UPDATE 1-Monsanto gains market share in Latin America

Wed May 19, 2010 10:21am EDT

* Says share gains in Latin America

* Says mid-teens EPS growth beginning in 2011

* Shares unchanged

By Carey Gillam

NEW YORK, May 19 (Reuters) - Monsanto (MON.N) sought to reassure disheartened investors on Wednesday, saying it was gaining market share in Latin America and that farmers were enthusiastic about its new U.S. seed product lineup.

The company, which has been struggling with a raft of competitive problems in both its chemicals and seeds and traits businesses, reiterated a forecast for mid-teens percentage growth in earnings per share beginning in 2011.

The news of market share gains in Latin America comes as the company works to underpin investor discontent that pushed shares in the global seed company to a more than three-year low on Monday. The stock fell to $53.90 that day, a 42 percent drop over the last year alone.

Monsanto shares were unchanged at $54.26 in morning trading on Wednesday.

Monsanto, a leading developer of genetically altered soybeans, corn and cotton, among other crops, said Wednesday that despite a decline in overall acres, it gained one percentage point in corn market share Argentina. The company said that in Brazil it sold 5 million acres of its YieldGard Corn Borer, which helped push its share up three points.

Executive Vice President Brett Begemann said recent company research indicated that for most U.S. farmers, Monsanto's reduced-refuge family of corn traits products "creates a compelling opportunity for conversion and adoption."

The optimistic tone comes a month after Monsanto predicted corn-seed share this year would be flat and bean-seed share down. The company has said that amid weaker-than-forecast sales of new SmartStax corn seed and Roundup Ready 2 Yield soybeans, it would lower prices.

Part of Monsanto's struggle stems from its herbicide business. The company's agricultural products segment saw a 35 percent drop in second-quarter net sales to $642 million from a year earlier.

Analysts have become increasingly critical of the company's market moves, chiding Monsanto for taking an arrogant approach in marketing and pricing of both its Roundup herbicide and branded seeds.

"The company's pricing policies have been too aggressive, if not obscene, in our opinion," Morgan Joseph & Co analyst Charlie Rentschler wrote in a report to investors on Monday.

Still, Rentschler said Monsanto appeared to be making solid progress in regaining its footing.

Jefferies & Co analyst Laurence Alexander expressed concern in a report Friday about lower seed pricing and deterioration in the company's glyphosate business.

"Overhangs from excess corn inventory and the potential for lower trait fees next year are likely to increase concerns that there could be downside risk to Monsanto's target of mid-teens EPS growth through 2012," he wrote.

Monsanto is also dealing with an antitrust probe by the U.S. Department of Justice and several state attorneys general. (Reporting by Carey Gillam; Editing by Lisa Von Ahn)

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