Monsanto Cuts Net Income Forecast on Expanded Restructuring

  • Savings forecast rises to $500 million, from $300 million
  • Profit forecast excluding restucturing charges is unchanged

Monsanto Co., the world’s largest seed company, cut its full-year earnings forecast because of additional expenses associated with the expansion of a cost-cutting plan it announced last month.

Net income in the year through August 2016 will now be $4 to $4.66 a share, including as much as $1.10 a share in restructuring costs, the St. Louis-based company said Tuesday in a statement. That compares with a projection made a month earlier of $4.44 to $5.01, with as much as 59 cents of restructuring expenses. The company maintained its forecast for profit that excludes one-time items of $5.10 to $5.60, while the average estimate of 24 analysts in a Bloomberg survey was $5.42.

Monsanto, the world’s largest seed producer, is taking steps to combat the effects of a commodity slump that reduced farmer incomes for two straight years. The company said the expanded restructuring program will save $500 million annually by the end of fiscal 2018. The smaller program announced Oct. 8 was to save as much as $300 million, partly by eliminating 2,600 jobs, or about 12 percent of the workforce.

Monsanto fell 1.5 percent to $92.86 in New York. The shares have dropped 22 percent this year.

In the fiscal first-quarter, which ends this month, Monsanto said it will lose 23 cents to 33 cents a share, excluding restructuring charges of as much as 80 cents a share. That trails the 14-cent profit estimated on average by 18 analysts.

The cost cuts come as Monsanto tries to acquire a competing chemical business to expand in pesticides beyond Roundup herbicide. In August, it abandoned a $46 billion takeover bid for Syngenta AG, the world’s largest producer of agricultural chemicals, after the Basel, Switzerland-based company refused to engage in negotiations. Monsanto CEO Hugh Grant said Oct. 8 that agriculture consolidation is "inevitable," and the heads of DuPont Co. and Dow Chemical Co. have said deal talks in the industry are ongoing.

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