June 25, 2009

Monsanto Company may have suffered a 14-percent drop in third quarter net income, but it has topped analysts' estimates as gains in GM crops more than offset declining sales of Roundup weed killer.

Third quarter net income fell to US$694 million from US$811 million a year ago. Sales dropped 11 percent to US$3.16 billion.

Gross profit from seeds, including genetics licensed to competitors, gained 17 percent in the quarter to US$1.43 billion, Monsanto said. Profit and sales climbed in units that make corn, soy, cotton and vegetable seeds.

Gross profit from Roundup fell 54 percent to US$273 million from the year-earlier quarter, contributing to a 46-percent profit decline in the crop-chemical segment.

CEO Hugh Grant is reducing 900 jobs while boosting sales of corn and soy seeds to meet 2009 earnings targets after Roundup sales dropped sooner than the company expected. As Monsanto prepares to cut 3.8 percent of workers globally, incurring a fourth-quarter restructuring expense of US$350 million to US$400 million.

Grant said the job cuts reflect Monsanto's transformation from a chemical company to biotech seed producer, in order to bring more clarity and predictability to the Roundup business and greater focus to the seeds and traits business.

Last month, Grant had reduced projections for Roundup profit due to rising output from competitors producing generic forms of the glyphosate-based herbicide.

Soy performed better than expected, helping the seed business exceed projections by 22 cents per share, said a New York-based analyst, who rated the shares "buy".