Oct 7 (Reuters) – Monsanto Co, one of the world’s largest seed and agrichemical companies, said on Wednesday that it was slashing 2,600 jobs and restructuring operations to cut costs in a slumping commodity market that it expects to squeeze results well into 2016
Monsanto, which also reported a much wider quarterly loss, said that along with the layoffs, its global restructuring would include “streamlining and reprioritizing” some commercial and research and development work, including an exit from the sugar cane business
Monsanto had 22,400 regular employees and 4,600 temporary workers, according to its 2014 annual report
Read Also
Canada says Australia has re-opened market access for beef and beef products
Australia has lifted a 22-year-old ban on the import of Canadian beef and beef products, the Canadian Food Inspection Agency said in a statement on Tuesday.
The company said it should reap annual savings of $275 million to $300 million from the restructuring by the end of fiscal 2017, at a total cost of $850 million to $900 million. It plans to reduce operating spending by another $100 million, bringing total annual savings to as much as $400 million
To try to shore up investor confidence, the company announced a $3 billion accelerated share repurchase program that Chairman Hugh Grant said would be completed in the next six months
Still, Monsanto said it was pegging its earnings-per-share outlook for its new fiscal year, which began on Sept. 1, at $5.10 to $5.60. That is well below many analysts’ expectations for more than $6.00
The company announced the restructuring as it said its losses widened to $1.06 a share in the fourth quarter ended on Aug. 31 from 31 cents a year earlier
Sales of corn seeds and traits, Monsanto’s key products, fell to $598 million from $630 million in the quarter. And sales at the company’s agricultural productivity unit, which includes Roundup herbicide, dropped to $1.1 billion from $1.25 billion
For the year, net sales were down about 5 percent for the seeds and traits products and down 7 percent for herbicides and other agricultural productivity products
Despite the bleak results, Grant said that the company’s fundamentals were strong
Monsanto will remain focused on execution of growth targets for its core seeds and traits business and be “disciplined” with its herbicide business, he said
The company said it would still meet its target of more than doubling fiscal 2014 earnings per share, excluding special items, by 2019
Strong demand for corn and soybeans remains a key fundamental for Monsanto, Grant said
The company has particularly high hopes for new soybeans, corn and cotton that can be sprayed with a new combination of Monsanto’s glyphosate-based Roundup and dicamba herbicides. The combination is aimed at combating widespread weed resistance to glyphosate
Monsanto still needs final regulatory approvals but said advance orders for “Roundup Ready Xtend Crop System” soybeans were on track to sell out by early December, company officials said. It expects pricing at a $5-to-$10-an-acre premium
Monsanto also wants to expand sales of agricultural digital data products designed to help farmers be more efficient in boosting crop yields. It will soon start field trials in Brazil, officials said
While farmers have shown interest in the new software and hardware data products offered by Monsanto and several competitors, they have been reluctant to pay for them
Shares of Monsanto were up 0.3 percent at $87.82 after falling as much as 4.3 percent
At Tuesday’s close, the stock had dropped roughly 30 percent from a high set last February, and the company’s growth strategy has under intense investor scrutiny after an attempted takeover of Swiss rival Syngenta AG failed.
