Monsanto CEO Sees 2010 As 'Critical' With New Launches
October 07 2009 - 11:33AM
Dow Jones News
The head of Monsanto Co. (MON) said Wednesday that 2010 would be
a "critical" year as it lines up new seed products to counter lower
earnings from its crop-protection business.
Hugh Grant, chairman and CEO of the world's largest seed
producer by revenue, said the rollout of high-tech new corn and
soybean seeds and international expansion will provide "the
slingshot" to reach its medium-term growth targets.
The strategy hinges on persuading farmers to buy the more
expensive new offerings at a time when global agricultural incomes
are under pressure from the reverse in global commodity
markets.
Monsanto pioneered genetically-modified seeds that can boost
crop yields by offering more protection against pests and
herbicides.
The company still has a technology lead in many areas over
rivals such as DuPont Co. (DD) but is accelerating product
roll-outs with an unprecedented seven offerings over the next seven
years.
Grant said on an analysts' call that Monsanto has been beefing
up its sales and marketing effort ahead of next year's crucial
launch of SmartStax corn seeds and Roundup Ready 2Yield
soybeans.
The two are seen as offering a step change in productivity - but
at a cost. While pricing for its existing seed line-up will be flat
next year, overall pricing will rise by 8% to 10%.
"We nail this in 2010 and it puts us in a great position for
2011 and 2012," said Grant, as Monsanto reported a higher fiscal
fourth-quarter loss on lower earnings from its Roundup
herbicide.
Roundup had been a moneyspinner that Grant once called a
"windfall" to fund research into its core business of seeds and
traits.
Monsanto has cut staffing and other costs to bridge the gap
caused by Roundup's challenges, and Grant has sought to focus
investors on the growth potential of seeds and traits, which are
expected to account for 85% of earnings by 2012.
The company on Wednesday reported a loss of $284 million, or 43
cents a share, for the fiscal fourth quarter to Aug. 31. This
compared with a prior-year loss of $172 million, or 31 cents.
Monsanto shares were recently trading flat at $75.32, a little
more than half their all-time peak in June 2008.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com