Monsanto to axe 2,600 jobs; buy back $3 bn of shares

One of the world's largest agrichemical and agricultural biotech firms, Monsanto Co Inc said On Wednesday that it would cut 2,600 jobs as part of its restructuring to cut costs amid falling commodity prices and a widening quarterly loss.

The planned job cuts represent nearly 10 per cent of the company's total workforce of around 27,000 regular and temporary workers as at the end of 2014. The reduction in workforce is expected to take place over the next two years.

Monsanto has also announced a new $3-billion accelerated share repurchase programme to boost investor confidence as it progresses toward its targeted capital structure. The programme is expected to complete in the next six months.

The restructuring is expected to yield annual savings of up to $300 million by the end of fiscal year 2017 at a cost of around $900 million, Monsanto said.

The company is also devising plans to reduce operating costs by additional $100 million, which would bring the overall potential savings to $400 million.

St Louis, Mississippi-based Monsanto is a leading manufacturer of crop seeds, pesticides and herbicides.

The company operates in two segments - seeds and genomics consisting of the global seeds and traits business, biotechnology platforms and precision agriculture; and  agricultural productivity comprising crop protection products and lawn-and-garden herbicide products.

For the fourth quarter ended August, the company's loss tripled to $495 million compared to a $156 million for the same quarter a year ago. Sales fell 10 per cent to $2.36 billion from $2.63 billion.

Sales of seeds and genomics, Monsanto's key products, fell 9 per cent to $1.25 billion from $1.38 billion in the quarter while sales of agricultural productivity segment dropped 12 per cent to $1.1 billion from $1.25 billion.

For the full year the company reported a 16-per cent drop in net profit at $2.3 billion compared to last year. Sales were down 5 per cent at $15 billion. Seeds and genomics accounted for about two-thirds of the company's annual revenue.

Earnings per share (EPS) fell 8 per cent to $4.81. For the fiscal 2016, the company has kept a lower EPS guidance of $4.44 to $5.01, reflecting additional restructuring charges.

Despite the depressing results, Monsanto chairman and chief executive officer Hugh Grant said the company has a strong footing.

With its inherent strengths, Monsanto believes that it is well positioned for sustainable growth over long term, aiming to more than double its 2014 ongoing EPS by 2019.

 ''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,'' Grant said.

The restructuring actions would also include streamlining and reprioritizing some commercial, and R&D efforts and exit of the sugarcane business, the company said.

The growth drivers would include the company's Intacta RR2PRO soybeans penetration on nearly 100 million acres and the Roundup Ready Xtend crop system in cotton and soybeans across the Americas.

Moreover, the company expects a small, but steady recovery in prices of its herbicide glyphosate.