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Growing corn demand boosts Monsanto 2007 sales

By Lorraine Heller , 10-Oct-2007

Biotechnology firm Monsanto has reported strong sales for its fourth quarter, although the company suffered a net loss in the period due to a one-off R&D charge.

The firm today announced $1.6bn in net sales for the period, up 13 percent from last year. Sales for the full fiscal year reached $8.6bn, 17 higher than 2006 figures.

 

 

 

The "record sales" reflect strong performance in the firm's corn business, reflecting a growing global interest in the crop, which is increasingly being sourced for ethanol production.

 

 

 

Monsanto said key factors for the increased revenues from its corn seed and traits business included a successful conclusion to the seed and traits season in the United States and strong farmer demand for the company's corn seed products in Argentina and Brazil.

 

 

 

Overall sales for the segment were $742m for the fourth quarter, or 40 percent higher than sales in the same period last year. Segment sales for the full year stood at $5bn, an increase of 25 percent compared to last fiscal year.

 

 

 

But strong corn sales were partially offset by a reduction in the company's soybean seeds and trait business, reflecting the global move by farmers to reduce the number of soybean acres planted in favor of corn.

 

 

 

In addition, the firm saw lower sales of cotton traits in Australia and the United States. Lower sales in the United States reflect farmer planting trends, while the lower sales in Australia were a result of drought conditions, said Monsanto.

 

 

 

Despite good overall growth in sales, the firm's performance this quarter was hit by a net loss of $210m, a wider loss than the $144m loss seen in the same period last year.

 

 

 

This was primarily a result of a $186m in-process research and development (IPR&D) charge at the company's Delta and Pine Land (D&PL) cotton business.

 

 

 

As part of its announcement today, the leading biotechnology company also issued a year-end report on its biotech trait acreage for 2007.

 

 

 

Just last month, the firm announced ambitious plans to almost triple its presence outside of the United States. Currently, there are some 95 million acres outside the US planted with Monsanto's biotech traits.

 

 

 

"We believe there is an untapped opportunity to grow our international traits business by approximately another 175 million acres," said the firm's vice president of global commercial business, Brett Begemann.

 

 

 

"Strong global adoption of our proven traits coupled with recent approvals paves the way for expanded growth and sets the stage for new growth as we look to stack and upgrade these products in the coming years," he told investors at the 16th Credit Suisse Chemicals Conference held in New York at the end of September.

 

 

 

The forecasts highlight a growing global adoption of genetically modified crops, resulting partly from the increased acceptance of the technology as a means to address climate and yield challenges.

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