Monsanto invests in corn business as Q3 profits soar

By Lorraine Heller

- Last updated on GMT

Related tags: Corn seed, Investment, Monsanto

Monsanto is to make its largest investment to date in its corn
production facilities, a move following continued strong demand for
its branded corn seed products around the world.

The announcement comes as part of the company's third quarter results, released today, which reveal a 71 percent leap in profits on the back of good performance from its corn seed business. The biotech firm said that it is to launch a three-year, $610m capital investment for its US corn production facilities. The investment plan includes expansions at nine existing corn production facilities, as well as two greenfield sites in the heart of the Corn Belt. "This represents the largest reinvestment that Monsanto has made in its history as an ag company,"​ said the firm. Additional details related to the expansion have not been disclosed at this time. Monsanto reported "record"​ net sales for its third quarter of 2007 of $2.8bn, 23 percent higher than the same period last year. As well as increased corn seed and traits revenues, another key driver for the quarter were increased herbicide sales in North America and Europe-Africa regions. Increased sales were partially offset by lower cotton trait revenues in the US due to a reduction in the number of acres planted to cotton. Sales for Monsanto's Seeds and Genomics business segment, which consists of the company's global seeds and related traits business, and genetic technology platforms, reached $1.7bn for the third quarter. This corresponds to a 32 percent increase on last year. As part of today's announcement, the company also said it is revising its previously announced opportunities for its corn trait technologies in the United States. The new estimates - another indication of the firm's confidence in its corn seed business - involve higher acreage forecasts for its glyphosate-tolerant corn, its corn borer insect protection product, its rootworm insect protection product and higher-margin triple-trait corn technology. "The 2007 season is shaping up to be an extraordinary year for agriculture. We've been able to deliver strong results through this point of the year, and we expect that our gains will contribute to added momentum for our business through the end of the decade,"​ commented Monsanto chairman, president and chief executive officer Hugh Grant. Earlier this month, the firm announced the completion of its $1.5bn acquisition of Delta and Pine Land Company (DPL), a move expected to increase innovation in the cotton industry by combining Monsanto's technology with DPL's germplasm. As part of the takeover, Monsanto was required by the US Department of Justice to divest its US branded cottonseed business. As a result, the firm sold it Stoneville cottonseed brand and related business assets to Bayer CropScience for $310m, and its NexGen cottonseed brand and related business assets to Americot for $6.8m. Monsanto said earnings from its DPL acquisition will contribute to its fourth quarter results, although the firm has historically reported a loss in its fourth quarter.

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