Just three months ago, the seed and agri-chemical giant Monsanto announced it expected to slash up to 2,600 jobs over a two-year period with the aim of making cost savings of $275m to $300m by the end of 2017.
However, releasing its first-quarter results for 2016 last week, the St Louis, Missouri-based agribusiness announced it was increasing the number of jobs to be cut by a further 1,000 positions. This will now see up to 3,600, or approximately 16% of Monsanto’s entire workforce, cut over the coming two years.
Monsanto says that the additional staffing cuts, along with site closures and contract terminations will result in a restructuring charge of about $1.1bn to $1.2bn.
Monsanto, like the rest of the global agribusiness industry, has been battling against significant challenges in the past year. Weak commodity prices, particularly for grains and oilseeds, coupled with currency headwinds in key growing regions such as Brazil and Argentina have continued to affect the group’s operating performance.
Last week, Monsanto reported a first quarter operating loss of $253m (€233m), a significant deterioration compared to the $243m operating profit generated for the same period last year. Group sales for the first quarter stood at $2.2bn, a 23% decline year on year.
During an earnings call with analysts, Monsanto chief executive Hugh Grant said the weakness in global commodity markets should lead to further consolidation within the global agricultural sector.
In 2015, 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.
Just two months after the last buyout offer was rejected, two of Monsanto’s biggest rivals and significant players in the agri-chemical and seed industries in their own right, Dow and DuPont, agreed to merge.
The newly combined agri-chemical and seed business will have sales of more than $18bn and will surpass Monsanto as the world’s largest agri-chemical and seed company.
However, Grant told analysts executives in his company still believe a deal with Syngenta is possible but admitted there had not been much progress made since the last offer was rejected.