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monsanto 01-08-08

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    monsanto 01-08-08 monsanto 01-08-08 Presentation Transcript

    • R&D PIPELINE REVIEW TERRY CREWS CFO STEVE PADGETTE, PH.D. VICE PRESIDENT, BIOTECHNOLOGY January 8-9, 2008 1
    • Forward-Looking Statements Certain statements contained in this presentation are quot;forward-looking statements,quot; 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, including proceedings related to Solutia Inc.; 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 presentation. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results. Trademarks Trademarks owned by Monsanto Company and its wholly-owned subsidiaries are italicized in this presentation. All other trademarks are the property of their respective owners. © 2008 Monsanto Company 2
    • Non-GAAP Financial Information This presentation may use the non-GAAP financial measures of “free cash flow,” earnings per share (EPS) on an ongoing basis and Return on Capital (ROC). We define free cash flow as the total of cash flows from operating activities and investing activities. A non-GAAP EPS financial measure, which we refer to as ongoing EPS, excludes certain after-tax items that we do not consider part of ongoing operations, which are identified in the reconciliation. ROC means net income (without the effect of certain items) exclusive of after-tax interest expenses, divided by the average of the beginning year and ending year net capital employed, as defined in the reconciliation. Our presentation of non-GAAP financial measures is intended to supplement investors’ understanding of our operating performance, not replace net income (loss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with GAAP. Furthermore, these non-GAAP financial measures may not be comparable to similar measures used by other companies. The non-GAAP financial measures used in this presentation are reconciled to the most directly comparable financial measures calculated and presented in accordance with GAAP. Monsanto is unable to provide a reconciliation of the 2008 ROC goal to projected net income and financial position for 2008 without unreasonable effort. As shown in the ROC reconciliation for the previous year, the calculation of ROC is complex, and Monsanto does not have sufficient information at this point in the fiscal year to reasonably estimate its operating profit after-tax and average capital for 2008 due to market and other conditions that are outside of Monsanto’s control. With respect to the time period prior to Sept. 1, 2000, references to Monsanto in this presentation also refer to the agricultural business of Pharmacia. FISCAL YEAR: References to year, or to fiscal year, are on a fiscal year basis and refer to the 12-month period ending August 31. 3
    • FINANCIAL REVIEW 2008 Again Projects Double-Digit Earnings Growth, Strong Cash Generation and Improved Margins 2007 2008F EARNINGS $2.00 $2.50-$2.60 ONGOING EARNINGS PER SHARE 54% GROWTH 25-30% GROWTH FROM 2006 FROM 2007 Further progress on Gross Profit as a Percent of Sales 50% trajectory toward 52-54% 2010 target Seeds & Traits Gross Profit $3.0B ~$3.5B Roundup And All Other Glyphosate-based $854M Greater than $1B Herbicides Gross Profit All Other Ag Productivity Gross Profit $418M ~$350M CASH MANAGEMENT AND SPENDING FREE CASH FLOW $(57)M $900M-$1B Return on Capital 14.8% Consistent with 2007 levels Capital Expenditures $509M Greater than $800M SG&A as a Percent of Sales 22% 20-21% Range R&D as a Percent of Sales 9% 10% Range Receivables as a Percent of Sales 18% Consistent with 2007 levels Inventories as a Percent of Sales 20% Consistent with 2007 levels 4
    • OVERVIEW Given Growth Opportunities, Monsanto Has Potential to More Than Double Gross Profit Over Next Five Years 2012 GROWTH RANGE MONSANTO GROSS PROFIT GROWTH TARGET Gross profit targeted to double from 2007 through 2012 $9,000 STRATEGIC PLAYBOOK $8,000 All growth is organic, from $7,000 base business and pipeline GROSS PROFIT (IN MILLIONS) $6,000 U.S. Corn International Corn $5,000 Soybeans Cotton $4,000 Seminis $3,000 R&D Pipeline Acquisitions to be pursued, $2,000 but are not included in this $1,000 growth projection Earnings continue to translate $0 into operating cash, and value MILESTONES 2004 2007 2012 created for shareowners 2010 2007 through combination of Gross margin Base Gross Profit: acquisitions, share target: 52-54% $4,286M repurchases and dividends ONGOING EPS GROWTH: MID-TO-HIGH TEENS 5
    • OVERVIEW Our Biotech and Breeding Pipeline Is Accelerating, With Progress in Projects and Widening Yield Advantages MILESTONES: Biotech pipeline is accelerating 10 projects either advanced phases or were added to the pipeline – among the most in any annual update Q1 Q4 First time transitioned 4 projects from Phase 2 to Phase 3 Q2 Q3 First multi-generational advancement as 2 generations of corn drought family advance SmartStax enters the pipeline as the platform for corn, complementing Roundup RReady2Yield as the soybean platform ANNUAL R&D CYCLE: SEEDS & TRAITS Breeding programs yields impressive WHAT CHANGED 2007-2008? DEKALB germplasm maintains impressive • 5 projects advanced phases 8.4 bu/ac advantage; gap widens to 14.6 • 5 products added bu/ac when protected with YieldGard VT • Vistive II removed in favor of Vistive III Triple stack • “Water-use efficiency” soybeans reclassified as Asgrow germplasm yield advantage “2nd-Gen Higher-Yielding soybeans” improves to average 1.27 bu/ac; Roundup • Two former Renessen projects rolled into the Monsanto RReady2Yield to provide 7-11% boost pipeline 6
    • OVERVIEW Pipeline Leverages Power of Breeding and Biotech for Current Commercial Growth and New Platforms in Next Decade MONSANTO’S R&D PIPELINE DISCOVERY PHASE I PHASE II R&D PHASE: PHASE III PHASE IV LAUNCH BREEDING G COMMERCIAL IT PLATFORM GERMPLASM INTEGRATION ANALYTICS COMMERCIAL MARKERS GENOMICS SEED ELITE Germplasm TRAIT SOLD TO R FARMERS BIOTECHNOLOGY Pipeline Priorities Through 2012 Pipeline Priorities Through 2012 BIOTECHNOLOGY BREEDING Deliver the Value in Monsanto’s Established Continue to Drive Breeding Gains Across Crop Trait Pipeline Platforms Unlock the Opportunity in Yield and Stress ► Ensure momentum in corn breeding continues Through the BASF Collaboration ► Accelerate ramp up of soybean breeding ► Continue application of proven tools to cotton and ► Deliver the industry’s first traits in the emerging yield- vegetables and-stress arena ► Change the trait-value opportunity with “product families” 7
    • CORN BREEDING Final Yield Trial Results Reinforce Yield Advantage of DEKALB Seed in U.S. 2007 FINAL U.S. COMPETITIVE CORN YIELD FINAL: COMPARISON: DEKALB DEKALB U.S. GEOGRAPHY: 210 (APPROXIMATE DIFFERENCES) COMPETITORS Grow footprint 205 OBJECTIVE: 205 2007 PERFORMANCE UPDATE 200 BUSHELS/ACRE • In > 14,000 comparisons, 195 197 Monsanto out-yields 195 190 193 competitive best by 191 190 189 185 188 8.4 bu/ac 186 180 • In 110-day RM, Monsanto’s lead remains 179 175 a strong 12 bu/ac 170 advantage 165 Source: 2007 Monsanto 160 and third party trials 163 through November 15, 155 2007. Weighted 155 average, calculated to 150 15% moisture. DEKALB products are compared 95 RM 100 RM 105 RM 110 RM 115 RM Overall with national competitive RELATIVE MATURITIES (DAYS)► products that contain >480 >1,220 >1,820 >5,220 >5,270 >14,000 COMPARISONS: similar crop protection traits. APPROXIMATE BU/AC 7.8 10.4 5.1 12.0 5.5 8.4 ADVANTAGE: 8
    • CORN BREEDING Again in 2007, Best in Class Germplasm and Trait Integration Delivers Best Yield TOTAL DEKALB SEED & TRAIT YIELD PERFORMANCE IN 2007 FINAL Seed & Trait: Head-to-Head AVE. BUSHELS PER ACRE 210 14.6 211.6 206 BU/AC 202 ADVANTAGE 198 197.0 194 190 MONSANTO Pioneer ® Competitive Hybrids DEKALB Hybrids Performance in Key Corn Belt States with Herculex® with YieldGard VT XTRA and Roundup Triple NE IA IL Ready Corn 2 >70 >400 800 Nearly 1,700 comparisons in 17 states: DEKALB Comparisons: seed, protected by YieldGard VT Triple, 210 214 219 Monsanto outperformed the best competitive seed-and- Brands: bu/ac bu/ac bu/ac trait package by >14.6 bu/ac on average 193 200 202 Competitive Brand: bu/ac bu/ac bu/ac 9
    • SOYBEAN BREEDING Roundup RReady2Yield and Molecular Breeding Rewrite Historic Soybean Yield Trends SOYBEAN YIELD PROGRESSION: 2000-2012 52 MAB gains set new USDA AVERAGE YIELD/AC1 trajectory on top of TREND LINE OF USDA YIELD 50 Roundup RReady2Yield step change SOYBEAN YIELD AT HISTORIC 48 RATE GAIN Roundup AVERAGE YIELD RReady2Yield creates EXPECTED TREND WITH APPLIED step change of 7-11% (BU/ACRE) 46 MOLECULAR BREEDING (MAB) across portfolio 44 42 All breeding going 40 forward is built on Roundup RReady2Yield MAB-ROUNDUP HISTORIC GAIN: 0.50 BU/AC 38 foundation and uses RREADY2YIELD applied MAB PLATFORM technology 36 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2007 2009-2010 Asgrow germplasm shows yield Roundup RReady2Yield advantage in all zones based on controlled commercial greater than 16,000 comparisons, release + commercial with an average advantage of 1.27 launch bu/acre for groups 1 thru 5 10 1. USDA NASS: http://www.nass.usda.gov/QuickStats/
    • BIOTECH PIPELINE Phase Advancements For Key Projects Reflect Progress and Strength Throughout Monsanto’s Industry-Leading Pipeline BIOTECH TRAIT PIPELINE: JANUARY 2008 UPDATE PHASE PHASE PHASE PHASE PHASE PHASE PHASE PHASE D D 1 2 3 4 1 2 3 4 AGRONOMIC TRAITS YIELD AND STRESS PIPELINE ROUNDUP RREADY2YIELD SOYBEANS DROUGHT-TOLERANT CORN FAMILY YIELDGARD VT PRO 2ND-GEN YIELDGARD CORN BORER DROUGHT-TOLERANT CORN SMARTSTAX CORN 2ND-GEN DROUGHT-TOLERANT CORN DICAMBA-TOLERANT SOYBEANS NITROGEN-UTILIZATION CORN FAMILY INSECT-PROTECTED + ROUNDUP RREADY2YIELD SOYBEANS NITROGEN-UTILIZATION CORN BOLLGARD III BROAD-ACRE HIGHER-YIELDING CORN FAMILY SOYBEAN NEMATODE-RESISTANCE HIGHER-YIELDING CORN SOYBEAN DISEASE BROAD-ACRE HIGHER-YIELDING DICAMBA-TOLERANT COTTON SOYBEAN FAMILY COTTON LYGUS CONTROL HIGHER-YIELDING SOYBEANS YIELDGARD ROOTWORM III 2ND-GEN HIGHER-YIELDING SOYBEANS VALUE-ADDED TRAITS DROUGHT-TOLERANT COTTON FAMILY DROUGHT-TOLERANT COTTON EXTRAX™ CORN PROCESSING SYSTEM + MAVERA™ HIGH-VALUE CORN WITH LYSINE2 BROAD-ACRE HIGHER-YIELDING CANOLA FAMILY HIGH-OIL SOYBEANS HIGHER-YIELDING + ROUNDUP RREADY2YIELD CANOLA1 2ND-GEN HIGH-OIL SOYBEANS OMEGA-3 ENRICHED SOYBEANS VISTIVE III SOYBEANS High Impact Technologies (HIT) project HIGH-STEARATE SOYBEANS Jan. 3, 2008 Advancements/Additions (VIA BIOTECH) The colored bar associated with each project indicates which phase that project is in. It is HIGH-OIL CORN not intended to represent the relative status of the project within a particular stage. 1. For higher-yielding + Roundup RReady2Yield canola, only the value of the higher-yielding trait is incorporated into the Yield and Stress collaboration with BASF 2. Value of licensing the EXTRAX™ technology is shared with Cargill as a part of Renessen joint venture 11
    • BIOTECH PIPELINE Lead Drought-Tolerant Corn Project Advances to Phase 3 With Fourth Year of Strong Field Results FOURTH SEASON OF YIELD R&D Pipeline NEW: IMPROVEMENT UNDER DROUGHT STRESS Drought-Tolerant Corn Family: Average Yield Improvement of Lead Event Lead Project ADVANCED: HIT Project 16 Phase 3 Percentage yield difference vs. control 13.4% 6.7% 10.6% 11.3% 14 PROJECT CONCEPT: Yield Difference (bu/acre) 12 Drought-tolerance family aimed at providing consistent yield and 10 buffering against effects of water PRODUCT limitations CONCEPT 8 TARGET VALUE: RANGE 6 LAUNCH-COUNTRY 55M ACRES1: 4 $300-$500M 2020 VALUE2: 2 SOURCES OF VALUE: 0 Improved yield a b b b 2004 2005 2006 2007 Targeting 8-10% yield 8 TOTAL 15 TOTAL 9 TOTAL 11 TOTAL 1 improvement in water-stress LOCATIONS LOCATIONS LOCATIONS LOCATIONS environments a: data from two hybrids 1. Acre opportunity reflects acres where technology fits at b: data from three hybrids Monsanto's current 2007 market share in respective crops 2. 2020 value reflects gross sales opportunity in launch country Drought-tolerant corn lead consistently delivering yield in year 2020 improvements under drought conditions in U.S. for fourth year in a row 12
    • BIOTECH PIPELINE 2007 Dryland Field Tests of Lead Drought Event Offers Visual Evidence of Increased Yield In Stressed Conditions 2007 FIELD TESTING SHOWS VISUAL R&D Pipeline NEW: PROOF OF YIELD IMPROVEMENT Drought-Tolerant Corn Family: SUPERIOR, NE - FIELD TRIALS – 2007 Lead Project ADVANCED: HIT Project Phase 3 PROJECT CONCEPT: Drought-tolerance family aimed at providing consistent yield and buffering against effects of water limitations VALUE: LAUNCH-COUNTRY 55M ACRES1: $300-$500M 2020 VALUE2: SOURCES OF VALUE: Improved yield Targeting 8-10% yield CONTROL HYBRID WITH GENE 1 improvement in water-stress (76 BU/AC) (94 BU/AC) environments 1. Acre opportunity reflects acres where technology fits at Water stress exposure during different stages of Monsanto's current 2007 market share in respective crops development can have significant effect on corn yield; 2. 2020 value reflects gross sales opportunity in launch country Monsanto’s lead drought-tolerance trait shows a significant in year 2020 yield advantage compared with controls under drought stress 13
    • BIOTECH PIPELINE Second-Generation Drought-Tolerant Corn Advances to Phase 2 With Multi-Year Performance in Field Testing SECOND-GEN DROUGHT CORN EVENTS NEW: R&D Pipeline PROVIDE CONSISTENT YIELD ADVANTAGE Drought-Tolerant Corn Family: Drought Efficacy for Second-Gen Events Yield Difference Over Controls (%) Second-Generation Project 16 ADVANCED: 14 STATUS: Phase 2 12 PROJECT CONCEPT: 10 Drought-tolerance family aimed at PRODUCT providing consistent yield and CONCEPT 8 buffering against effects of water TARGET RANGE limitations 6 VALUE: 4 LAUNCH-COUNTRY 55M 2 ACRES1: 0 $300-$500M 2020 VALUE2: EVENT 1 EVENT 2 EVENT 3 EVENT 1 EVENT 2 EVENT 3 LOWER-YIELDING HIGHER-YIELDING SOURCES OF VALUE: ENVIRONMENT ENVIRONMENT AVERAGE YIELD: 53 BU/AC AVERAGE YIELD: 166 BU/AC Improved yield 2007 2006 Targeting 8-10% yield 1 improvement in water-stress (All three events significant @ p≤0.10); Statistical significance determined by ANOVA (2006) or nonparametric test (2007) environments Consistent drought yield performance of top 3 events over 2 Water substitution years (5 locations/year) 2 Variable costs in pumped irrigation of >$100/ acre • Performance demonstrated in 2 different test hybrids and over 1. Acre opportunity reflects acres where technology fits at a broad range of drought-stress conditions in both lower- Monsanto's current 2007 market share in respective crops yielding and higher-yielding environments (52-188 bu/ac) 2. 2020 value reflects gross sales opportunity in launch country in year 2020 14
    • BIOTECH PIPELINE In Continued Field Testing, Nitrogen Utilization Leads Show Yield Improvement Under Normal Nitrogen LEAD PERFORMANCE UNDER NORMAL NEW: R&D Pipeline NITROGEN CONDITIONS Nitrogen-Utilization Corn Family: Yield Increase (bu/Ac) Lead Project 12 * ** Phase 1 10 STATUS: *** * 8 PROJECT CONCEPT: 6 4 Targets ways to use nitrogen more 2 efficiently, exploring potential to 0 boost yield under normal nitrogen -2 conditions or stabilize it in low TRIALS IN MULTIPLE TRIALS IN MULTIPLE nitrogen environments HYBRID BACKGROUNDS HYBRID BACKGROUNDS VALUE: (15 LOC) (16 LOC) LAUNCH-COUNTRY 2005 55M 2006 YIELD TRIALS: ACRES1: 2007 YIELD TRIALS: YIELD SUFFICIENT N LEVELS SUFFICIENT N LEVELS TRIALS: $300-$500M 2020 VALUE2: (37 LOC TOTAL) (20 LOC TOTAL) (23 LOC TOTAL) SOURCES OF VALUE: 2005 2006 2007 Improved yield * Yield improvement in normal 1 Statistically significant @ p≤0.10 nitrogen environments Bar color correlates with the specific hybrid background tested. Same bar color in different tests and different years indicates same hybrid was used. Nitrogen reduction 2 All trials conducted under sufficient nitrogen application levels. Improving yield in low nitrogen environments Under normal nitrogen conditions, lead Nitrogen-Utilization 1. Acre opportunity reflects acres where technology fits at trait has demonstrated yield advantages in multiple Monsanto's current 2007 market share in respective crops backgrounds over multiple years 2. 2020 value reflects gross sales opportunity in launch country in year 2020 15
    • BIOTECH PIPELINE YieldGard VT PRO Will Provide Dual Mode of Action for Increased Product Durability and Broader Spectrum Control YIELDGARD VT PRO IN FINAL NEW: R&D Pipeline REGULATORY PHASE YieldGard VT PRO 2007 YieldGard VT PRO Field Trials 12 YieldGard VT PRO Phase 4 # of Damaged Kernels per Ear STATUS: Corn Earworm Damage Ratings contains two 10 PROJECT CONCEPT: proteins for effective 8 control of target 2007; N=9 YieldGard VT PRO is the second- insect pests: 6 generation of YieldGard Corn Borer European and broadens the spectrum of 4 cornborer and insect control and increases the southwestern 2 durability of the trait with the use of cornborer two proteins for dual modes of 0 Corn earworm action for resistance management Roundup YieldGard Herculex® YieldGard VT and fall with Ready Corn Borer Pro with VALUE: Corn 2 with Roundup Roundup armyworm Roundup Ready Corn 2 Ready Ready Corn 2 LAUNCH-COUNTRY Provides broader 60-65M Corn 2 ACRES: spectrum and greater consistency 2007 & 2006 YieldGard VT Pro Field Trials SMARTSTAX 0-9 Damage Rating Scale 2020 VALUE: 10 COMPONENT Awaiting final Fall Armyworm Damage Ratings 9 regulatory import 8 SOURCES OF VALUE: approvals in key 2006; N=3 7 countries, EPA Higher per-acre yield from 6 2007; N=5 registration and improved spectrum and 1 5 USDA deregulation consistency of control 4 3 Higher on-farm yield from 2 potential for reduced 2 1 refuge acre requirements 0 Control Herculex® YieldGard VT PRO 16
    • BIOTECH PIPELINE Third-Generation Corn Rootworm Technology Shows Early Promise and Highlights Innovation in the Pipeline RNAi AND NOVEL PROTEIN APPROACHES R&D Pipeline DEMONSTRATE EXCELLENT PROTECTION NEW: AGAINST CORN ROOTWORM FEEDING YieldGard Rootworm III Phase 1 STATUS: 1.40 2007 Field Efficacy Tests Root Damage (0-3) Scale PROJECT CONCEPT: 1.20 5 locations YieldGard Rootworm delivers effective and consistent in-plant 1.00 protection against western, northern and Mexican corn 0.80 rootworm. Third generation technology, namely RNAi 0.60 technology, is targeted to provide an additional mode of action for 0.40 improved spectrum and durability. 0.20 0.00 High Pressure Greenhouse Test YieldGard RNAi 1 RNAi 2 New Insect Negative Control VT Rootworm/ RNAi Negative Protein Technology Check Roundup Ready 2 YieldGard Rootworm x RNAi technology is an innovative approach that uses targeted YieldGard RNAi Rootworm Technology regulation of gene expression for rootworm control (Baum JA, et al. Nature Biotechnology; 2007,25, 1322-1325) ► Early yield trials demonstrate yield equivalency for both RNAi and novel protein constructs 17
    • BIOTECH PIPELINE Roundup RReady2Yield Soybean Approaching Commercialization; Will Serve As Platform for Soybean Trait Pipeline FOUR YEARS OF DATA CONTINUE TO NEW: R&D Pipeline VALIDATE 7-11% YIELD ADVANTAGE Roundup RReady2Yield Soybeans Near-Isoline Comparisons: HIT Project Phase 4 Roundup RReady2Yield vs. Roundup Ready % Yield Increase over Roundup Ready 12% PROJECT CONCEPT: Roundup RReady2Yield provides 11% 10% enhanced yield, with a target of 7- 9% 11% yield increase compared with Roundup Ready soybeans 9% 8% VALUE: 7% 7% LAUNCH-COUNTRY 6% 45M ACRES1: $300-$500M 2020 VALUE2: 4% SOURCES OF VALUE: 2% Improved yield 1 Targeting 7-11% yield increase 0% 4 YEAR 1. Acre opportunity reflects acres where technology fits at 2004 2005 2006 2007 Monsanto's current 2007 market share in respective AVERAGE crops 2. 2020 value reflects gross sales opportunity in launch Roundup RReady2Yield soybeans yield 7 to 11 percent higher country in year 2020 than Roundup Ready soybeans based on 73 Monsanto field trials from 2004-2007 18
    • BIOTECH PIPELINE Insect-Protected Soybeans Are First-Ever Monsanto Trait Developed Exclusively for Non-U.S. Opportunity FIELD PERFORMANCE OF BT SOYBEANS NEW: R&D Pipeline Insect-Protected Soybeans with 2007 Insect Efficacy Trials - 4 Locations Roundup RReady2Yield 50 (season cumulative) ± standard error ADVANCED: 45 STATUS: Phase 3 Mean Larvae per Meter Row 40 PROJECT CONCEPT: 35 Insect-protected soybeans use Bt 30 technology widely adopted in corn 25 and cotton to control insect pests, 20 especially economically important 15 pests for Brazilian farmers. The Bt trait is combined with Roundup 10 RReady2Yield 5 VALUE: 0 UNSPRAYED SPRAYED UNSPRAYED SPRAYED LAUNCH-COUNTRY: Brazil Bt Non-Bt LAUNCH-COUNTRY non-Bt 50M ACRE OPPORTUNITY1: Maturity Group V 2020 COMMERCIAL $150-$300M VALUE2: Tifton, GA Loxley, AL St. Gabriel, LA Alexandria, LA SOURCES OF VALUE: Insect-protected soybeans with Roundup RReady2Yield technology provides effective protection against key Insecticide substitution lepidopteran pests, better than chemical insecticides 1 Based on 2 current sprays costing almost $6/acre total • Also exhibits the glyphosate tolerance of Roundup Improved yield RReady2Yield soybean varieties Early indications of 4+% 2 1. Acre opportunity reflects acres where trait could have technological fit. Opportunity does not reflect acres that may be increase over chemical planted to a competitive trait or acres required for insect-resistance management (IRM) set-aside refuges insecticides 2. 2020 value reflects gross sales opportunity in launch country in year 2020 19
    • BIOTECH PIPELINE Insect-Protected Soybeans Are First-Ever Monsanto Trait Developed Exclusively for Non-U.S. Opportunity 2007 FIELD TESTING SHOWS VISUAL R&D Pipeline NEW: PROOF OF CONTROL Insect-Protected Soybeans with TIPTON, GA - FIELD EFFICACY TRIAL – 2007 Roundup RReady2Yield ADVANCED: STATUS: Phase 3 PROJECT CONCEPT: Insect-protected soybeans use Bt technology widely adopted in corn and cotton to control insect pests, especially economically important pests for Brazilian farmers. The Bt trait is combined with Roundup RReady2Yield VALUE: LAUNCH-COUNTRY: Brazil LAUNCH-COUNTRY 50M ACRE OPPORTUNITY1: CONTROL WITH GENE 2020 COMMERCIAL $150-$300M VALUE2: (NO INSECTICIDE) (NO INSECTICIDE) SOURCES OF VALUE: Insecticide substitution Insect-protected soybeans with Roundup RReady2Yield 1 Based on 2 current sprays technology demonstrated significant protection from key costing almost $6/acre total lepidopteran pests, including soybean looper, in 2007 tests Improved yield 2 4+% increase over chemical 1. Acre opportunity reflects acres where trait could have technological fit. Opportunity does not reflect acres that may be planted to a competitive trait or acres required for insect-resistance management (IRM) set-aside refuges insecticides 2. 2020 value reflects gross sales opportunity in launch country in year 2020 20
    • BIOTECH PIPELINE Dicamba-Tolerant Soybeans Advance to Phase 3 With Excellent Tolerance and Yield Data From 2007 Field Trials FIELD PERFORMANCE DEMONSTRATES NEW: R&D Pipeline EXCELLENT DICAMBA TOLERANCE Dicamba-Tolerant Soybeans 2007 Efficacy Yield ADVANCED: 80 STATUS: Phase 3 PROJECT CONCEPT: 60 Provide new, unique mode of Yield (bu/ac) action, designed to provide Untreated soybean growers with most 40 effective weed management system 1x1 lb/ac, 2x available when stacked with 2x2 lb/ac, 4x Roundup RReady2Yield 1x1x1 lb/ac, 3x 20 VALUE: LAUNCH-COUNTRY 45M ACRE OPPORTUNITY1: 0 2020 COMMERCIAL <$150M VALUE2: EVENT 1 EVENT 2 EVENT 3 SOURCES OF VALUE: ▼ DMO Enzyme Structure Increased Flexibility Agronomic trials in 28 locations 1 showed comparable yields Improved weed control options with two modes of action between dicamba treated plots and untreated controls, even at 1. Acre opportunity reflects acres where technology application 3X approved rates – fits at Monsanto's current 2007 market share in respective crops indicating commercial tolerance 2. 2020 value reflects gross sales opportunity in and yield performance launch country in year 2020 21
    • BIOTECH PIPELINE Vistive III Advanced to Phase 3 After Meeting Compositional and Yield Targets VISTIVE III COMPOSITION TARGETS NEW: R&D Pipeline Vistive III Soybeans 77% Mid Oleic – Low Sat Trait 84% Alone 77% ADVANCED: Fatty Acid (%) HIT Project Vistive III Low Lin – Mid Phase 3 70% Oleic – Low Sat 63% Vistive Low Lin Alone PROJECT CONCEPT: 56% Vistive III trait is designed, by 49% combining breeding and 42% biotechnology, to lower linolenic 35% 14% and saturate content while boosting 28% 6% oleic content to produce an oil with 3% 21% the same preferable mono- 14% unsaturated fat content as olive oil 7% and the low saturated fat content found in canola oil 18:0 + 16:0 18:1 18:2 18:3 CATEGORY► VALUE: SATURATES OLEIC LINOLEIC LINOLENIC COMMODITY 15% 20% 56% 8% LAUNCH-COUNTRY SOYBEANS 15 - 20M ACRES1: VISTIVE III <7% 55-80% 12-25% ≤ 3% TARGETS <$150M 2020 VALUE2: SOURCES OF VALUE: When breeding (green bar) and biotech (yellow bar) are combined, Vistive III (red bar) meets all product concept Oil replacement value compositional targets For frying applications and oil 1 blends for baking, roughly 15 - • Additionally, 3 years of biotech trait field data in the U.S. and 20M acres planted for oil used Argentina indicate that yield is not statistically different from for food control 1. Acre opportunity reflects acres where technology fits at Monsanto's current 2007 market share in respective crops 2. 2020 value reflects gross sales opportunity in launch country in year 2020 22
    • BIOTECH PIPELINE Food Prototypes Containing SDA Soybean Oil from Omega-3 SDA Enhanced Soybeans Meets Consumer Acceptability SDA SOYBEAN OIL METS FOOD NEW: R&D Pipeline APPLICATION TARGETS Omega-3 SDA Enhanced Soybeans 9= Like Extremely Phase 3 STATUS: Consumer Acceptability – Overall Liking PROJECT CONCEPT: 9 8 7.14a 7.14a Omega-3 SDA enhanced soybeans 6.6a 6.47 a 6.59 a 6.53 a represent a land-based source of Liking Rating 7 essential Omega-3 fatty acids. 6 Targeting 20 percent stearidonic 5 acid (SDA) with taste, shelf life and oil stability of soybean oil. 1= Dislike extremely 4 VALUE: 3 LAUNCH-COUNTRY 2 <1M ACRES1: 1 $300-$500M 2020 VALUE2: Margarine Yogurt Drink Granola Bar SOURCES OF VALUE: Control (Soy Oil ) SDA Soy Oil High Value Oil a Not Statistically Different Product similar to soybean oil 1 in taste, shelf-life and oil Recent results show comparable consumer acceptability stability, but with the superior between SDA soy oil and conventional soy oil in margarine nutritional profile of fish oil spreads, yogurt, yogurt drinks and granola bars ► No significant yield differences between Omega-3 SDA 1. Acre opportunity reflects acres where technology fits at enhanced lead event and the control over 5 growing seasons Monsanto's current 2007 market share in respective crops and 65 locations 2. 2020 value reflects gross sales opportunity in launch country in year 2020 23
    • BIOTECH PIPELINE Higher-Yielding Soybeans Continue to Demonstrate Improved Yield Over Conventional Controls 2007 HIGHER-YIELDING SOYBEAN NEW: R&D Pipeline AGRONOMIC TESTING VERSUS CONTROLS Higher-Yielding Soybeans Family: Percent yield difference vs. control Lead Project 6.0 (Bu/Ac Increase Over Control) 7.1% Phase 2 6.2% 6.2% 6.2% 6.1% STATUS: Average Yield Advantage 5.0 PROJECT CONCEPT: PRODUCT CONCEPT 4.0 Higher-yielding soybeans aimed at TARGET RANGE boosting intrinsic yield potential of 3.0 soybeans through insertion of key genes 2.0 VALUE: LAUNCH-COUNTRY 1.0 45M ACRES1: 0.0 $300-$500M 2020 VALUE2: EVENT 1 EVENT 2 EVENT 3 EVENT 4 EVENT 5 SOURCES OF VALUE: 18 Locations Improved yield More than 60 events were tested at 18 locations, with lead 1 Targeting additive yield to U.S. events showing strong yield advantages over conventional average of 42 bu/ac controls • Higher-yielding trait will be stacked on top of Roundup RReady2Yield and other soybean-pipeline traits with an 1. Acre opportunity reflects acres where technology additive yield boost fits at Monsanto's current 2007 market share in respective crops 2. 2020 value reflects gross sales opportunity in launch country in year 2020 24
    • BIOTECH PIPELINE U.S. Field Testing Identifies Drought-Tolerance Leads in Cotton EARLY RESULTS ON DROUGHT-TOLERANT COTTON NEW: R&D Pipeline TESTING IN THE U.S. Drought-Tolerant Cotton Mid-Season Late Season Halfway, TX – September 2007 Halfway, TX – October 2007 Phase 1 STATUS: PROJECT CONCEPT: Drought-tolerant cotton is designed to minimize risk in cotton farming by providing yield stability in environments experiencing sporadic or CONTROL WITH GENE CONTROL WITH GENE consistent water stress and by reducing water needs on irrigated acres. YIELD DIFFERENCE PERCENT Percent yield difference vs. control – Across multiple locations PROJECT UPDATE: 4.0% 19% 6.7% 8.5% 10.1% 4.7% 4.6% 4.9% 20 (lbs seed cotton/ACRE) • Building a portfolio of genes 18 that confer drought tolerance Event 1 16 in cotton 14 Event 2 • Initial field results show 12 positive phenotypes for 2006 – 4 locations 10 multiple genes in water- 2007 – 7-9 locations 8 stressed conditions 6 4 2 0 2006 2007 2006 2007 Water Stressed Non-Stressed 25
    • BIOTECH PIPELINE Strong Pipeline Reflects Growing Innovation, Opportunity in Latter-Stage Projects and Emerging Value in Yield and Stress 2020 COUNTRY ADDITIONAL PHASE COMMERCIAL OF GEOGRAPHIC SOURCES OF VALUE VALUE LAUNCH OPPORTUNITY • Improved yield BRAZIL HIGH 3 LEAD Drought-Tolerant Corn Family U.S. ARGENTINA YEILD & STRESS • Water replacement EU 27 • Improved yield BRAZIL HIGH 1 LEAD Nitrogen-Utilization Corn Family U.S. ARGENTINA • Nitrogen replacement EU 27 BRAZIL MEGA 2 LEAD Broad-Acre, Higher-Yielding Corn Family U.S. • Improved yield ARGENTINA EU 27 Broad-Acre, Higher-Yielding Soybean HIGH BRAZIL 2 LEAD U.S. • Improved yield ARGENTINA Family HIGH BRAZIL 4 Roundup RReady2Yield Soybeans U.S. • Improved yield ARGENTINA • Improved yield BRAZIL HIGH 4 U.S. ARGENTINA YieldGard VT PRO • Improved insect protection EU 27 LOW 4 Improved-Protein Soybeans U.S. • Food industry functionality N/A LOW BRAZIL 3 High-Oil Soybeans U.S. • Food industry functionality ARGENTINA HIGH 3 Omega-3 Soybeans U.S. • Food industry functionality N/A • Improved yield Insect Protected + Roundup MID 3 Brazil ARGENTINA RReady2Yield Soybeans • Improved insect protection LOW BRAZIL 3 Dicamba-Tolerant Soybeans U.S. • Durable weed control ARGENTINA LOW 3 Vistive III Soybeans U.S. • Food industry functionality N/A INDIA MID 2 Bollgard III Cotton U.S. • Improved insect protection AUSTRALIA BRAZIL LOW U.S. 2 Roundup RReady2Yield Canola Canada • Improved yield EU 27 COMMERCIAL VALUE RANGES AT 2020: LOW <$150M MID $150-$300M HIGH $300-$500M MEGA >$1B 26
    • SUMMARY Our Biotech and Breeding Pipeline Is Accelerating, With Progress in Projects and Widening Yield Advantages MILESTONES: Biotech pipeline is accelerating 10 projects either advanced phases or were added to the pipeline – among the most in any annual update Q1 Q4 First time transitioned 4 projects from Phase 2 to Phase 3 Q2 Q3 First multi-generational advancement as 2 generations of corn drought family advance SmartStax enters the pipeline as the platform for corn, complementing Roundup RReady2Yield as the soybean platform ANNUAL R&D CYCLE: SEEDS & TRAITS Breeding programs yields impressive WHAT CHANGED 2007-2008? DEKALB germplasm maintains impressive • 5 projects advanced phases 8.4 bu/ac advantage; gap widens to 14.6 • 5 products were added bu/ac when protected with YieldGard VT • Vistive II was removed in favor of Vistive III Triple stack • “Water-use efficiency” soybeans reclassified as Asgrow germplasm yield advantage “2nd-Gen Higher-yielding soybeans” improves to average 1.27 bu/ac; Roundup • Two former Renessen projects were rolled into the RReady2Yield to provide 7-11% boost Monsanto pipeline 27
    • Reconciliation of Non-GAAP Financial Measures Reconciliation of Free Cash Flow Fiscal Year Three Months Three Months 2008 Fiscal Year Ended Ended $ Millions Target Nov. 30, 2007 2007 Nov. 30, 2006 Net Cash Provided (Required) by Operations $1,950 - $2,050 $1,854 $996 $600 Net Cash Provided (Required) by Investing Activities (1,050) (1,911) (256) (67) $533 Free Cash Flow $900 - $1,000 $(57) $740 (156) Net Cash Provided (Required) by Financing Activities N/A (583) (47) Effect of Exchange Rate Changes on Cash and Cash Equivalents N/A 46 58 5 $382 Net Increase (Decrease) in Cash and Cash Equivalents N/A $(594) $751 Reconciliation of Non-GAAP EPS Three Months Ended $ per share Nov. 30, 2007 Fiscal Year 2007 Diluted Earnings per Share $0.46 $1.79 Loss (Income) on Discontinued Operations -- $(0.13) In-Process R&D Write-Off Related to the Delta & Pine Land (D&PL) -- $0.34 Acquisition Tax Charge on Repatriated Earnings -- -- Cumulative Effect of Change in Accounting Principle -- -- Diluted Earnings (Loss) per Share from Ongoing Business $0.46 $2.00 28
    • Reconciliation of Non-GAAP Financial Measures Reconciliation of Return on Capital $ Millions 12 Months Total Monsanto Company and Subsidiaries: Ended Aug. 31, 2007 Operating Profit After-tax (excluding certain items) $1,116 Average Capital $7,533 Return on Capital 14.8% Operating Profit After-tax (excluding certain items): Net Income $993 Adjustment for certain items, after-tax: 2007 In-Process R & D Related to the D&PL $186 Acquisition Loss (Income) on Discontinued Operations ($71) Interest Expense – Net of Taxes $8 Operating Profit After-tax (excluding certain items) $1,116 As of Aug. 31, 2007 Average Capital: Short-Term and Long-Term Debt $1,420 Shareowners’ Equity $7,505 Cash and Cash Equivalents $(866) Cash for Operations $150 Total Capital $8,209 Prior Period Capital $6,857 Average Capital $7,533 29