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News

Monsanto upbeat amid global financial turmoil
By Andy Beer, Deputy Editor
Agrow World Crop Protection News
Wednesday, 15 October 2008

Monsanto has raised its gross profit forecast for 2012 on the back of strong financial results for fiscal 2008. The company is projecting a gross profit of $9,500-9,750 million, which is more than double the company’s gross profit of $4,230 million in fiscal 2007. “Across the industry, every company is dealing with historic volatility caused by uncertainty in the commodities and credit markets,” says Monsanto’s chairman, president and CEO, Hugh Grant. “But our fundamental belief is that if we focus on the things in our business that we control, and we do those things well, there is significant growth ahead for our business.”

"What's for lunch? A comparison of organic and GMO food"
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Monsanto talks to the US consumers about organic and GM foods in this video. It takes a humorous look at consumer opinions about process attributes — the way food is grown — including the benefits of GMO and organic foods

When Monsanto laid out its five-year plan in November 2007, the company projected a gross profit for its seed and trait business of $6,500-7,000 million (Agrow No 532, p 1). Since then, Monsanto has added to its vegetable and maize seed businesses through the purchase of De Ruiter Seeds (Agrow No 546, p 2) and Semillas Cristiani Burkard (Agrow No 547, p 2) and begun developing a new seed treatment platform (Agrow No 538, p 1), Mr Grant points out.

The company now forecasts a gross profit for the seed and trait business of $7,300-7,500 million in 2012, representing a compound annual growth rate of 18-20%. It expects gross profit from its soybean and cotton seed businesses to more than double over this period, while that from its maize and vegetable seed businesses is forecast to rise by more than 2.5 times.

While Monsanto ’s growth projections are built largely on its seed and trait sector, the company also expects to benefit from a resurgent Roundup (glyphosate) herbicide business. It assumes that annual gross profit from Roundup and other glyphosate-based herbicides will fluctuate around $1,900 million over the next four years, with the remainder of the agricultural productivity segment adding some $300 million. In 2007, the company did not expect the entire segment to contribute more than $1,550 million by 2012 (Agrow ibid).

Monsanto’s projections are based on increased demand for agricultural commodities. The USDA projects US maize and soybean plantings of 90 million acres (36 million ha) and 70 million acres, respectively, through to 2017, while the global maize trade is expected to grow by 15% and soybean trade by 40%, Monsanto points out. “Great grain demand drives the need for more yield, more yield requires more innovation, and the companies that innovate will grow,” Mr Grant asserts.

Along with the revision to Monsanto’s gross profit targets, the company also projects an expansion in profit margins. Monsanto has met its 2010 profit margin of 54% two years ahead of schedule and is now targeting overall margins of 58-60%, with the seed and trait business aiming at 65%. The margin expansion seen in fiscal 2008 was largely due to Roundup. Margins for the seed and trait business remained flat at 61%....

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