(Reuters) — Monsanto plans to slash 2,600 jobs and restructure operations to cut costs in a slumping commodity market.
The company, which said it expected low prices for agricultural products to squeeze results well into 2016, also reported a much wider quarterly loss and gave an outlook below many analysts’ expectations.
The layoffs would affect 11.6 percent of Monsanto’s regular workforce, according to the company.
The global restructuring will also include an exit from the sugar cane business and “streamlining and reprioritizing” some commercial and research and development work.
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To try to shore up investor confidence, the company announced a $3 billion accelerated share repurchase program that chair Hugh Grant said would be completed in the next six months.
Monsanto said it expected to incur restructuring costs of $850 to $900 million. When completed, the moves should help save as much as $400 million a year.
The restructuring, which caps a year when Monsanto’s sales fell more than five percent, comes during an agricultural slump and a currency collapse in the important Brazilian market.
Syngenta AG, which Monsanto had tried to acquire over the summer, has said it is trying to bolster its bottom line by selling a vegetable seed business and undertaking a $2 billion share repurchase. And DuPont, which operates agricultural seed seller DuPont Pioneer, has lowered its profit outlook.
Monsanto forecast earnings per share of $5.10 to $5.60 for its new fiscal year, which began on Sept. 1. That is well below many analysts’ expectations of more than $6.
The company said its losses widened to $1.06 a share in the fourth quarter that ended on Aug. 31 from 31 cents a year earlier.
Sales of corn seeds and traits, which are Monsanto’s key products, fell five percent to $598 million in the quarter. As well, sales at the company’s agricultural productivity unit, which includes Roundup herbicide, dropped 12 percent to $1.1 billion.
Despite the bleak results, Grant said the company’s fundamentals were strong.
Monsanto will remain focused on achieving growth targets for its core seeds and traits business and be disciplined with its herbicide business, he said.
