NEW YORK, Feb. 18 /PRNewswire-FirstCall/ -- Fueled by its innovative
research-and-development (R&D) platform, Monsanto Company's (NYSE: MON) 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(TM)
corn and Roundup Ready 2 Yield(TM) 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.
Webcast Information
Casale's presentation slides and simultaneous audio webcast of the
presentation may be accessed by visiting the company's Web site at
http://www.monsanto.com/investors. Following today's live broadcast set for
12:15 p.m. ET, a replay of the webcast will be available for two weeks.
About Monsanto Company
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.
Cautionary Statements Regarding Forward-Looking Information:
Certain statements contained in this release are "forward-looking
statements," such as statements concerning the company's anticipated financial
results, current and future product performance, regulatory approvals,
business and financial plans and other non-historical facts. These statements
are based on current expectations and currently available information.
However, since these statements are based on factors that involve risks and
uncertainties, the company's actual performance and results may differ
materially from those described or implied by such forward-looking statements.
Factors that could cause or contribute to such differences include, among
others: continued competition in seeds, traits and agricultural chemicals; the
company's exposure to various contingencies, including those related to
intellectual property protection, regulatory compliance and the speed with
which approvals are received, and public acceptance of biotechnology products;
the success of the company's research and development activities; the outcomes
of major lawsuits; developments related to foreign currencies and economies;
successful operation of recent acquisitions; fluctuations in commodity prices;
compliance with regulations affecting our manufacturing; the accuracy of the
company's estimates related to distribution inventory levels; the company's
ability to fund its short-term financing needs and to obtain payment for the
products that it sells; the effect of weather conditions, natural disasters
and accidents on the agriculture business or the company's facilities; and
other risks and factors detailed in the company's most recent periodic report
to the SEC. Undue reliance should not be placed on these forward-looking
statements, which are current only as of the date of this release. The company
disclaims any current intention or obligation to update any forward-looking
statements or any of the factors that may affect actual results.
Note to editor: 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
Contact
Media: Danielle Stuart (314-694-2478)
Investors: Scarlett Lee Foster (314-694-8148)
