* Profit seen at low end of outlook for FY 2009
* Competition on Roundup stronger than expected
* Free cash flow seen at $1.4 billion
* Shares fall more than 5 percent
(Updates stock price, adds details)
By Carey Gillam
KANSAS CITY, May 27 Monsanto Co (MON.N) said
on Wednesday that tougher competition in the herbicide business
would push fiscal-year results to the low end of its earnings
forecast, sending shares of the world's largest seed company
down more than 5 percent.
Monsanto now expects ongoing earnings of about $4.40 per
share, the low point in its previously announced range of $4.40
to $4.50, for the year ending on Aug. 31.
The company said third-quarter earnings were forecast at
$1.15 per share. Analysts were looking for $1.58, according to
Reuters Estimates. The company will release its third-quarter
results on June 24.
Shares of St. Louis based Monsanto were off 5.1 percent at
$80.90 in midday trade on the New York Stock Exchange.
Monsanto had warned earlier this year of stiff competition
in the glyphosate-based herbicide arena, where the company's
Roundup herbicide has long been a favorite of farmers.
Company officials had said they saw 2009 as the peak for
the herbicide business, with future revenue growth driven
mainly by innovations in seeds.
Still, retail prices for glyphosate-based herbicide have
eroded faster than expected, mostly due to Chinese generics and
pricing actions by Monsanto competitors Dow (DOW.N) and
Syngenta SYNN.VX, according to Jefferies & Company analyst
Alexander reported in a note to investors that U.S. spot
herbicide prices had fallen to $19-$21 a gallon from about
$21-$25 a gallon earlier this year.
Monsanto said Wednesday its Roundup and glyphosate business
will likely generate about $2 billion in gross profit, down
from its previous forecast of $2.4 billion.
Partly offsetting the bad news on the herbicide business
segment, Monsanto said its expects its seeds and traits
businesses to deliver gross profit toward the upper end of its
prior guidance of $4.4 billion to $4.5 billion in fiscal year
Within that segment, Monsanto projects that its corn and
soybean businesses combined could generate $3.5 billion in
gross profit for fiscal 2009, up about 20 percent over the
The company also said it expected to generate about $1.4
billion in free cash for the full year, down from $1.8
(Reporting by Carey Gillam, editing by Dave Zimmerman)