Fraley is delivering a presentation (click
here for PDF version) as a part of the Morgan Stanley
Chemicals and Paper & Packaging Roundtable in San Francisco.
“There’s a very defined shift in the sales in
the U.S. agricultural industry away from crop chemicals and to
seeds and traits,” says Fraley. “We made a significant bet on
biotechnology in the 1980s, and that investment catapulted
Monsanto to the head of a larger industry shift.”
In his remarks, Fraley will illustrate that this
value shift is well underway in the industry with the “first
round” of biotechnology traits and seed breeding advancements
being delivered to farmers through the seeds they plant. Fraley
believes that future value will be created not only by
“stacking” multiple traits into the seed, but also by providing
improved food and feed traits alongside the agronomic traits
currently available.
“In the future, the value shift to the seed will
be even more dramatic, as technology traits that enhance water
usage and nutrient uptake in the plant, or traits that improve
human health or animal nutrition are introduced,” Fraley says.
In his presentation, Fraley will cite examples
of projects in Monsanto’s pipeline that are expected to
contribute to the value shift to seeds and traits, including:
• drought tolerant crops, which are designed to
enhance yield and environmental benefits by improving water use;
• Healthier oils for use in food products, including Omega-3s
which promote heart health and low-linolenic soybean oil that
reduce or eliminate trans fats; and,
• High-lysine corn, which can improve the balance of amino acids
in animal feed.
Fraley says the combination of new biotechnology
traits and improved plant breeding methods – which include
marker-assisted techniques that use molecular markers in
addition to physical measurement of traits in plant breeding
programs – are the major factors leading to this dramatic shift
in value to the seed.
“The rapid adoption of the first generation of
technology traits has given innovators the confidence to
redouble their efforts for the second- and third-generation
products,” Fraley says.
Fiscal-Year 2005 Earnings Target for Ongoing
Business Reiterated
In his comments, Fraley will also reaffirm the
company’s 2005 fiscal year earnings per share (EPS) in the range
of $1.77 to $1.90 on an ongoing basis. However, the company will
record a tax benefit of approximately 39 cents per share in the
first quarter of 2005 as a result of the loss incurred on the
European wheat and barley business. This means that on a
reported basis, the company now expects earnings to be in the
range of 43 cents per share for the first quarter and in the
range of $2.16 to $2.29 per share for the full fiscal year.
Previously, the company expected reported earnings to be flat
with 2004 first-quarter results of 4 cents per share, and
full-year earnings in the range of $1.77 to $1.90 per share.
(See reconciliation table with this news release.)
Monsanto will report its complete first-quarter
fiscal year 2005 earnings on Wednesday, Jan. 5, 2005.
