the 12-m fiscal year 2017, and for the calendar 2017 9-month period.
Precision farming is the concept that has spread rapidly across Europe and North America and across large farms in Latin America driven by the crop protection, seed and machinery companies. Data from the farm combine soil profiles, fertility, water retention, yields with associated data analysis services provided by companies who send their analysis back to farmers. Farmers then use this data to fine tune their fertiliser application, type of crop, seed variety, seeding rate, herbicidal treatment and so on.
The segment which was full of small boutique operators is consolidating rapidly. Monsanto is investing in this sector by buying stakes in several companies involved in providing these services, as are most of the other big players.
The Climate Corporation has several promising applications in its R&D pipeline of over 35 projects in seed scripting, soil fertility and corn disease diagnosis. The Climate FieldView ™ platform grew in fiscal year 2017, with paid coverage of approximately 14 million hectares. The company estimates that currently 48 million hectares are being analysed in key areas across the Americas and Europe. Their goal is to capture a part of this market, with other input companies in North America, Latin America and Europe.