BY P.J. HUFFSTUTTER AND TOM POLANSEK -Reuters
Monsanto Co said a souring farm economy and currency woes will push its 2016 earnings to the lower end of expectations, while a cost-cutting drive will lead the world’s largest seed company to slash more jobs.
Low commodity prices also should lead to more consolidation in the agricultural sector, Chief Executive Hugh Grant said, about a month after rivals Dow Chemical Co and DuPont said they would merge.
However, Monsanto’s recent attempts to re-engage Syngenta AG about a potential takeover have been difficult since the Swiss agrochemical company shot down a proposed $45 billion deal last year, Grant said.
He told analysts on an earnings call on Wednesday that company executives still believe there is “a significant opportunity” for integration between the two companies, and given tougher market conditions there is a greater need to figure out what those opportunities might be.
“We haven’t seen much progress on that front,” Grant said.
Investors and Wall Street analysts have wondered what Monsanto would do to boost its portfolio of farm chemicals – particularly after it abandoned a bid for Syngenta in August.
Monsanto reported a smaller-than-expected quarterly loss on Wednesday, thanks in part to soybean sales rising in Brazil and growing demand in the company’s new soybean seeds and product lines.
But currency concerns, low commodity prices and farmers keeping a tight grip on their wallets have continued to create a tough marketplace for the St. Louis-based company.
A global glut of corn and soybeans has kept grain prices depressed for a third straight year, while pressure from investors and a desire to bolster profits – and product portfolios – has sent many of the world’s largest agricultural companies scrambling to cut deals.