Monsanto Q2 profit shows decline

Monsanto Co. has reported a 19% decline in profit for the second quarter from last year reflecting lower prices for Roundup and other glyphosate-based herbicides.

The company also said it expects fiscal year 2010 earnings per share at the low end of its previously stated range and acknowledged that its goal of doubling 2007 gross profit by 2012 is unlikely.

The past few quarters have not been impressive for Monsanto, with sales showing declines in the light of the recession as well as a drop in prices of corn and soy. Farmers' demand for seeds and herbicides, particularly Monsanto's higher-cost, genetically modified offerings, has weakened as a result. Even when competitors shifted focus to low-cost seeds, Monsanto has all along believed in the quality of its pricey products.

Historically, the second quarter is Monsanto's largest quarter, driven by northern hemisphere seeds and traits, particularly corn.

St. Louis, Missouri-based Monsanto reported net income for the second quarter of US$887 million or US$1.60 per share, down from US$1.09 billion or US$1.97 per share in the year-ago quarter.

The results for the latest quarter include restructuring charges of US$84 million or US$0.10 per share. This includes US$54 million charged to US corn cost-of-goods sold, as the result of a decision to exit some product lines in the US branded corn business to streamline product SKUs across multiple brands.

Earnings from ongoing business for the latest quarter declined to US$1.70 per share from US$2.16 per share in the year-ago period.

The producer of genetically modified seeds said net sales for the second quarter declined 4% to US$3.89 billion from US$4.04 billion in the prior-year quarter.

The decline in net sales for the quarter reflects lower prices for the company's glyphosate-based herbicides. The company noted that the price decreases were central to its strategy of increasing global volume, which increased in several regions, including Brazil, Argentina, Asia and the US