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monsanto -12-08 monsanto -12-08 Presentation Transcript

  • UBS BEST OF AMERICAS CONFERENCE STEVE PADGETTE PH.D. VICE PRESIDENT, BIOTECHNOLOGY SEPTEMBER 12, 2008
  • 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; 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 reports on Forms 10-Q and 10-K. 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
  • OVERVIEW Increasing Protein Demand, Coupled with Boost from Biofuels, Creates Sustained Long-Term Grain Demand STRETCHING SUPPLY STATE OF AGRICULTURE: Strong Demand Environment WORLD CORN AND SOYBEAN STOCKS-TO-USE RATIO1 FACTORS: STOCKS-TO-USE RATIO 50% ► INCREASING PROTEIN 45% DEMAND 40% Wealth drives meat 35% consumption – changing 30% feed demand 25% ► ASCENSION OF CHINA 20% China’s growth is reaching 15% limits of domestic 10% production, driving huge 5% changes in export 0% 2008/2009P 1964/1965 1966-1967 1968/1969 1970/1971 1972/1973 1974/1975 1976/1977 1978/1979 1980/1981 1982/1983 1984/1985 1986/1987 1988/1989 1990/1991 1992/1993 1994/1995 1996/1997 1998/1999 2000/2001 2002/2003 2004/2005 2005/2006 environment ► ESTABLISHMENT OF SOYBEAN STOCKS-TO-USE BIOFUELS CORN STOCKS-TO-USE Assuming only base-case adoption of biofuels, more • U.S. corn ending stocks-to-use ratio projected to be 12% for 2007/08 corn and soy needed in next and down 28% to a 9% stocks-to-use ratio for 2008/09 decade • U.S. soybean stocks-to-use estimated to be 4.4% for 2007/08 and essentially flat for 2008/09, even with acres up nearly 18% 3 1. USDA PSD View database query for global corn and soybeans
  • OVERVIEW Global Corn Production Per Acre Is Sub-Optimized Today, Creating an Opportunity for Innovation GLOBAL CORN PRODUCTION1: YIELD CORE PRODUCTIVITY MEASURES AND EVALUATION Boosting yield-per- acre can make a meaningful CANADA difference in EU 27 3M ACRES supply-demand 136 BU/AC 500M BUSHELS 27M ACRES environment 90% HYBRID U.S. 99 BU/AC CHINA 2B BUSHELS 90M ACRES • If India, Mexico 151 BU/AC 67M ACRES MEXICO 13B BUSHELS 83 BU/AC and Brazil moved 6B BUSHELS 18M ACRES to 100 bushel per 25% HYBRID INDIA 48 BU/AC BRAZIL 900M BUSHELS acre yields, they 20M ACRES 36M ACRES 45% HYBRID 75% HYBRID could produce 32 BU/AC 58 BU/AC 700M BUSHELS 2B BUSHELS nearly 4 billion additional ARGENTINA bushels of corn 10M ACRES 111 BU/AC annually – equal 900M BUSHELS to total world Optimization of yield per acre corn exports in 2007 Poor/Subsistence Sub-Optimized Optimized 4 1. Source is USDA FAS and internal estimates.
  • OVERVIEW Pipeline Leverages Power of Breeding and Biotech to Create Yield for Current Commercial Growth and New Platforms 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 Through the BASF Collaboration 5
  • INTERNATIONAL CORN Plan to Continue to Target 1-2 Share Point Gains in Key Countries in 2009; U.S. Targets 2+ Share Gain INTERNATIONAL CORN BRAND PERFORMANCE: LEADING MARKET INDICATORS OF MONSANTO BRAND SHARE PERFORMANCE – 2008 EU27 U.S. 2008F BRAND 2008F DEKALB 13% 25-26% SHARE: BRAND SHARE: ESTIMATED ESTIMATED 0.5 share 2-3 share FY08 GAIN: FY08 GAIN: POSITION IN POSITION IN #3 #2 MARKET: MARKET: FY09 TARGET: FY09 TARGET: 1-2 share 2+ share INDIA ARGENTINA 2008F BRAND 39% SHARE: 2008F TOTAL 45% CURRENT BRAND SHARE: Flat SHARE BRAZIL ESTIMATE: ESTIMATED 5 share FY08 GAIN: 2008F TOTAL POSITION IN 40% #1 BRAND SHARE: MARKET: POSITION IN #1 MARKET: ESTIMATED Held FY09 TARGET: 1-2 share FY08 GAIN: FY09 TARGET: 1-2 share Share POSITION IN #1 MARKET: FY09 TARGET: 1-2 share 6
  • U.S. CORN Triple Stack Penetration Accelerates, Creating Added Growth and Setting Stage for SmartStax Launch U.S. CORN TRAIT OPPORTUNITY: 2005-2010F 70 220 200 U.S. TRIPLE-STACK ACRES 60 180 U.S. TRAIT ACRES (IN MILLIONS) 160 50 (IN MILLIONS) 140 40 120 100 30 80 20 60 40 10 20 0 0 2007 2008F 2009F 2010 2005 2006 2007 2008F 2009F 2010F Opportunity Q3UPDATE Q3UPDATE Rootworm Control NA 50-65M 20.8M 28-29M Corn Borer Control NA 60-70M 42.4M 43-44M Glyphosate Tolerance NA 80M 57.9M 67-68M Triple Stack/SmartStax 17.6M 28M 34-35M 50-65M Opportunity widens in 2010 with launch of SmartStax Trait acres reflect the total acres planted with each individual trait. In the case of stacked traits, each absolute acre will be reflected by two or more trait acres. 7
  • GLOBAL BIOTECH TRAITS Significant Growth Opportunity in Expansion of Existing Commercial Biotech Traits Globally SOYBEANS COTTON CORN INTERNATIONAL MARKET OPPORTUNITY MARKET OPPORTUNITY FOR BIOTECH TRAITS THROUGH 20101 ROUNDUP BOLLGARD ROUNDUP YIELDGARD ROUNDUP YIELDGARD READY AND READY CORN READY ROOTWORM BOLLGARD II CORN 2 BORER (FLEX) Brazil 50-60M 3M 2M 15-20M 15-20M 5M Argentina 40M - - 9M 7M 5M India - 15-20M 15-20M 6M 6M - Europe (EU27) 1M - - 24M 8M 5M South Africa 0.2M .15M .15M 6M 4M - Australia - 0.5M-0.8M 0.5M-0.8M - - - OPPORTUNITY: 91-101M 19-24M 18-23M 60-65M 40-45M 15M Total Key Markets 2008F Penetration of 72-94%2 68-76% 3-4% 3% 21-23% 0% Key Markets  Opportunity for existing biotech traits outside of the U.S. is nearly 275M acres and a little more than a third of those acres have been penetrated 1. Market Opportunity reflects total acres where technology is applicable, not necessarily acres projected for penetration by 2010. 2. Primarily Bollgard I penetration; opportunity to expand to second generation technology. 8
  • INTERNATIONAL CORN With Recent Trait Approvals, Door Opens for Technology Infusion in Latin America ARGENTINA BRAZIL 20 2008 STATUS 15-20M • Roundup Ready Corn 2 with YieldGard YIELDGARD CORN ROUNDUP READY CORN 2 15 Corn Borer stack BORER WITH YIELDGARD CORN M ACRES received regulatory BORER STACK approval in Argentina end of August 2007 10 • YieldGard Corn Borer 7M received final approvals in Brazil in 5 early 2008 1-2M 1-1.5M 0 FY09F FY09F OPPORTUNITY OPPORTUNITY HYBRID ACRES – FY08E 10M1 27M MONSANTO SHARE FY08E 45% 40% FY09 TRAIT PRICING WITHIN $15-$16/ACRE $18-20/ACRE DEKALB BRAND FY08 AVG. RETAIL PRICE FOR $29/ACRE $34/ACRE DEKALB HYBRID CORN SEED 9 1. Source: KLEFFMANN Marketing Services
  • R& D PIPELINE Strong Pipeline Reflects Growing Innovation and Value of Emerging Yield and Stress Traits DISCOVERY PHASE 1 PHASE 2 PHASE 3 PHASE 4 Drought- HIGH Tolerant FAMILY TRAITS► Family CORN: COLLABORATION YIELD & STRESS Nitrogen- BROAD-ACRE HIGH Utilization FAMILY TRAITS► YIELD Family Broad-Acre, MEGA Higher-Yielding FAMILY TRAITS► Family SOYBEANS: Broad-Acre, BROAD-ACRE HIGH Higher-Yielding FAMILY TRAITS► YIELD Family 2020 VALUE RANGES: Roundup Omega-3 Bollgard III Ready 2 Yield soybeans soybeans MEGA HIGH Roundup Insect-protected $300M-$500M Ready 2 >$1BM Roundup Ready YieldGard Yield canola 2 Yield soybeans VT PRO Dicamba- corn MID LOW tolerant soybeans <$150M $150M-$300M Vistive III Improved- protein High-oil Corn Soybeans Cotton Canola soybeans soybeans Note: 2020 value ranges reflects expected annual gross sales in launch country in 2020. 10
  • R & D PIPELINE Roundup Ready 2 Yield Soybeans Have Potential to Deliver Up to 10 Years of Breeding Gains Through One Trait R&D Pipeline ROUNDUP READY 2 YIELD SOYBEANS: SECOND-GENERATION WEED CONTROL OPPORTUNITY Roundup Ready 2 Yield Phase 4 STATUS: PRE-LAUNCH Near-Isoline Comparisons: % Yield Increase over Roundup Ready 12% PROJECT CONCEPT: Roundup Ready 2 Yield vs. Roundup Ready Roundup Ready 2 Yield will provide 11% 10% soybeans that are tolerant to the 9% Roundup family of herbicides with a 7-11% yield increase compared to 9% 8% Roundup Ready soybeans VALUE: 7% 7% 6% LAUNCH- U.S. COUNTRY: 4% LAUNCH- COUNTRY ACRE 70M OPPORTUNITY1: 2% 2009: 1-2M ACRES LAUNCH PLANS: 2010: 5-6M ACRES 0% 4 YEAR 2009 PRICING: $69-$722/ACRE 2004 2005 2006 2007 AVERAGE SOURCES OF VALUE:  Roundup Ready 2 Yield soybeans yield 7 to 11 percent Weed control higher than Roundup Ready soybeans based on 73 Current Roundup Ready 1 soybean platform will retail for Monsanto field trials from 2004-2007 $49-$52/acre in 2009 Improved yield 1. Acre opportunity reflects acres where trait could have technological fit. Opportunity does not reflect acres that 2 7-11% increase; average of 9% may be planted to a competitive trait or acres required for insect-resistance management (IRM) set-aside refuges over 4 years of field trials 2. Reflects seamless prcing to farmer, including trait value, germplasm value and value provided by seed treatment 11
  • R & D PIPELINE Insect-Protected Soybeans Are First-Ever Monsanto Trait Developed Exclusively for Non-U.S. Opportunity 2007 FIELD TESTING SHOWS VISUAL R&D Pipeline PROOF OF CONTROL Insect-Protected Soybeans with Roundup Ready 2 Yield TIPTON, GA - FIELD EFFICACY TRIAL – 2007 Phase 3 STATUS: 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 Ready 2 Yield VALUE: LAUNCH-COUNTRY: Brazil LAUNCH-COUNTRY 50M ACRE OPPORTUNITY1: 2020 COMMERCIAL $150-$300M CONTROL WITH GENE VALUE2: (NO INSECTICIDE) (NO INSECTICIDE) SOURCES OF VALUE: Insecticide substitution  Insect-protected soybeans with Roundup Ready 2 Yield 1 Based on 2 current sprays costing almost $6/acre total technology demonstrated significant protection from key 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 insecticides planted to a competitive trait or acres required for insect-resistance management (IRM) set-aside refuges 2. 2020 value reflects gross sales opportunity in launch country in year 2020 12
  • R & D PIPELINE Higher-Yielding Soybeans Continue to Demonstrate Improved Yield Over Conventional Controls 2007/08 HIGHER-YIELDING SOYBEAN NEW: R&D Pipeline AGRONOMIC TESTING VERSUS CONTROLS Higher-Yielding Soybeans Family: Percentage yield difference vs. control: Lead Project 8.0 6.2% 10.2% 7.1% 6.0% 4.6% 10.5% 2.2% 10.3% 5.4% 8.8% (bu/a increase over control) Phase 2 STATUS: Average Yield Advantage PROJECT CONCEPT: 6.0 PRODUCT Higher-yielding soybeans aimed at CONCEPT boosting intrinsic yield potential of TARGET 4.0 soybeans through insertion of key RANGE genes VALUE: 2.0 LAUNCH-COUNTRY 45M ACRES1: 0.0 $300-$500M 2020 VALUE2: Event 1 Event 2 Event 3 Event 4 Event 5 SOURCES OF VALUE: Season 1: 2007 U.S. Field Trials (18 locations) Season 2: 2007/08 LA Field Trials (12 locations) Improved yield  16 top-performing events advanced to Latin America 1 Targeting yield improvement of 6-10% trials. Lead events showing strong yield advantages over conventional controls in both trials.  Higher-yielding trait will be stacked on top of Roundup Ready 2 Yield and other soybean-pipeline 1. Acre opportunity reflects acres where technology fits at Monsanto's current 2007 market share in traits. respective crops 2. 2020 value reflects gross sales opportunity in launch country in year 2020 13 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
  • R & D PIPELINE SmartStax Corn Upgrades Triple Stack Corn Through Potential Refuge Reduction and Improved Insect Control Projected SmartStax Value: On-Farm Increased Yield (per-acre and on-farm) + SmartStax Value: YIELD Refuge Reduction Considerations YIELD COMPONENT BENEFIT1 PER-ACRE U.S. EPA requires set-aside refuge  Improved consistency: 1-2% for current single-mode-of-action Primary pests insect-protected traits in corn  Improved protection: 1-2% 20% Secondary pests ON-FARM 80%  Reduced refuge 3-6% 4-10% Total Estimated Yield Benefit Flexibility to move to one technology + 20 BU/AC platform on-farm 1 Durability + Yield Differential Flexibility to increase planting Farmers in Illinois in 2007 reported + populations average 20 bu/acre yield difference Platform for future traits between YieldGard VT Triple and + refuge acres Access to superior seed + Total Projected SmartStax Value = 1. Yield benefit reflects expected yield benefit above triple-stack standard, on a 14 per-acre and whole-farm basis as noted. Ranges may overlap
  • R & D 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 PROOF OF YIELD IMPROVEMENT Drought-Tolerant Corn Family: SUPERIOR, NE - FIELD TRIALS – 2007 Lead Project 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 6-10% yield 1 improvement in water-stress CONTROL HYBRID WITH GENE environments (76 BU/AC) (94 BU/AC) 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 15 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
  • EXTENDING LEADERSHIP Second-Generation Drought-Tolerant Corn Targeted to Expand Reach Drought Efficacy for Second-Gen Events Yield Difference Over Controls (%) 16 R&D Pipeline 14 Drought-Tolerant Corn Family: 12 Second-Generation Project 10 PRODUCT CONCEPT Phase 2 8 STATUS: TARGET KEY RESULTS RANGE 6 PROJECT CONCEPT: 4 Drought-tolerance family aimed at 2 providing consistent yield and 0 EVENT 1EVENT 2 EVENT 3 EVENT 1 EVENT 2 EVENT 3 buffering against effects of water limitations HIGHER-YIELDING ENVIRONMENT LOWER-YIELDING ENVIRONMENT AVERAGE YIELD: 166 BU/AC AVERAGE YIELD: 53 BU/AC VALUE: 2007 2006 LAUNCH-COUNTRY 55M (All three events significant @ p≤0.10); Statistical significance determined by ANOVA (2006) or nonparametric test (2007) ACRES1: $300-$500M 2020 VALUE2: SOURCES OF VALUE: SEGMENTED VALUE OPPORTUNITY ACROSS MARKETS Improved yield  Second generation KEY OPPORTUINITY IRRIGATED Targeting 6-10% yield demonstrates 1 improvement in water-stress 8-12M Acres performance over environments WESTERN broad range of stress DRYLAND Water substitution conditions in both 10-12M Acres low and high-yielding 2 Variable costs in pumped environments irrigation of >$100/ acre STABILITY  Potential for a broad 60-70M Acres Low annual High annual 1. Acre opportunity reflects acres where technology fits at acreage fit across all precipitation Monsanto's current 2007 market share in respective crops precipitation acres planted 2. 2020 value reflects gross sales opportunity in launch country Source: Spatial Climate Analysis Service, Oregon State University in year 2020 16 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
  • R & D PIPELINE In Continued Field Testing, Nitrogen-Utilization Lead Shows Yield Improvement Under Normal Nitrogen LEAD PERFORMANCE UNDER NORMAL 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, Nitrogen-Utilization lead 1. Acre opportunity reflects acres where technology fits at has demonstrated yield advantages in multiple backgrounds Monsanto's current 2007 market share in respective crops over multiple years 2. 2020 value reflects gross sales opportunity in launch country in year 2020 17 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
  • SUMMARY On Track in 2008, Growth Drivers Continue to Set Stage for Growth Through 2012 GROSS PROFIT OUTLOOK BY SEGMENT 2007-2012F $10,000 TOTAL GROSS All Other Agricultural Productivity PROFIT GROWS Roundup and Other Glyphosate-based Herbicides TO >2X $8,000 2007 BASELINE Seeds & Genomics $6,000 $4,000 GROWTH COMES FROM SEEDS & $2,000 TRAITS $0 2007 2008F 2009F 2010F 2011F 2012F  U.S. Corn  Int’l Corn  Cotton  Vegetables  R&D Pipeline  Soybeans • Expand seed • Establish and • Prepare for • Accelerate U.S. • Reinvigorate • Largest-ever footprint expand seed commercial traits and margins R&D field footprint launch of breeding effort • Drive trait • Integrate Roundup penetration • Drive trait • Drive int’l traits DeRuiter Ready 2 Yield penetration purchase SmartStax Accelerated trait Roundup Ready Globalized $1B Vegetable Game-Changing Platform platform 2 Yield Platform Cotton Platform Platform Launches 18
  • SUMMARY Monsanto’s Growth Opportunity Lies at the Intersection of Demand, Innovation and Execution Monsanto’s Simple Philosophy on Opportunity:  More demand requires more YIELD  More yield requires more INNOVATION  More innovation delivers more GROWTH 19