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Monsanto cuts quarterly earnings guidance, shares drop

Hugh Grant, Chairman and CEO of Monsanto, participates in a panel discussion at the 2015 Fortune Global Forum in San Francisco, California November 3, 2015. REUTERS/Elijah Nouvelage

By P.J. Huffstutter

CHICAGO (Reuters) - Monsanto Co (MON.N) expects to lose 23 to 33 cents a share in its fiscal first quarter of 2016, dragged by restructuring costs, pricing pressures on its herbicide glyphosate, slower-than-expected U.S. corn seed sales and a weak currency in Brazil, a top executive said on Tuesday.

Monsanto shares slid more than 1 percent. Analysts had expected the company to report a profit of 6 cents per share for the quarter ending Nov. 30.

Monsanto now expects to earn $4.00 to $4.66 a share for fiscal 2016 which ends next August, Kerry Preete, executive vice president of global strategy, told investors at the Morgan Stanley Global Chemicals & Agriculture Conference.

Last month, the company had forecast fiscal 2016 earnings of $4.44 to $5.01 a share.

Agrochemical and seed companies are struggling to cope with a souring farm economy. A global glut of corn and soybeans has sent prices plummeting, and some of the world's largest agricultural companies have started talking about possible mergers.

Monsanto has said it plans to focus on developing its digital farming strategy, and expand the reach and licensing deals of new corn and soybean traits. Still, market analysts and company investors have wondered what acquisition deals, if any, Monsanto might make after this year's failed $45 billion bid to purchase rival Syngenta AG (SYNN.VX).

Last month, Monsanto announced plans to restructure, slashing about 11.6 percent of its regular work force. On Tuesday, Monsanto said in a statement it would have larger one-time restructuring charges than previously estimated.

Now, the company forecasts it will see $200 million in savings from its restructuring. This brings the total amount to $500 million in savings by fiscal 2018, sharply higher than the previous estimate of $275-to-$300 million of savings from restructuring over two years.

Monsanto's profit stalwarts, weed killer Roundup and its portfolio of genetically modified seeds, have been showing signs of strain. Roundup's longevity as a farmer mainstay has become vulnerable as weeds have developed resistance to its active ingredient glyphosate.

Profits have also been hit by currency pressures as Brazil's real (BRL=) has weakened against the U.S. dollar. This has reduced the dollar value of Monsanto's licensing fees in that country.

Excluding special items Monsanto expects to earn $5.10 to $5.60 per share in fiscal year 2016, unchanged from previous guidance, Preete told investors.

A Thomson Reuters poll found analysts are expecting $5.34 a share in adjusted earnings.

Monsanto shares fell $1.22, or 1.3 percent, to $93.05 by 12:02 ET.


(Reporting By P.J. Huffstutter; Editing by Marguerita Choy and David Gregorio)