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Monsanto Earnings Drop 21 Percent

July 23, 1998

ST. LOUIS (AP) _ Monsanto’s earnings dropped nearly 21 percent in the second quarter on increased spending for the research and development of new pharmaceutical products.

The company, which makes farm products and drugs, reported Thursday that net income fell to $257 million, or 41 cents a share, on a diluted basis. A year earlier, it earned $324 million, or 54 cents a share.

If onetime items are excluded, Monsanto’s latest profit amounted to 43 cents a share.

The company’s stock rose $2.06 1/4 to $57.81 1/4 on the New York Stock Exchange.

Second-quarter sales rose to $2.5 billion from $2.1 billion. Agricultural sales were driven by Roundup herbicide, used increasingly in conservation tillage applications. Pharmaceutical sales rose due to increased demand for Arthrotec arthritis treatment, which was launched in the United States this year, and Ambien, a short-term treatment for insomnia.

Monsanto spent $200 million on building improvements, research and acquisition-related costs in the second-quarter, up 60 percent over a year ago.

The St. Louis-based company announced plans to merge with American Home Products Corp. during the quarter. It also reached an agreement to acquire DEKALB Genetics Corp., Cargill Inc.’s international seed operations and Plant Breeding International Cambridge Ltd. It plans to merge Delta and Pine Land Co. into Monsanto, allowing it to be more competitive in the global seed market.

Once all the deals are completed, Monsanto will be able to quickly move its agricultural biotechnology and pharmaceutical products to market, chairman and chief executive Robert B. Shapiro said.

For the first half of the year, Monsanto earned $453 million, or 73 cents per share, on sales of $4.5 billion. That’s down from $598 million, or 99 cents per share, on sales of $4.0 billion during the same period a year ago.

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