Monsanto Posts Loss as Herbicide Sales Slide Written by Carey Gillam, Reuters    Sunday, 10 January 2010 21:58

Monsanto Co (MON.N) reported a quarterly loss on Wednesday instead of the break-even results Wall Street had expected, citing a slide in herbicide revenue and a smaller drop in corn and soybean seed sales Hot Stocks Monsanto, the world's largest seed company, also said it was still on track for good gains this year. Shares in Monsanto bounced off early declines and rose later in the day as officials laid out new products that they say could add $8 billion in gross revenues by 2020, including new biotech corn and soybean seeds offerings for planting this spring. The moves come as Monsanto reduces its reliance on its herbicide business in favor of a focus on the more profitable seeds and genetic traits businesses. Monsanto on Wednesday posted a net loss of $19 million, or 3 cents a share, for the first quarter, compared with a year-earlier profit of $556 million, or $1 a share. The results fell short of estimates as analysts were expecting a break-even quarter, according to Thomson Reuters I/B/E/S. But after shares fell as much as 3 percent in the morning, they rose as much as 2.3 percent in the afternoon. The quarter was "pretty noneventful," Ticonderoga Securities analyst Christopher Shaw said, adding that the big issues for 2010 would be pricing and competition in herbicides, and key U.S. corn and soybean seed sales this spring. Overall, net sales decreased $952 million, or 36 percent, for the period ending November 30, mainly because of decreased sales of its glyphosate-based herbicides, primarily in Brazil and Europe. Roundup and other glyphosate-based herbicide sales were off 63 percent in the quarter as volume and pricing slid. Gross profit fell to $739 million, down 52 percent, while the margin dropped 15 percentage points to 44 percent, due mostly to pricing adjustments for Roundup and other glyphosate-based herbicides. Net sales in corn seed and traits fell 9 percent, or $59 million, in the quarter, due partly to a decrease in planted acres in Brazil and Argentina. Soybean seed sales were depressed because of delays in harvesting last year's soybean crop, though volume should pick up in the second quarter, Monsanto said. Monsanto sees strong demand for corn and soybean seed for planting this spring, including its Genuity SmartStax corn, which is expected to be planted on more than 4 million acres. The company, which is already a leading player in the corn and soybean markets, is also rolling out Genuity Roundup Ready 2 Yield soybeans and expects plantings of that new seed on 8 million to 10 million acres this season. 2010 would be a "critical year" to helping the company meet a growth plan set for 2011 and 2012, Monsanto Chairman Hugh Grant said. "We believe it will only get better from here," he said in a statement. Monsanto reiterated its earnings forecast of $3.10 to $3.30 a share for 2010 and said it expects free cash flow in the range of $900 million to $1 billion. Monsanto rose $1.26, or 1.48 percent, to close at $86.27 on the New York Stock Exchange. Source: Reuters