April 6, 2006

Monsanto profit rises 18 percent due to strong demand for GM corn

Monsanto Co, the world's largest developer of GM (genetically modified) seeds, announced an increase of 18 percent in second-quarter profits as US farmers are now taking to GM corn designed to resist pests and herbicides.

Net income rose to US$440 million from US$373 million, while sales increased 15 percent to US$2.2 billion, Monsanto said in a statement.

A major part of its increase in profits comes from seeds with combined traits such as resistance to root-eating bugs and herbicides. Such "stacked seeds" have a gross margin of 90 percent, compared with an 80 percent margin for seeds with one trait, according to an analyst.

Stacked seeds are in high demand, and Monsanto basically has the market cornered, the analyst said.

Monsanto had slightly over half of US corn-seed sales last year. It is also earning income from licensing fees.

DuPont and Dow Chemical Co are close behind in the race to gain market share. Both companies came up with stacked seeds that resist rootworm and corn borer this year.

Sales of Roundup and similar glyphosate- based herbicides fell 11 percent to US$427 million. Revenues rose in the US and fell in most other parts of the world, Monsanto said.

Monsanto is quickly becoming a name synonymous with GM seeds. 88 percent of the world's GM crops are in some way linked to Monsanto as the company sold licences to at least 250 companies, some of which are its rivals.

GM acreage increased by 11 percent last year to 90 million hectares, according to the International Service for the Acquisition of Agri-biotech Applications.