Sector News

Monsanto misses estimates, plans layoffs and sugarcane exit

October 8, 2015
Chemical Value Chain

Faced with slumping agricultural markets, seed giant Monsanto has announced a restructuring program that includes 2,600 layoffs—approximately 12% of its global workforce—in a quarterly earnings report that includes a wider year-on-year (YOY) loss and a disappointing forecast for 2016.

The company reports a net loss of $497 million for the three months ended 31 August, a seasonally weak quarter, compared with a net loss of $163 million in the year-ago period. The reported adjusted operating loss of 19 cts/share missed analysts’ consensus estimate of a loss of 2 cts/share, as reported by Thomson Reuters (New York). Net sales fell 10% YOY, to $2.35 billion. Gross profit was down 19% YOY, to $996 million.

Monsanto has also announced plans to cut costs globally to “transform and innovate the way the company operates.” Actions, in part, include streamlining and reprioritizing some commercial and R&D efforts, including exiting the sugarcane business. The plans also include the “expected separation” of approximately 2,600 employees over the next 18–24 months. 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.

Fourth-quarter seeds and genomics segment sales were down 9.1% YOY, to $1.2 billion. Segment gross profit was down 19% YOY, to $604 million. Corn sales were down 5.1% YOY, while soybean sales fell 19%. Agricultural productivity segment sales fell 13% YOY, to $1.1 billion, while gross profit slipped 20%, to $392 million.

Monsanto also forecast lower earnings—$5.10–5.60/share—in 2016 on expectations of continued currency pressure (35–40 cts/share), glyphosate pricing declines (50–85 cts/share), higher corn seed costs (20–30 cts/share), and launch costs for Roundup Ready Xtend soybeans. Analysts had expected the company to post 2016 earnings of $6.20/share.

The company expects mid-to-high single-digit growth in gross profit before estimated restructuring charges from its core seeds and Genomics segment in fiscal 2016. This growth will be led by global corn hybrid portfolio introductions, continued Intacta RR2 PRO adoption, and additional licensing opportunities. Monsanto expects agricultural productivity segment to deliver $900 million–1.1 billion of gross profit since the company plans to stay consistent with its strategy to maintain a slight premium over the generics.

By Rebecca Coons

Source: Chemical Week

comments closed

Related News

January 29, 2023

Dow and 3M cut thousands of jobs

Chemical Value Chain

3M and Dow have announced they are cutting thousands of roles from their global workforces in response to economic pressures. Dow has said it will cut 2,000 jobs across its global workforce (around 5%) in a bid to save US$1bn in 2023. The company says it will also cut costs by shutting down “select assets”, though it did not note where it would halt operations.

January 29, 2023

Sweden discovers Europe’s largest rare earths deposit

Chemical Value Chain

Sweden’s state mining firm has discovered what could be Europe’s largest rare earths deposit, and says it could help the bloc reduce its reliance on imports of minerals needed to manufacture clean technologies and meet climate targets.

January 29, 2023

Avantium to supply Henkel with plant-based FDCA

Chemical Value Chain

Henkel and Avantium have been partners since 2019, when Henkel joined the PEFerence consortium. This consortium of partners, coordinated by Avantium, aims to establish an innovative supply chain for FDCA and PEF (polyethylene furanoate).

How can we help you?

We're easy to reach