Monsanto lower outlook; lays off 1,800
Monsanto Co. (MON), producer of seeds and herbicide, yesterday announced its forecast of earnings per share of $3.10-$3.30 per share for the current fiscal year, well below Wall Street's estimate of $4.10 per share.
Management expects profit from its popular herbicide Roundup to be lower than expected, due to a glut of supply and low-cost competition. Roundup had been a profit maker that Chief Executive Hugh Grant once called a windfall to fund research into its core business of seeds and traits. After Roundup's patent expired in 2000, a flood of competitors entered the market.
Monsanto also plans to cut 8 percent of its workforce, or roughly 1,800 jobs. Roughly 600 of those cuts will be in the United States.
The financial effect for us has been that we are now targeting to optimize gross profit at $1 billion annually," said Chief Financial Officer Carl Cassle, in a statement. "While we can see a path to the $1 billion target in 2012, there are multiple headwinds causing us to forecast below that mark in the next two years."
Management expects profit from its popular herbicide Roundup to be lower than expected, due to a glut of supply and low-cost competition. Roundup had been a profit maker that Chief Executive Hugh Grant once called a windfall to fund research into its core business of seeds and traits. After Roundup's patent expired in 2000, a flood of competitors entered the market.
Monsanto also plans to cut 8 percent of its workforce, or roughly 1,800 jobs. Roughly 600 of those cuts will be in the United States.
The financial effect for us has been that we are now targeting to optimize gross profit at $1 billion annually," said Chief Financial Officer Carl Cassle, in a statement. "While we can see a path to the $1 billion target in 2012, there are multiple headwinds causing us to forecast below that mark in the next two years."
Monstanto's results are disappoinying, but the difficulty in Roundup has been known for quite some time. For an investor with a long-term investing horizon, I am not aware of too many stocks with similar growth opportunities.
- Colvin
Posted by Colvin & Co. at 9/11/2009 12:25 PM 
Categories: Agriculture Companies
Tags: Monsanto seed fertilizer
Categories: Agriculture Companies
Tags: Monsanto seed fertilizer
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