Seed maker Monsanto posts loss amid growing competition, criticism
Monsanto Co. is not having a great year.
With lower-priced Chinese competitors taking a bite out of its Roundup herbicide dominance, the world’s biggest seed maker announced Wednesday that its earnings in the fiscal year ended Aug. 31 fell to $1.1 billion from $2.1 billion in 2009.
The agricultural leader of genetically modified, or GMO, seed development said it posted a loss of $139 million, or 26 cents a share, in its fiscal fourth quarter, compared with a loss of $233 million, or 43 cents a share, a year earlier.
Quarterly sales were $1.95 billion, up from $1.88 billion a year earlier. But annual sales dropped about 10% to $10.5 billion.
Company officials tried Wednesday to ease the worries of investors, but acknowledged that the firm’s financial outlook might remain sluggish next year. In August, the Missouri-based firm had warned that its earnings for this fiscal year would be at the lower -- rather than higher -- range of expectations.
The reasons for this, say analysts, are numerous.
Competition from rival DuPont and several other competitors have nibbled away at Monsanto’s long-held dominance of the soybean market. Corn, in general, has been fairly flat.
The company is wrestling with serious criticism, and political and consumer pushback, in the European Union and Japan over its GMO seeds. Environmental concerns and criticisms are mounting in the U.S., as are the complaints of the farming community over the rising price of seeds -- and the legal battles to block planting the company’s GMO alfalfa and sugar beet seeds.
As a result, the company’s stock price is down 40% year-to-date. On Wednesday, Goldman Sachs dropped the company from its "conviction buy" list, but kept its basic rating at “buy.”
Monsanto’s stock jumped as high as $51.27 early in the day, after the earnings were announced. But the shares fell back to close at $48.65, up 13 cents.
-- P.J. Huffstutter
Photo: A farmer holds Monsanto's Roundup Ready Soybean seeds. Credit: Dan Gill / Associated Press