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8:32AM Monsanto lowers FY10, issues downside Q3 EPS guidance as it repositions Roundup business to address fundamental market changes (MON) 52.66 : Co lowers FY10 EPS guidance to $2.40-2.60, ex-items, vs the $3.13 consensus; down from the low end of $3.10-3.30 previously; co also issues downside Q3 EPS guidance, sees Q3 EPS of $0.75-0.80, ex-items, vs the $1.32 consensus as the co announces it is repositioning its Roundup business in the face of fundamental structural changes that have caused upheaval in the glyphosate industry. Actions taken will reduce FY10 EPS by $0.50-0.70; these near-term actions include lowering prices on volume for the 2011 season and accelerating payment on certain distributor and retailer incentives to close out multi-tier brand support and speed the transition to the new brand strategy. The company also stated negotiations to resolve breaches of contractual obligations by two major supply customers have been unsuccessful to date.
* May 27, 2010, 9:31 AM ET
Monsanto Cuts Forecast to Realign Herbicide Product
By Tiernan Ray
Shares of Monsanto (MON) are off $2, or 4%, at $50.50, after the company this morning cut its forecast to for this year’s earnings per share to a range of $2.40 to $2.60, down from an earlier projection of $3.10 to $3.30, and below analysts’ $3.13 consensus estimate.
For the current quarter, the company said it sees 75 cents to 80 cents, well below the $1.32 expectation.
Free cash flow, as a result will also be lower this year, at $400 million versus a prior estimate of $500 million.
The cut is the result of “fundamental structural changes” in the glyphosate-based herbicides industry, the compay said, forcing a “repositioning” of its “Roundup” brand of products.
Monsanto plans to “simplify” roundup, to present farmers to “reduce the uncertainty” associated with the product, it said.
The changes include lowering prices for the 2011 growing season, but also paying distributors sooner to close out some product in the channel.
Also, sales in Q3 were curtailed by “an abbreviated burn-down season” in the U.S., the company said.