Monsanto Co. (MON), the world's largest seed company by revenue, announced plans Wednesday to restructure a crop protection business hit by intensifying competition from generic rivals.

The agribusiness group expects gross profits from the Roundup unit to halve next year from their recent peak of $2 billion, though it maintained its long-term earnings' targets.

Monsanto has diversified over the past decade from herbicides such as Roundup that once accounted for the bulk of its sales, introducing high-margin seeds that boost yield for farmers of corn, soybeans and other crops.

Hugh Grant, chairman and chief executive, said there were no immediate plans to dispose of Roundup and associated businesses, which are being turned into a standalone unit following a sharp drop in earnings.

"We are fighting a significant onslaught of generic material," Grant said on a conference call after the company reported a 14.4% drop in profits for its fiscal third quarter.

Grant has steered Monsanto toward a dominant position in high-technology seeds, using what he once described as "windfall" profits from Roundup in recent years to expand through acquisitions into cotton and vegetable seeds.

He said Monsanto had a "never say never" policy as far as selling Roundup, but that the immediate focus was on stabilizing the business.

Roundup sales almost halved in the latest quarter, and a forecast gross profit of around $1 billion next year could lead group earnings to be flat or even down in 2009.

However, Monsanto expects new seed products to offset the decline and maintained its existing goal of doubling gross profit for the group between 2007 and 2012. It also announced plans to shed 900 jobs, 4% of its workforce, as part of a broader cost-cutting initiative.

While European governments continue to resist use of its genetically-modified seeds, Monsanto has increased its penetration in North and South America and in Asia, introducing higher-margin products that provide resistance against pests and weeds.

Grant said Monsanto remained on the lookout for acquisitions, and had examined part of the seeds business targeted for sale by Dow Chemical Co. (DOW).

Monsanto reported profits of $694 million, or $1.25 a share, in the quarter to May 31, ahead of the reduced guidance issued last month. This compares with $811 million, or $1.45 a share, a year earlier.

Revenue fell 11% to $3.16 billion and gross margin rose to 58% from 55.6%.

Monsanto shares were up 1.2% at $80.26 in mid-morning trade, valuing the company at $43.3 billion. The stock peaked last June at $145.80, but has fallen back in the wake of the reversal in the global commodity boom.

Grant, like other executives in the sector, maintains that demographic changes such as shifting diets will return growth in crop demand to its recent historical pattern, driven by the need to maximize yields from finite land and water resources.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com