Monsanto to slash 2,600 jobs as weak commodities prices continues

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Publish time: 9th October, 2015      Source: www.cnchemicals.com
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October 9, 2015

   

   

Monsanto to slash 2,600 jobs as weak commodities prices continues

   

   

   

   

   

The drop in global commodities prices and weaker corn seed sales have led Monsanto Co. to initiate austerity measures, including cutting off 2,600 jobs- over the next 18 to 24 months - to mitigate financial losses.

   

   

Monsanto''s key business is corn which had slid 5.1% to US$598 million. By the fourth quarter this year, a US$495 million loss was reported, compared to US$156 million in the same period during 2014.

   

   

Adding to a growing number of affected corporations, the agricultural titan will lose 12% of its workforce while the possibility of feeble profit through 2016 looms ahead, Bloomberg Business reported.

   

   

Monsanto is currently attempting to contain damages ensuing from the commodity slump that had shrunk farmer incomes for two consecutive years, by re-prioritising research and development as well as departing from the sugar-cane business. With the moves creating savings as much as US$300 million yearly, further restructuring could cut expenses by as much as an additional US$100 million.

   

   

"The initial phase is expected to lead to annual savings of US$275 to US$300 million by the end of fiscal year 2017, at a total cost of approximately US$850 to US$900 million," Monsanto said. "The company is developing further plans to reduce its operating spending by an additional US$100 million, which would bring the total annual expected savings to potentially US$400 million."

   

   

Despite the bleak situation, Monsanto is still optimistic of double per-share earnings in five years from 2014, according to Chris Shaw, an analyst with Monness Crespi Hardt & Co.

   

   

"We will continue to focus on executing on key milestones within our core seeds and traits business, and we plan to remain disciplined in our agricultural productivity strategy, drive further optimisation in spend through strategic restructuring actions and accelerate our progress toward our targeted capital structure," said Hugh Grant, the CEO of Monsanto.

   

   

For now, profit is expected to fall to a range of US$5.10- US$5.60 in the 12 months starting from September 1, compared to US$5.73 a year earlier, Monsanto said. Meanwhile, it will also expedite repurchases of share worth US$3 billion under a programme that was halted during Monsanto''s headlining failure to buy Syngenta AG for US$46 billion.

   

   

In addition to cost-saving actions and more favourable agriculture and currency markets, Monsanto is also relying on the sales of Intacta, a new genetically-modified (GM) soybean, to revive per-share earnings growth at more than 20% yearly by fiscal 2017.