Monsanto (MON) Lowering Prices To Raise Profit
Monsanto Co. (NYSE: MON) plans to reduce prices on its newest genetically modified seeds in order get farmers using the seeds quickly and raise profits 15% per year by fiscal year 2011.
Chief Executive Officer Hugh Grant said on Wednesday that weaker than expected sales of SmartStax corn seed and Roundup Ready 2 Yield soybeans, along with discussions with farmers, led to Monsanto Co. deciding to lower costs.
Grant said during a conference call with analysts that he expects profits to grow by 13% to 17% a year from the $3.10 per share that Monsanto Co. expects to earn this year.
He also said that he didn't think Monsanto Co. could meet the goal it made in 2007 to double its gross profit by 2012. Generic Roundup competitors have cut into the company's market share and forced it to lower its prices.
By lowering the prices, Monsanto Co. hopes to meet its goal of selling 16 million acres of Roundup Ready 2 soybeans in 2011, compared to just 6 million acres this year.
Widespread adoption of the seeds would reveal their benefits to farmers who would hopefully buy them after the original Roundup Ready soybeans lose their patent protection in 2014.
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