New York, New York
February 18, 2009
Fueled by its innovative
research-and-development (R&D) platform,
Monsanto Company's seeds
and traits strategy is the fundamental driver to the company's
future growth and fiscal 2012 financial goals. Between now and
fiscal 2012, Monsanto expects the gross profit of its Seeds &
Genomics segment to grow by more than 60 percent. This is the
message Carl Casale, Monsanto's executive vice president, will
tell investors today as part of a presentation at the Morgan
Stanley Global Basic Materials Conference in New York.
For fiscal 2009, Monsanto expects to achieve 20 percent-plus
ongoing earnings growth and generate more than $1.8 billion in
free cash. Casale will reconfirm Monsanto's objective to deliver
on-going earnings per share (EPS) in fiscal 2009 of $4.40 to
$4.50, compared with $3.64 per share in fiscal 2008.
This includes expectations for EPS growth in the second and
third quarters to both be in the 10-to-12 percent range compared
with the same periods in fiscal 2008.
The company's Seeds & Genomics segment additionally expects to
maintain an approximately 18 percent compound annual growth rate
in its gross profit through fiscal 2012. This growth is expected
to come as the company manages the anticipated decline in gross
profit from its Roundup and other glyphosate herbicides
business, which is projected to peak in fiscal 2009 at an
expected
$2.4 billion to $2.5 billion gross profit range and settle to
roughly $1.9 billion in gross profit in fiscal 2012.
Monsanto's consistent investment in research in the 9-to-10
percent range of net sales has maximized returns. Most of that
R&D investment is for breeding and biotechnology to support the
company's seeds and traits business, which has grown at a
compound annual growth rate of 28 percent on a gross profit
basis from 2001 through 2008.
"Our investment in R&D has been focused on opportunities that
create new value for farmers globally," Casale will say. "We
leverage R&D as a springboard that accelerates success and
drives future growth with commercial products that solve
farmers' most pressing needs to reduce crop stress and enhance
yields."
Two such technologies on the verge of commercialization are
SmartStax™ corn and Roundup Ready 2 Yield™ soybeans.
Casale will discuss how SmartStax will raise the bar as the most
durable and complete on-farm package for weed and pest
management, and will become the platform for all of the
company's future corn technologies. SmartStax is designed to
deliver a higher-yielding package by combining a broader
spectrum for herbicide tolerance and insect control with the
potential for reduced refuge requirements.
Currently, corn growers are required to plant structured refuges
or plots of corn that do not use in-plant protection technology
near corn acres that do. The percentage of refuge acres varies
based on the specific geography, but in general has been set at
50 percent in cotton-growing regions of the United States and 20
percent in the northern Corn Belt. Monsanto submitted a request
to the EPA in June 2008 to reduce refuge requirements for
SmartStax to 20 percent in cotton-growing states and 5 percent
in the northern Corn Belt.
In addition to SmartStax, Monsanto has successfully moved
another technology platform -- Roundup Ready 2 Yield soybeans --
into the early commercial stages, marking the start of a new era
in soybean production.
Like SmartStax, Roundup Ready 2 Yield will be the trait platform
for future soybean technologies such as higher-yielding
soybeans, which are demonstrating yield improvements of more
than 7 percent on top of the 7 to 11 percent yield boost that
Roundup Ready 2 Yield soybeans will provide over comparable
Roundup Ready soybeans. Earlier this month, Monsanto delivered
the first bag of Roundup Ready 2 Yield soybeans to a farmer in
northern Illinois.
The demand for this new technology is expected to help boost
soybean seeds and traits gross profit by approximately 70
percent between fiscal 2009 and fiscal 2012.
Casale will highlight that Monsanto is poised to launch several
industry- leading technologies between fiscal 2012 and the end
of the decade. Two products -- second-generation
drought-tolerant corn and higher-yielding soybeans -- have
joined nitrogen-use-efficiency corn and first-generation
drought-tolerant corn as game-changing technologies under
development.
Monsanto Company is a leading global provider of
technology-based solutions and agricultural products that
improve farm productivity and food quality. Monsanto remains
focused on enabling both small-holder and large- scale farmers
to produce more from their land while conserving more of our
world's natural resources such as water and energy. To learn
more about our business and our commitments, please visit:
http://www.monsanto.com.
SmartStax is not registered with the U.S. Environmental
Protection Agency. It is a violation of Federal law to promote
or sell an unregistered pesticide.
Roundup, Roundup Ready 2 Yield, Roundup Ready and SmartStax are
trademarks of Monsanto Company and its wholly owned
subsidiaries.
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
1. Ongoing EPS and Free Cash Flow: The presentations of ongoing
EPS and free cash flow are not intended to replace net income
(loss), cash flows, financial position or comprehensive income
(loss), and they are
not measures of financial performance as determined in
accordance with generally accepted accounting principles (GAAP)
in the United States. The following tables reconcile ongoing EPS
and free cash flow to the respective most directly comparable
financial measure calculated in accordance with GAAP.
Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated
excluding certain after-tax items which Monsanto does not
consider part of ongoing operations. The company is not able to
provide a reconciliation to reported EPS guidance for fiscal
year 2009 at this time, as it is still evaluating purchase
accounting adjustments
related to its recent $264 million acquisition of the Brazilian
sugar cane business Aly Participacoes Ltda. Such adjustments are
dependent upon the completion of valuations of certain
intangible assets, including acquired in-process R&D which
requires immediate expense recognition and is expected to be
significant.
| |
Fiscal
Year 2008 |
| Diluted
Earnings per Share |
$3.62 |
| Items
Affecting Comparability - EPS Impact |
|
| Income on
Discontinued Operations |
$(0.04) |
| Acquired
In-Process R&D (De Ruiter) |
$0.29 |
| Solutia
Claim Settlement |
$(0.23) |
| Diluted
Earnings per Share from Ongoing Business |
$3.64 |
Reconciliation of Free Cash Flow:
Free cash flow represents the total of cash flows from operating
activities and investing activities, as reflected in the
Statements of Consolidated Cash Flows presented in this release.
With respect to the fiscal year 2009 free cash flow guidance,
Monsanto does not include any estimates or projections of Net
Cash Provided (Required) by Financing Activities because in
order to prepare any such estimate or projection, Monsanto would
need to rely on market factors and conditions that are outside
of its control.
| |
Fiscal
Year 2009
Guidance |
| Net Cash
Provided by Operating Activities |
$3,000 |
| Net Cash
Provided (Required) by Investing Activities |
(1,200) |
| Free Cash
Flow |
$1,800 |
| Net Cash
Required by Financing Activities |
N/A |
| Effect of
Exchange Rate Changes on Cash and Cash Equivalents |
N/A |
| Net
(Decrease) Increase in Cash and Cash Equivalents
|
N/A |
| Cash and
Cash Equivalents at Beginning of Period |
N/A |
| Cash and
Cash Equivalents at End of Period |
N/A |
|
|
