Monsanto Posts Wider Loss on Declining Corn Acres, Glyphosate Pricing
7 October 2015 Monsanto posted a wider loss in the fourth quarter as foreign currency headwinds, declining corn acres and declines in glyphosate pricing took their toll.
The company also unveiled plans to take global restructuring actions, including the exit of the sugarcane business.
The initial phase is expected to lead to annual savings of $275 to $300 million by the end of fiscal year 2017, at a total cost of approximately $850 to $900 million. The plans also include job cuts of about 2,600 employees over the next 18 to 24 months. The company is developing further plans to reduce its operating spending by an additional $100 million, which would bring the total annual expected savings to potentially $400 million.
Monsanto reported a net loss of $495 million in the fourth quarter of fiscal year 2015, compared with a reported net loss of $156 million in the same period last year.
For the fourth quarter, Seeds and Genomics segment net sales were $1.3 billion for the quarter, down from $1.4 billion a year ago. Agricultural Productivity — which consists of crop protection and lawn-and-garden herbicide products — net sales were $1.1 billion for the quarter, down from $1.3 billion a year ago.
With $274 million in a one-time licensing benefit in fiscal year 2015 and the continuing low generic glyphosate pricing levels, Monsanto expects the Agricultural Productivity segment gross profit to be in the range of $900 million to $1.1 billion in fiscal year 2016, it said, adding, “The company plans to stay consistent with its strategy as it continues to adjust pricing to maintain a slight premium over the generics. Beyond fiscal year 2016, the continued strategic management of the Agricultural Productivity segment is expected to support the Seeds and Genomics segment and new growth opportunities.”
“The fundamentals of our business are strong and Monsanto remains the best positioned company in the industry. As we look to 2016, focus and discipline become increasingly important,” said Chief Executive Hugh Grant. “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. A focus on these priorities will set the foundation for expected rapid growth, with our strong core business and several growth drivers continuing to underpin our confidence to meet our target of more than doubling fiscal year 2014 ongoing EPS by fiscal year 2019.”
Looking ahead for the seed business, Monsanto said it plans to build on the momentum of Intacta RR2 PRO soybeans in South America, with a target to reach 30 million acres in fiscal year 2016. For the Roundup Ready Xtend Crop System, U.S. teams are gearing up for the anticipated largest technology launch on more than three million acres in fiscal year 2016.
The soybean opportunity will be complemented in fiscal year 2016 by the company’s global corn business. This includes new hybrid portfolio introductions across key corn growing regions, an anticipated low single digit germplasm price mix lift in local currency and the anticipated repeat in holding or growing share in every major corn market in 2016.
Within the digital agriculture space, Monsanto expects the Climate platform to expand to more than 90 million acres in 2016 with more than 12 million of the acres using its premium offerings.
Get The Newsletter Today!
