Monsanto Expects to Rebound From Fourth-Quarter Loss

Monsanto Co., unfazed by a 3 percent dip in net sales and a $42 million net loss in the fourth quarter, said it will increase earnings more in the current year than previously expected.

The biotech seed and agribusiness giant, based in Creve Coeur, said it will earn $1.77 to $1.90 a share in fiscal 2005. That represents a compounded annual growth rate of 10 percent to 18 percent over the $1.61 earnings per share of 2004, excluding certain one-time charges. The company also said it will grow earnings by 10 percent in 2006.

The optimistic forecast comes as prices for Monsanto's flagship Roundup herbicide continue to fall in the United States. And it follows a year of near perfect global farming weather, which sparked strong sales.

"Philosophically, I view (financial) guidance as a commitment, not an aspiration. The guidance that we have provided today is what we reasonably believe we can achieve, considering the good and the bad, and assuming a probable case but not the best one," Chief Executive Hugh Grant told analysts in a conference call after Wednesday's year-end financial report.

Monsanto continues to balance falling Roundup revenue with higher prices and a broadening line of products in its seeds and traits division.

Roundup prices in the United States have been falling since 2000, when its patent protection expired and generic competition stiffened. After years of depending on the herbicide as a cash cow, Grant said he expects U.S. prices to hit $11 to $13 a gallon, and market share to fall to a percentage in the mid-60s – similar to what Monsanto sees in the rest of the world, where generic glyphosate has been available for years.

In fiscal 2004, Chinese glyphosate makers unexpectedly increased prices, and Monsanto was able to follow suit outside of the United States. As a result, Roundup and other glyphosate product sales rose 9 percent to nearly $2 billion. But Grant said he expects that was "a blip, not normal."