U.S. seeds and agrochemicals company Monsanto, which agreed last month to be bought by Germany's Bayer for $66 billion, reported a surprise adjusted profit, helped by a drop in expenses and higher corn seed volumes.
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Monsanto agreed in September to a sweetened $128-per-share offer from Bayer that, if approved by regulators, would create a company commanding more than a quarter of the world market for seeds and pesticides.
The St. Louis, Missouri-based company had been expected to report a loss on an adjusted basis, reflecting a slump in commodity prices and a fall in farm incomes.
However, net sales in the company's corn seeds and traits business jumped 34 percent in the three months ended Aug. 31 as corn seed volumes rose in the United States.
Monsanto's expenses also dropped, by nearly 10 percent, as its cost cutting measures paid off. The company said in January it would cut about 3,600 job cuts, or about 16 percent of its global workforce, through fiscal 2018.
The company's global restructuring also includes an exit from the sugar cane business and streamlining some commercial and research and development work, the company has said.
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Monsanto, whose shares were little changed in premarket trading on Wednesday, did not offer any update on potential divestitures related to the Bayer deal.
Some farm groups, rival seed companies and lawmakers have raised concerns about the huge deal, saying it could result in higher prices and reduced choices for farmers.
Bayer and Monsanto have said they are confident that the deal will pass regulatory muster. Bayer has said it is committed to divest up to $1.6 billion of its portfolio to win approval.
The net loss attributable to Monsanto narrowed to $191 million, or 44 cents per share, in the fourth quarter ended Aug. 31 from $495 million, or $1.06 per share, a year earlier.
Excluding items, however, the company earned 7 cents per share. Analysts had expected a loss of 3 cents per share on that basis, according to Thomson Reuters I/B/E/S.
Net sales of the company, known for its genetically engineered corn, soybean and the Roundup herbicide, rose 8.8 percent to $2.56 billion, beating the average estimate of $2.36 billion.
Up to Tuesday's close of $102.15, Monsanto's shares had fallen about 4.3 percent since the Bayer deal was announced last month.
(Reporting by Karl Plume in Chicago and Arathy S Nair in Bengaluru; Editing by Ted Kerr)