Monsanto's profit doubles despite the economic downturn
07 Jan 2009
Even as industries worldwide report declining revenues amidst an economic slowdown, one company has reported results that beat the trend. Monsanto Co, the world's largest seed producer, said fiscal first-quarter net income more than doubled as the company boosted sales of Roundup weed-killer and corn seeds.
The company made $556 million in the quarter that ended 30 November, up 117 per cent from the $256 million in profit it earned a year ago.
Monsanto said its net sales climbed 29 per cent to $2.6 billion, up from $2 billion a year earlier. Gross profit from seeds, including genetically modified varieties licensed to competitors, gained 37 per cent to $678 million as higher sales of corn and soybean seeds increased revenue in the unit 31 per cent to $1.1 billion, Monsanto said.
Strong demand in Brazil for Roundup and other herbicides led the increase in Monsanto's first-quarter sales, followed by higher corn seed and trait sales in the US and Brazil. Due to the seasonal nature of farming, the first quarter of Monsanto's fiscal year typically and primarily reflects the impact of its Latin American businesses. The second and third quarters are expected to be the primary drivers for the company's full-year results, Monsanto said, as they largely reflect both the relative size of the company's US business and the importance of its seeds-and-traits business to Monsanto's earnings.
Monsanto increased its full-year forecast to $4.40 to $4.50 a share, up from an 8 October forecast of $4.20 to $4.40 and the $3.62 a share earned last year. CEO Hugh Grant is raising prices for genetically modified seeds and Roundup, betting that farmers will pay for increased output even as crop prices decline.
"The ongoing demand from farmers … has allowed us to deliver such strong earnings growth while staying fully invested in our research and development pipeline," Grant said in a statement. "Our Latin American business once again displayed its strength and set the pace for a great fiscal 2009."
Monsanto is an American multinational agricultural biotechnology corporation. It is the world's leading producer of the herbicide glyphosate, marketed as "Roundup". Monsanto is also by far the leading producer of genetically engineered (GE) seed, holding 70–100 per cent market share for various crops.
Agracetus, owned by Monsanto, exclusively produces Roundup Ready soybean seed for the commercial market. In March 2005, it finalised the purchase of Seminis Inc, making it also the largest conventional seed company in the world. It has over 18,800 employees worldwide, and annual revenue of $8.563 billion reported for 2007.
