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.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE