Monsanto's fiscal third quarter earnings slipped 3 percent, as hits to the agricultural product maker's cotton and soybean segments weighed on results.
The St. Louis company also said Wednesday that it tried to plant a seed for future growth by eating some drought-related expenses in the recently completed quarter.
Monsanto said the 2012 drought that parched stretches of the United States forced it to use South American greenhouses more to produce corn seeds. That contributed to a 7 percent increase in cost of goods sold in this year's quarter. Monsanto decided to eat the higher expenses tied to seed production instead of passing them along through price hikes.
CEO Hugh Grant told analysts during a Wednesday morning call the company saw that as "an investment in our customer base," one they hope helps customer sentiment and profitability next year.
The move was more than just a public relations stunt, according to Morningstar analyst Jeff Stafford. He said Monsanto has turned off some farmers in the past by introducing new seeds at very high prices.
"They are acutely aware of driving prices year over year and what that means in their relationship with farmers," he said.
Overall, Monsanto earned $909 million, or $1.68 per share, in the quarter ended May 31, down from $937 million, or $1.74 per share, a year ago.
Earnings totaled $1.66 per share, not counting a tax matter resolution.
Revenue inched up less than 1 percent to $4.25 billion. In contrast, Monsanto's revenue had soared 17 percent in last year's quarter when the mild spring that preceded the drought allowed farmers to sow crops earlier.
Analysts expected earnings of $1.61 per share on $4.41 billion in revenue for this year's quarter, according to FactSet.
Several analysts cited a lower tax rate as the main factor behind the better-than-expected earnings.
Monsanto Co. makes seeds for crops like corn, soybean, cotton and wheat and crop protection chemicals like the herbicide Roundup. The agricultural giant produces genetically engineered seeds used by farmers for their pest resistance and ability to produce bigger crops.