Monsanto reports better-than-expected first-quarter results due to cost cuts and increased soybean sales, but says it will expand its previously announced restructuring program to include another 1,000 job cuts in an effort to cope with slumping corn sales and increased currency pressure.
The plan brings the total announced headcount reduction to 3,600, or just over 16% of the company’s total workforce. Monsanto is targeting $500 million in annual savings by the end of 2018.
The company reports a net loss of $253 million for its fiscal first quarter ended 30 November, compared with a net gain of $243 million in the year-ago quarter. Adjusted earnings, a loss of 11 cts/share, beat the consensus analyst estimate of a loss of 23 cts/share and the company’s own guidance of a loss of 23–33 cts/share. Sales slid 22.7% year-on-year (YOY), to $2.2 billion.
Seeds and genomics gross profit decreased 22.6% YOY, to $728 million, on sales down 13.7% YOY, to $1.4 million. Corn seed sales slumped 19.7% YOY, to $745 million, while soybeans were up 10.6%, to $438 million. Cotton and vegetable seeds sales were down.
Agricultural productivity gross profit fell by 63.2% YOY, to $173 million, while sales were down a more modest 24.3%, to $820 million.
Looking ahead, Monsanto says it expects full-year earnings to be at the lower half of the $5.10–$5.60/share range, 2.2–11.0% below 2015 results. Analysts’ estimates are for $5.26/share. The company says it expects currency headwinds to impact 2016 results by 60 cts–70 cts/share, up from a previous estimate of 35 cts–50 cts/share because of the recent currency devaluation in Argentina.
Looking ahead, Monsanto expects seeds and genomics gross profit to increase 5–7% YOY in 2016, led by new corn hybrids, increased adoption and of next-generation soybeans, new licensing opportunities. Agricultural productivity results are also expected to improve; Monsanto forecasts 2016 segment gross profit of $900 million to $1.1 billion as timing-related declines in volumes from the first quarter are recovered in the latter half of the year.
Monsanto estimates the expanded restructuring program will result in $1.1–$1.2 billion in charges, up from a previously estimated $850–$900 million.
By Rebecca Coons
Source: Chemical Week
We are closing the chapter of the Chemicals Import Export Headquarters, and opening a new chapter under the name of Qemetica – a chemical group driving many industries on all continents. Therefore, the change of name is also accompanied by the adoption of the key goals of the business strategy for the next 6 years. – says Kamil Majczak, President of the Management Board.
In its efforts to advance chemical recycling, Neste has successfully conducted its first processing trial run with a new challenging raw material, liquefied discarded tires. In the processing run, Neste produced high-quality raw material for new plastics and chemicals.
Sika is opening a state-of-the-art facility in Lima, Peru, to produce synthetic macro fibers, and expanding the rollout of a product range with great growth potential in Latin America. With this innovative technology, Sika is further strengthening its position as a leading supplier to the mining industry and a strong partner for infrastructure projects.
