Monsanto slashing 2,600 jobs, buying back shares as sales fall

By Carey Gillam (Reuters) - Monsanto Co, one of the world's largest seed and agrichemical companies, said on Wednesday that it was slashing 2,600 jobs and restructuring operations to cut costs in a slumping commodity market that it expects to squeeze results well into 2016. Monsanto, which also reported a much wider quarterly loss, said that along with the layoffs, its global restructuring would include "streamlining and reprioritizing" some commercial and research and development work, including an exit from the sugar cane business. Monsanto had 22,400 regular employees and 4,600 temporary workers, according to its 2014 annual report. The company said it should reap annual savings of $275 million to $300 million from the restructuring by the end of fiscal 2017, at a total cost of $850 million to $900 million. It plans to reduce operating spending by another $100 million, bringing total annual savings to as much as $400 million. To try to shore up investor confidence, the company announced a $3 billion accelerated share repurchase program that Chairman Hugh Grant said would be completed in the next six months. Still, Monsanto said it was pegging its earnings-per-share outlook for its new fiscal year, which began on Sept. 1, at $5.10 to $5.60. That is well below many analysts' expectations for more than $6.00. The company announced the restructuring as it said its losses widened to $1.06 a share in the fourth quarter ended on Aug. 31 from 31 cents a year earlier. Sales of corn seeds and traits, Monsanto's key products, fell to $598 million from $630 million in the quarter. And sales at the company's agricultural productivity unit, which includes Roundup herbicide, dropped to $1.1 billion from $1.25 billion. For the year, net sales were down about 5 percent for the seeds and traits products and down 7 percent for herbicides and other agricultural productivity products. Despite the bleak results, Grant said that the company's fundamentals were strong. Monsanto will remain focused on execution of growth targets for its core seeds and traits business and be "disciplined" with its herbicide business, he said. The company said it would still meet its target of more than doubling fiscal 2014 earnings per share, excluding special items, by 2019. Strong demand for corn and soybeans remains a key fundamental for Monsanto, Grant said. The company has particularly high hopes for new soybeans, corn and cotton that can be sprayed with a new combination of Monsanto's glyphosate-based Roundup and dicamba herbicides. The combination is aimed at combating widespread weed resistance to glyphosate. Monsanto still needs final regulatory approvals but said advance orders for "Roundup Ready Xtend Crop System" soybeans were on track to sell out by early December, company officials said. It expects pricing at a $5-to-$10-an-acre premium. Monsanto also wants to expand sales of agricultural digital data products designed to help farmers be more efficient in boosting crop yields. It will soon start field trials in Brazil, officials said. While farmers have shown interest in the new software and hardware data products offered by Monsanto and several competitors, they have been reluctant to pay for them. Shares of Monsanto were up 0.3 percent at $87.82 after falling as much as 4.3 percent. At Tuesday's close, the stock had dropped roughly 30 percent from a high set last February, and the company's growth strategy has under intense investor scrutiny after an attempted takeover of Swiss rival Syngenta AG failed. (Reporting by Carey Gillam in Kansas City, Mo.; Editing by Lisa Von Ahn)