In February the Swiss pesticide giant Syngenta AG, which Monsanto pursued unsuccessfully a year ago, agreed to sell itself to China National Chemical Corp.
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Monsanto stated that the business had been challenged immensely from dropping crop prices and currency headwinds, which are expected to reduce its FY16 earnings results. The company also anticipates results in its seeds and genomics business to bite into its bottom line by an additional 30 cents, which the company blamed on industry discounting and a delay in the US approval of dicamba for in-crop use. Corn and soybean demand is increasing, and farmer incomes will be better than projected as they save on crop and fuel inputs this year and land rents ease.
Monsanto said it also faces pressure from a strong dollar, which makes its products more expensive overseas, and competition for its weed killer Roundup.
The company is hopeful the U.S. Environmental Protection Agency will approve the chemical in the “next several months”, Chief Technology Officer Robert Fraley said in the interview.
“Despite vagaries in the market, our growth story is still intact”, Grant said.
The immediate market reaction was to send Monsanto shares lower in NY to $85.07, wiping more than $3bn from the group’s stockmarket value, although the stock had recovered some ground by midday deals to stand at $86.41, a drop of 6.6% on the day.
Monday shares were down 6% as of Wednesday morning.
Monsanto’s changed outlook means that it’s now expecting EPS for the second quarter of 2016 to be between $2.35 to $2.45.
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This is down from the previous guidance of $5.10 to $5.40. Its free cash flow target for 2016 was cut to $1.4-$1.6 billion from $1.6-$1.8 billion. The stock plunged after the world’s largest seed producer slashed its full-year 2016 profit forecast.
