Monsanto increases job cuts as corn, chemical sales slump

Monsanto increases job cuts as corn, chemical sales slump

9:39 AM, 8th January 2016
Monsanto increases job cuts as corn, chemical sales slump

BENGALURU, INDIA: Monsanto Company said that the souring of farm economy and currency woes will push its 2016 earnings to the lower end of expectations, while a cost-cutting drive will lead the world’s largest seed company to slash more jobs.

The company said that it now plans to cut a total of 3,600 jobs, or about 16 percent of its global work force, through fiscal 2018, and expects to record $1.1 billion to $1.2 billion in restructuring charges.

Monsanto had previously said it expected those charges to be between $850 million to $900 million.

Low commodity prices also should lead to more consolidation in the agricultural sector, chief executive Hugh Grant said, about a month after rivals Dow Chemical Co and DuPont said they would merge.

However, Monsanto’s recent attempts to re-engage Syngenta AG about a potential takeover have been difficult since the Swiss agrochemical company shot down a proposed $45 billion deal last year, Grant said.

He told analysts that the company executives still believe there is “a significant opportunity” for integration between the two companies, and given tougher market conditions there is a greater need to figure out what those opportunities might be.

“We haven’t seen much progress on that front,” Grant said.

Monsanto reported a smaller-than-expected quarterly loss, thanks in part to soybean sales rising in Brazil and growing demand in the company's new soybean seeds and product lines.

But currency concerns, low commodity prices and farmers keeping a tight grip on their wallets have continued to create a tough marketplace for the St. Louis-based company.

A global glut of corn and soybeans has kept grain prices depressed for a third straight year, while pressure from investors and a desire to bolster profits - and product portfolios - has sent many of the world's largest agricultural companies scrambling to cut deals.

Late last year, DuPont and Dow Chemical announced an all-stock merger valued at $130 billion.

Monsanto expects to continue to have licensing deals with the merged company, Grant said.

“We expect industry consolidation to continue, and it should,” he said.

The company also said it expects adjusted earnings for the full-year to be in the lower half of the $5.10 to $5.60 range, partly due to weak currency in Argentina.

The company’s net loss was $253 million, or 56 cents per share, in the first quarter ended Nov 30, compared with a profit of $243 million, or 50 cents per share, a year earlier.

On an adjusted basis, Monsanto reported a loss of 11 cents per share.

Analysts on average had expected a loss of 23 cents, according to Thomson Reuters I/B/E/S.

Monsanto’s total net sales fell 22.7 percent to $2.22 billion.

© Reuters News



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