Monsanto to slash jobs as market headwinds persist
Monsanto, the world’s largest seed company, has reported an operating profit of $3.5bn (€3.1bn) for its full financial year, a 13.5% decline compared with the same period last year. Full-year profits stood at $2.3bn (€2.1bn) despite the group recording a near $500m loss in its final quarter of the year.
Monsanto’s net sales declined by 5.6% to just over $15bn (€13bn), with the majority of this made up from the group’s seed and genomics division. Monsanto’s chemical division contributed about $5bn (€4.4bn) in sales.
Successive years of large grain harvests in the US have weighed heavily on grain prices and eroded farmer incomes, which in turn has impacted on Monsanto’s seed sales. Despite an expected continuation of headwinds for commodities and the global market alike, Monsanto remains defiant it can achieve ongoing earning of $5.10 to $5.60 per share in the coming fiscal year.
The company also reiterated its five-year ambition to more than double its 2014 earnings by the year 2019. Chief executive Hugh Grant said Monsanto remains the best positioned company in the industry.
“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 optimization in spend through strategic restructuring actions and accelerate our progress toward our targeted capital structure,” added Grant.
Despite the positive outlook, Monsanto released details of a cost-cutting restructuring programme it will undertake in the coming years. The group said it expects to cut up to 2,600 jobs in the next 24 months with a target to make annual savings of $275-300m by the end of 2017.
Earlier this year, Monsanto made three separate buyout offers for the Swiss-based chemical giant Syngenta. The offers, which valued Syngenta at more than €40bn, were all rejected by management at the Swiss firm, who said the offers significantly undervalued the company.
Monsanto finally withdrew its interest in early September saying it would focus on its core seed business from now on.
Any merger of Monsanto and Syngenta would have created by far the largest seed and chemical company in the world, with a turnover close to €30bn. Combined they would have controlled about 40% of both the seed and chemical markets.