Agricultural giant FMC is the latest company to warn about operations in Brazil and now the stock is crashing.
On Monday the $US5 billion agricultural company announced that it would lay off 800-850 people — saving the company about $US150 million a year by 2017 — while also cutting its profit outlook for the third quarter and all of 2015.
Third quarter earnings are now expected to total $US0.38 per share, below expectations for $US0.65, while full year earnings per share expected to come in between $US2.35-$US2.45 against expectations for earnings of $US3.00-$US3.30.
In after hours trading shares of the company were down more than 11% to trade near $US33.25. Through Monday’s close shares of the company had fallen 34% year-to-date.
The main driver of the company’s downbeat outlook is Brazil, which FMC said has created “significant headwinds” that will continue to weigh on its agricultural solutions unit in the second half of this year.
The real took earnings in this segment down $US200-$US240 million, though price increases offest $US90-$US110 million, according to the company.
As FMC notes, the Brazilian real is down about 50% this year against the dollar and fell 25% against the dollar in the third quarter alone.
Earlier this month, DuPont cut its outlook citing headwinds out of Brazil.
And as we noted back in September, with inflation and unemployment surging as the real collapses against the dollar, the economic situation in Brazil is a mess.
“We are taking aggressive actions to address the extraordinary operating environment in Brazil,” said Pierre Brondeau, FMC president, CEO, and chairman.
“The steps we are announcing today will protect the profitability of the business during this downturn, shrink the capital employed in the region and position FMC to take advantage of a future market recovery. FMC will be well positioned to deliver solid earnings growth and higher returns beginning in 2016, even in the face of soft market conditions.”
NOW WATCH: 13 Surprising Facts About Brazil
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