St. Louis, Missouri
November 8, 2007
Monsanto Company (NYSE: MON) expects to double the gross
profit potential of its business from the end of
2007 through 2012, officials will tell investors today. The
company's growth is expected to result in an ongoing earnings
per share (EPS) growth rate in the mid-to-high teens over the
next five years.
Monsanto's management team also will note that, by the end of
2012, the free cash flow generation of its business, exclusive
of potential acquisitions, will be in the range of $2 billion to
$2.2 billion. This growth is expected to provide its business
with greater flexibility for additional acquisitions, technology
investments, dividends and share repurchases.
Monsanto executives will provide an overview of its five-year
growth plan as part of the company's biennial U.S. Investor Day
meeting held in St. Louis.
The event will include presentations by Hugh Grant, chairman,
president and chief executive officer; Robb Fraley, executive
vice president and chief technology officer; Brett Begemann,
executive vice president; Carl Casale, executive vice president;
and Terry Crews, executive vice president and chief financial
officer.
"Backed by the growing demand for our seed and trait products,
our business is poised for significant organic growth between
now and the end of 2012,"
said Grant. "We believe we can effectively double the gross
profit potential of our business just with the businesses we
have in hand today while continuing to return value to our
shareowners."
As part of the event, Monsanto executives will discuss how
Monsanto's seeds and traits business is expected to be shaped by
six key factors over the next five years. These factors include:
its U.S. and international corn seeds and traits business; its
soybean business; its cotton business; its Seminis fruit and
vegetable seed business; and its R&D pipeline. Within these
factors, the company expects:
- U.S. and international
corn seed businesses will continue to be significant
catalysts for growth. Monsanto expects that share for its
DEKALB brand could grow by as much as 10 percentage points
in the United States through 2012. In key international
markets, the company expects to realize annual gains of
1-to-2 percentage points in most regions through 2012.
- Global corn traits
business is poised for expanded growth from continued
adoption of current and future stacked trait offerings. By
2010, Monsanto expects to introduce its SmartStax product.
This product is expected to expand the gross margin
potential of its traits business and access an opportunity
of 90 million to 108 million acres worldwide. This product
will also serve as a platform for future corn trait
offerings like drought-tolerance and nitrogen-utilization
beyond 2012.
- Soybean business is
on track for a one million to two million acre controlled
commercial release of its Roundup RReady2Yield technology in
2009, with a full-scale launch of five million to six
million acres in 2010. The introduction of Roundup
RReady2Yield soybeans will serve as the platform for up to
five new stacked trait offerings in soybeans by 2012.
- Cotton business
remains focused on converting the Delta and Pine Land
portfolio to its double stack of second-generation
technologies. By 2012, pending regulatory approvals, the
company believes this business will be selling stacked,
second-generation offerings in both its India and U.S.
cotton business, effectively doubling the gross profit
contribution of this business.
- Seminis business
has the potential to expand its margins from 44 percent in
fiscal year 2007 to 65 percent by the end of 2012. The
company believes its fruit and vegetable business can
realize a compound annual growth rate for sales of six
percent based on a stronger product mix, new and improved
product offerings and pricing approaches more in line with
the value the products deliver.
- R&D pipeline is
poised to deliver multiple projects that offer a high gross
sales opportunity leading up to 2012 and beyond. By 2020,
Monsanto believes that its pipeline will create an
additional $5 billion in gross sales at the farmgate, of
which more than three-quarters of this value is incremental.
Between now and 2020, Monsanto expects to introduce six
blockbuster projects with an estimated gross sales
opportunity of $300 million to $500 million as well as one
mega-blockbuster project with an estimated gross sales
opportunity of more than $1 billion.
"While we've historically talked a
lot about the products we're delivering, we're now focused on
the platforms that our business is poised to deliver between now
and the end of 2012," said Grant. "We believe these platforms,
like SmartStax in corn and Roundup RReady2Yield in soybeans,
have the potential to effectively change the competitive
dynamics within the agriculture industry and pave the way for
farmers to get more benefit out of every seed."
Monsanto Leaders Increase Guidance for Fiscal Year 2008
As part of the event, Monsanto's Crews will announce that the
company expects its first quarter 2008 EPS to be approximately
35 cents, or more than double the 16 cents the company realized
in the first quarter of fiscal year 2007.
As a result of the strong quarter, the company will announce
that its full-year 2008 EPS guidance, both on a reported and
ongoing basis, has changed to the upper end of its previously
announced range of $2.20 to $2.40.
Crews will also note that Monsanto's guidance for free cash flow
for fiscal year 2008 will remain in the range of $800 million to
$900 million. The company expects net cash provided by operating
activities to be in the range of $1.75 billion to $1.85 billion,
and net cash required by investing activities to be
approximately $950 million for fiscal year 2008. (For a
reconciliation of free cash flow, see note 1.)
Investor Meeting Webcast and Materials
A live webcast of Monsanto's investor briefing is available
through Monsanto's web site at:
http://www.monsanto.com/investors. Materials related to
today's event posted at this site include: the presentation
agenda, briefing slides, downloadable audio files of each
presentation, and speaker bios at this site. Following the live
broadcast, a replay of the webcast will be available on the
Monsanto web site for two weeks. To access presentation slides
and the simultaneous audio webcast of the presentation, visitors
may need to download Windows Media Player™ prior to listening to
the webcast.
Monsanto Company is a leading global provider of
technology-based solutions and agricultural products that
improve farm productivity and food quality.
For more information on Monsanto, see:
http://www.monsanto.com/.
DEKALB, Roundup RReady2Yield, Seminis, SmartStax and YieldGard
VT PRO are trademarks owned by Monsanto Company and its wholly
owned subsidiaries. All other trademarks are the property of
their respective owners.
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
1. 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
2008 free cash flow target, 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 12 Months Ended
2008 Aug. 31,
Guidance 2007 2006
Fiscal Year 12 Months Ended
2008 Aug. 31,
Guidance 2007 2006
Net Cash Provided by
Operating Activities $1,750 - $1,850 $1,854 $1,674
Net Cash Required by
Investing Activities (950) (1,911) (625)
Free Cash Flow $800 - $900 $(57) $1,049
Net Cash Required by
Financing Activities N/A (583) (117)
Effect of Exchange Rate
Changes on Cash and
CashEquivalents N/A 46 3
Net Increase (Decrease) in
Cash and Cash Equivalents N/A $(594) $935
Cash and Cash Equivalents at
Beginning of Period N/A $1,460 $525
Cash and Cash Equivalents
at End of Period N/A $866 $1,460
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