Monsanto to Cut 2600 Jobs in Restructuring

Monsanto Co, one of the world’s largest seed and agrichemical companies, said on Wednesday that quarterly sales of its key products fell, leading to a bigger loss than the market expected and reflecting a tough commodity market that it expects to pinch results well into 2016. The company is developing further plans to reduce its operating spending by an additional $100 million, which would bring the total annual expected savings to potentially $400 million.

Nevertheless, Monsanto said it was keeping its earnings-per-share guidance for the new fiscal year beginning Sept.1, at $5.10 – $5.60.

The restructuring plan will involve closing Monsanto’s Brazilian sugar-cane unit, CanaVialis, which contributed to about $493 million in restructuring charges for the quarter, according to Monsanto’s chief financial officer, Pierre Courduroux. The cost of the reorganization – which will streamline sales, research and other departments – is estimated at $850 million to $900 million. That is well below many analysts’ expectations for more than $6.00. Last year, it lost $156 during the same quarter.

Monsanto reported fiscal year 2015 profit fell 15.5 percent from a year earlier to 2.31 billion, in part due to the fall in commodity prices and legal and restructuring charges.

Shares of the company declined 1 per cent in early trading.

This was an apparent reference to St. Louis-based Monsanto’s plan to eliminate 2,600 jobs over the next 18 to 24 months, from a worldwide workforce of about 22,000.

Grant says Monday will remain focused on achieving growth targets for its core seeds and traits business, stay disciplined with its herbicide business, and still meet its target of more than doubling FY 2014 EPS, excluding special items, by 2019. The company is also planning a $3 billion accelerated share buyback program. Syngenta said Monsanto’s $46 billion offer was below the potential value of the company, plus it had concerns about antitrust violations.

“There has been a lot of conversation about Monsanto is pivoting, or you’re changing,” Grant said. The move came after Monsanto abandoned its efforts to acquire Swiss pesticide producer Syngenta.

Low corn prices are putting pressure on the company’s best-selling product, genetically-modified corn seeds. That contributed to a $US100 million drop in fourth quarter profits in its Agriculture Productivity division.