5 Things to Watch for After Monsanto’s Earnings Train Wreck
Monsanto reported earnings this morning, and it was a train wreck.
The company missed their revenue estimates and said corn sales, its biggest source of profit, fell 5.1% year over year to $598 million, and soybean sales dropped 19% to $162 million. On top of that, one of its more profitable divisions, the agricultural productivity segment, which includes the Roundup brand weed killer, also saw sales fall to $1.1B from $1.25B. The company plans to eliminate 2,600 jobs as part of a cost-cutting plan which is 12% of its workforce.
It turns out that Syngenta wasn’t the only ones that didn’t want them.
Over half of the countries in Europe are opting out of their business model, California will be labeling the ingredient in their signature product, Roundup, as a carcinogen, and a growing number of American consumers are calling on the food industry to dump GMOs from their products.
So what to look for from this giant chemical company going forward?
- An adjustment or hike to the licensing, trait and royalty fees charged to U.S. farmers (would not be a smart move, as farmers are already going non-GMO due to the cost structure).
- Off balance sheet entities (this is where Enron got creative when earnings came under pressure).
- Insider trades.
- The U.S. food industry. 45% of new product launches are noon-GMO, as consumers are making it crystal clear that they don’t want to eat Roundup Ready food anymore.
- The Trans Pacific Partnership: Obama’s first stop when trying to sell this trade agreement which works in favor of Monsanto’s business model was to “business leaders” at the USDA.
If you are not familiar with how the TPP might work, this short two minute video is one of the best tutorials around. It will bring you up to speed quickly and explain why even Congress is not in favor of it. What can you do? Reach out to your local member of Congress and let them know: democracy is not something that we want traded away.
Tell your Senators to oppose TPP.
