Monsanto Co., the world’s largest producer of genetically modified seeds (GM seeds), has registered a loss of $19 million for the quarter ended November 30. Slashed margin due to lower prices of Roundup and other weedkillers is the reason, reported the company on Wednesday.
However, the company’s loss for the fiscal first quarter at three cents per share is better than the company’s initial forecast of a loss of five cents a share. In the year ago period the company had recorded profit of $556 million at $1 per share.
The company’s revenue tumbled 36 per cent to $1.7 per cent, less than Thomson Reuters Forecast, based on analyst’s poll, of $1.98 billion. Drop in Glyphosate-based herbicides in Brazil and Europe dragged Monsanto’s top-line down.
The St. Louis-based company’s gross margin fell to 44 per cent from 59 per cent, largely owing to the lower prices of Roundup, the brand name under which Monsanto sells most of its herbicides.
The company’s share on Wednesday fell 1.7 per cent pre-market to $83.55.
However, President and Chief Executive Hugh Grant said in a statement, “We’ve delivered on our targets for the quarter.” He informed that 11 of Monsanto’s research and development projects in pipeline moved ahead. The company expected the figure to be at nine in November. He further added, the company is “Confident that we will achieve the milestones necessary to reach our financial commitment to our share owners.”
Meanwhile, stuck with falling prices of its Roundup herbicides, Monsanto at present is focusing more on its seeds and traits business. Prices of Roundup are under severe pressure due to increased competition from various generic products, mostly from China. Seeds and traits are expected to contribute 85% of Monsanto’s top-line by 2012.
In the meantime, for the full year Monsanto has forecasted earnings of $2.85 to $3.11 per share; whereas Wall Street has projected fiscal 2010 earnings to be $3.35 per share.