Monsanto Profits Fall

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Friday, 01 November 2002

Monsanto, the agrochemical group, yesterday reported third-quarter sales had fallen almost a third and net losses tripled to $165m as it continued to suffer from the severe drought in the US and the slowdown in Latin America.

Hugh Grant, chief operating officer, said Monsanto would lose 4m-6m of RoundUp volumes in the US, its main herbicide product, because of the continued effect of dry weather. "US branded volumes for the year will be at 37m-39m. The market is growing at a slower rate than expected. Overall, we expect sales of 49m gallon range, down from our 51m predictions."

He also warned of pricing pressures, such as from Syngenta, an agrochemical rival. Monsanto said it expected the price of RoundUp at the end of the year would be down about 7-8 per cent year-on-year. However, Mr Grant suggested that pricing of RoundUp was getting tougher, with price falls of 12-15 per cent.

Sales of RoundUp and other herbicides fell 43 per cent to $281m from $489m.

Monsanto has been seeking to shift its reliance from RoundUp, which has gone off-patent, by spending heavily on genetically modified traits, which accounts for the bulk of its research and development spend. Monsanto said it had been focusing on improving cash generation and hoped to generate $400m-$460m of free cashflow by the end of 2002.

Source: Caroline Daniel Financial Times Oct 31, 2002