Agricultural chemicals maker Monsanto Co. (MON) posted a quarterly net loss on Wednesday as a drop in Roundup (search) herbicide sales in the United States more than offset increased demand for its specialty seed technology.

But Monsanto officials said the company is on track with its strategy to build future profits on genetically modified crop products. The company now expects earnings-per-share growth of 10 percent to 18 percent in 2005 and 10 percent in 2006.

"Our global business performance was better than expected" in the latest quarter, Chief Executive Hugh Grant said in a conference call.

Monsanto (search) posted a net loss of $42 million, or 16 cents a share, for the fiscal fourth quarter ended Aug. 31, compared with a loss of $188 million, or 72 cents a share, a year earlier.

The loss in the latest quarter included after-tax restructuring charges of $44 million and a tax benefit of $5 million. The year-earlier loss included a charge of 96 cents a share tied to a litigation settlement.

Continued erosion in Monsanto's herbicide business was the chief drag on earnings, the company said. Increased competition has been eating into both sales volume and the prices that Monsanto can command. For the fourth quarter, sales of Roundup and other glyphosate-based herbicides dropped 17 percent to $590 million.

Total net sales for the fourth quarter were $1.26 billion, down 3 percent from a year earlier.

Sales of seeds and genetic modifications that make corn, soybeans and other crops resist insects and tolerate weedkillers rose 39 percent. Sales in that unit were $354 million.

Soybean sales surged to $44 million from $10 million a year earlier. Sales of all other crop seeds and "traits" — genes inserted into seeds to give crops certain characteristics — were up 67 percent to $142 million.

Fulcrum Global Partners analyst Frank Mitsch said while the fourth quarter was lackluster, Monsanto appeared on track to meet its double-digit growth goals.

He said the company's move to make up for decreased sales of herbicide by sharply raising prices for its biotech seeds could be a problem down the road, however.

For the new season, Monsanto has raised the technology fee attached to some of its products as much as 41 percent.

"What is going to make or break Monsanto is how willing the farm community is to accept these increases," Mitsch said.

Monsanto also said on Wednesday that quality problems will continue to limit the supply of Posilac, a supplement that increases milk production in dairy cows, into 2005. Originally, the company thought it would lift the limits by the end of 2004.

Monsanto shares were up 18 cents at $36.77 in late-morning trade on the New York Stock Exchange.