Unveiling better-than-expected results this morning, Monsanto also may have planted seeds for a spin-off of its herbicides business. It said it was creating a separate division for its Roundup and other herbicides. At very least, it may look to put the business in some kind of trust to protect shareholders from getting zapped. CEO Hugh Grant (pictured below) sprinkled some hints about where the company is headed:
“Over the last six years, Monsanto’s business has undergone a dramatic transition from a company historically built on chemical innovations to one focused on delivering enhanced seed offerings that help farmers get more out of each acre of farmland while reducing the footprint of the inputs used on that land. The actions announced today will allow our company to better navigate in today’s changing business environment and keep the company on a clear path for growth.
“We believe these steps are in the best interests of our shareowners, our customers and our employees. This is designed to bring more clarity and predictability to our Roundup business and greater focus to our growing seeds and traits business.”
The business, once a boomer for Monsanto, is turning out to be nearly as noxious to the company as it is to weeds. Gross profit from Roundup is seen dropping by half to about $1 billion annually as the company grapples with increased competition.
It has been thorny on the PR side as well. In a recent suit, Monsanto accused DuPont of unlawfully using Roundup technologies in soybeans and corn. DuPont responded by accusing Monsanto of trying to deny access to alternative technologies at a time when farmers are struggling with weeds that are increasingly resistant to current Monsanto products.