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monsanto 03_10_09


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monsanto 03_10_09

  2. 2. 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 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. © 2009 Monsanto Company 2
  3. 3. 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 3
  4. 4. Increasing Protein Demand, Coupled with Boost from Biofuels, Creates Sustained Long-Term Grain Demand STATE OF AGRICULTURE: STRETCHING SUPPLY Yield Always Matters WORLD CORN STOCKS-TO-USE RATIO1 ► Global corn ending stocks-to-use ratio 120% 900 projected to be 17-18 STOCKS-TO-USE RATIO percent for 2008/09, 800 100% following two years of M METRIC TONS 700 record corn crops 80% 600 60% ► Feb. 2008 USDA 10-year 500 projections forecast 2-3% 40% CAGR for corn and 400 soybean global trade 20% 300 ► No appreciable change in 0% 200 1964/1965 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 2008/2009F 1966-1967 acres planted over next 10 years; yields must grow 1986/1987 2008/2009 1964/1965 steadily each year to meet demand GLOBAL CORN STOCKS-TO-USE1 ► Yield optimizes income of GLOBAL CORN CONSUMPTION1 grower irrespective of commodity price 1USDA PSD View database query for global corn 4
  5. 5. 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 90% HYBRID environment U.S. 99 BU/AC CHINA 2B BUSHELS • If India, Mexico 90M ACRES 151 BU/AC 67M ACRES MEXICO 13B BUSHELS 83 BU/AC and Brazil moved 6B BUSHELS 18M ACRES 25% HYBRID to 100 bushel per INDIA 48 BU/AC BRAZIL 900M BUSHELS acre yields, they 20M ACRES 36M ACRES 45% HYBRID 75% HYBRID 32 BU/AC could produce 58 BU/AC 700M BUSHELS 2B BUSHELS nearly 4 billion additional ARGENTINA bushels of corn 10M ACRES 111 BU/AC 900M BUSHELS annually – equal to total world Optimization of yield per acre corn exports in 2007 Poor/Subsistence Sub-Optimized Optimized 5 1. Source is USDA FAS and internal estimates.
  6. 6. Five-Year Plan to More Than Double Gross Profit by 2012 Centered On Seeds and Traits Platform 2012 GROWTH RANGE GROSS PROFIT COMMITMENT: 2003-2012F Gross profit targeted to more than double from 2007 $9.5- baseline through 2012 $9.75B SEEDS & GENOMICS GROSS PROFIT STRATEGIC PLAYBOOK $10,000 AG PRODUCTIVITY GROSS PROFIT All growth is organic, from $7.3- base business and pipeline $7.5B $8,000 GROSS PROFIT (in millions) U.S. Corn International Corn Soybeans ~2.25X Cotton $6,000 2007 Vegetables BASELINE R&D Pipeline $4.2B Earnings continue to $4,000 translate into operating cash, and value created for shareowners through combination of acquisitions, $2,000 share repurchases and dividends $0 2003 2004 2005 2006 2007 2008 2009F 2012F BASELINE 6
  7. 7. Even as Roundup Supply and Demand Comes into Balance, Seeds and Traits Is Fundamental Driver of Growth SEEDS & GENOMICS GROSS PROFIT Roundup and Other ROUNDUP AND OTHER GLYPHOSATE-BASED HERBICIDES GROSS PROFIT Glyphosate-Based $10,000 Herbicides $7.3B- $9,000 GROSS PROFIT (in millions) ~18% CAGR FY2009 Forecast $7.5B $8,000 Gross Profit $2.4B-$2.5B $7,000 Target $4.5B- $6,000 Branded Price $4.6B (per equivalent > $20 $5,000 gallon) $4,000 FY2012 Forecast $3,000 ~ -8% CAGR Gross Profit $1.9B $2,000 $2.4B- Target $1.9B $2.5B $1,000 Branded Price (per equivalent $16-$18 $0 gallon) 2009F 2012F Seeds and Genomics gross profit is estimated to grow at a CAGR of ~18% through 2012, representing nearly 4x the gross profit contribution of the Roundup business 7
  8. 8. U.S. Seeds & Traits Gross Profit Expected to Double by 2012; Nearly 85% Growth in International Seeds & Traits Forecasted SEEDS AND GENOMICS 2012F 2008 GROSS PROFIT – U.S. Corn Seed & Traits Soybean Seed & Traits Cotton Seed & Traits ~2X Vegetable Seed 2008 $2.4B BASELINE Other Seed & Traits $4.7-$4.8B SEEDS AND GENOMICS 2012F 2008 GROSS PROFIT – INTERNATIONAL Corn Seed & Traits Soybean Seed & Traits ~1.8X Cotton Seed & Traits 2008 BASELINE Vegetable Seed $1.45B $2.6-$2.7B Other Seed & Traits 8
  9. 9. Launches of Roundup Ready 2 Yield and SmartStax Drive U.S. Gross Profit Growth and Re-Invigorate Portfolio UNITED STATES 2012 MILESTONE TARGETS U.S. ► SmartStax launch in 2010; target market 2008 of 55-65M acres1 CORN SEED 25.5%/10.5% ► Drought-Tolerant corn targeted to SHARE: launch in 2012+ HYBRID CORN 80-90M ACRES: ► Grow DEKALB brand to 30-34 share ►SOYBEAN 20%/9% SEED SHARE: points and American Seeds to ~15 share SOYBEAN 65-75M points by 2012 ACRES ► COTTON 41% ► Large-scale launch of Roundup Ready 2 SEED SHARE: Yield soybeans on 5-6M acres in 2010; COTTON 9-12M ACRES: target market of 45-55M acres1 ► Grow Asgrow brand share to 24-28 2009 MILESTONE TARGETS share points by 2012 ► Targeting to gain 1-2 share points in ► Grow Deltapine cotton seed share to ~50 DEKALB and 1 share point in share points by 2012 American seeds ► Launch new varieties of cotton with ► Targeting 34-35M acres of triple-stack second-generation traits in 2010 corn; ~70% of our branded portfolio ► Targeting to gain 1 share point in Asgrow brand ► Controlled commercial release of Roundup Ready 2 Yield on 1.5M acres 9 1Target market defined as acres where technology is applicable, not necessarily a projection of acres penetrated by 2012.
  10. 10. Roundup Ready 2 Yield Soybeans First in Series of Yield-Enhancing Traits FINAL ROUNDUP READY 2 YIELD SOYBEANS VERSUS COMMERCIAL CHECKS COMPARISONS TO COMMERCIAL ROUNDUP READY SOYBEANS – 2 YEAR SUMMARY 60 VALUE PROPOSITION COMPETITORS’ PRODUCT WITH ROUNDUP READY 2 YIELD ROUNDUP READY TRAIT YIELD IMPROVEMENT ON 55 AVERAGE YIELDS IN ~3.8 bu/ac 55.5 GROUPS 2 & 3: Bushels per Acre 55.2 54.5 INCREMENTAL YIELD 50 51.7 VALUE TO FARMER 51.4 ~$38/ac (VERSUS ROUNDUP 49.9 READY): 45 PRICING SEAMLESS PRICE FOR FIRST-GENERATION $49-$52 40 ROUNDUP READY SEED (PER ACRE)1: SEAMLESS PRICE FOR 35 $69-$72 ROUNDUP READY 2 YIELD SEED (PER ACRE)1: 2 3 Overall RELATIVE MATURITIES: COMPARISONS: >1,000 >2,900 >3,900 APPROXIMATE BUSHELS PER ACRE ADVANTAGE FOR 4.6 3.8 3.8 ROUNDUP READY 2 YIELD: PERCENT YIELD ADVANTAGE 9.1% 7.3% 7.4% FOR ROUNDUP READY 2 YIELD1: Two year summary (2007-2008) of head-to-head comparisons between all Roundup Ready 2 Yield products available for sale in 2009 vs. national competitor Roundup Ready products. Final data as of December 9, 2008. 10 1Reflects seamless price to the farmer, including trait value, germplasm value and value provided by the seed treatment.
  11. 11. SmartStax Raises the Bar as Most Durable, Complete and Easy to Use On-Farm Package for Weed and Pest Control 2007 & 2008 SmartStax EFFICACY TRIALS NEW: R&D Pipeline 1.5 SmartStax Corn Node Injury Scale 0-3 ADVANCED STATUS: Phase 4 1.0 PROJECT CONCEPT: CRW Root Damage Ratings 0.5 SmartStax combines the following herbicide-tolerant and insect-protection 0.0 traits for the most complete control: • YieldGard VT Rootworm with YieldGard VT Roundup Herculex® SmartStax Roundup Ready Corn 2 and Rootworm Ready Corn Rootworm 6.0 Damaged Area (cm2) with Roundup YieldGard VT PRO Ready Corn 2 5.0 • Herculex® I and Herculex® RW • Liberty Link® 4.0 3.0 VALUE: Corn Earworm Damage 2.0 LAUNCH-COUNTRY 55-65M ACRES1: 1.0 0.0 2020 VALUE2: >$500M Roundup Herculex® SmartStax YieldGard VT WHOLE-FARM YIELD IMPROVEMENT Ready Corn Corn Borer Triple PRO ESTIMATES: The second-generation YieldGard corn borer trait, a key IMPROVED CONSISTENCY FOR SmartStax component, demonstrates incremental yield benefit 1 PRIMARY AND SECONDARY of 4 percent over first-generation corn borer traits in 1. Acre opportunity reflects acres where technology fits at PESTS3 Monsanto's current 2007 market share in respective crops preliminary data from 2 years of comparisons 2. 2 4 REDUCED REFUGE 2020 value reflects gross sales opportunity in launch Fewer damaged kernels from earworm drives yield country in year 2020 TOTAL: 5-10% advantage 1Acre opportunity reflects acres where technology fits at Monsanto's current 2007 market share in respective crops 22020 value reflects gross sales opportunity in launch country in year 2020 Herculex® is a registered trademark of Dow Agrosciences LLC 11 3As compared to YieldGard VT Triple 4Subject to EPA approval Liberty Link® is a registered trademark of Bayer CropScience AG
  12. 12. Increasing Biotech Penetration in Brazil and Argentina Sets Stage for Significant Contributions to Gross Profit LATIN AMERICA NORTH LATIN AMERICAN OUTLOOK: CURRENT 2012 OUTLOOK SEED & TRAIT TRENDS THROUGH 2012 #1 position in all key countries CORN SEED SHARE: 7-8M HYBRID CORN ACRES: MEXICO #1 CORN Approved YieldGard Corn Borer with Roundup Ready Corn 2 POSITION in Colombia and Honduras BIOTECH STATUS: December 2008 approval gained for experimental trials in El Salvador • Integration of Cristiani; Expand seed footprint for pending FY2009 OUTLOOK trait introductions BRAZIL CURRENT 2012 OUTLOOK 40% CORN SEED SHARE: 44-48% BRAZIL #1 CORN 25-27M HYBRID CORN ACRES: POSITION • Targeted share gain: 1-2 points • 1.5-2M acre launch of YieldGard Corn Borer; 15-20M target FY2009 CORN OUTLOOK: market1 • Roundup Ready Corn 2 approved; 15-20M acre target market1 SOYBEAN ACRES 50-55M ARGENTINA • Roundup Ready soybeans targeted to 60% penetration; FY2009 SOYBEAN #1 CORN OUTLOOK targeting 80% penetration by 2012 POSITION ARGENTINA CURRENT 2012 OUTLOOK 46% CORN SEED SHARE: 50-54% 8-10M HYBRID CORN ACRES: • Targeted share gain: 1-2 points FY2009 CORN • 2M-plus acre launch of YieldGard Corn Borer with Roundup OUTLOOK: Ready Corn 2; 7M acre target market1 1Targetmarket defined as acres where technology is applicable, not necessarily a projection of acres penetrated by 2012. 12
  13. 13. Upgrade of Cotton Traits and Growth in Corn Seed Share In India Expected to Deliver Growth in Asia-Pacific Through 2012 ASIA -PACIFIC 2012 MILESTONE TARGETS INDIA ► Regulatory agencies in key countries in 2008 Asia-Pacific continue to approve biotech 36% CORN SEED products for import from the U.S. and SHARE: Latin America to facilitate timely HYBRID CORN 5-7M ACRES: launches of new traits ► COTTON 5% SEED SHARE: ► Grow DEKALB brand to 40-44 share HYBRID COTTON 18-20M ASIA-PACIFIC points in India by 2012 ACRES: ► Complete conversion of India to AUSTRALIA Bollgard II cotton; 18-20M acre target 2008 market1 ► COTTON N/A SEED SHARE: ► Roundup Ready Flex/Bollgard II cotton HYBRID COTTON 500-800K launched in India; 15-20M acre target ACRES: market1 2009 MILESTONE TARGETS ► Australia cotton trait business returns with adequate rainfall ► Targeted to gain 1-2 share points in DEKALB corn in India ► Bollgard cotton estimated to be on ~10M acres and Bollgard II targeted to grow to ~6M in India 1Target market defined as acres where technology is applicable, not necessarily a projection of acres penetrated by 2012. 13
  14. 14. Vegetables and Corn Share Growth are Cornerstones of Europe’s Gross Profit Growth in Seeds & Traits EUROPE 2012 MILESTONE TARGETS ► Regulatory approvals to import biotech crops from the U.S. and Latin America continue to occur timely to facilitate planned launches of new traits EUROPE ► Grow DEKALB brand to 16-20 share points by 2012 ► De Ruiter seed fully integrated and EU 27 protected culture business contributes 2008 ~35 percent of the annual gross profit to 12% CORN SEED SHARE: vegetable seeds by 2012 HYBRID CORN ~30M ACRES: 2009 MILESTONE TARGETS ► Targeted to gain 1-2 share points in DEKALB corn ► First full year of De Ruiter protected culture vegetable seed business; Europe targeted to be approximately 65% of Monsanto’s protected culture net sales 14
  15. 15. Technology Investment Has Fueled Gross Profit Progression for Seeds and Traits Research And $4,500 Development SEEDS & GENOMICS GROSS PROFIT $4,000 GEOGRAPHY Global TOTAL COMPANY RESEARCH & DEVELOPMENT1 $3,500 Maximize return OBJECTIVE: on investment $3,000 IN MILLIONS 2009 STATUS 2001 – 2008 24% CAGR $2,500 • Monsanto spends more on seed and biotech $2,000 R&D than any other 2001 – 2008 $1,500 company 9% CAGR • >90% of R&D spend is $1,000 for seeds-and-traits, split roughly 50/50 $500 between breeding and $0 biotechnology 2001 2002 2003 2004 2005 2006 2007 2008 1Total R&D does not include IP R&D from acquisitions 15
  16. 16. As SmartStax and Roundup Ready 2 Yield Launch, Four New Game-Changing Products Poised to Extend Lead Post 2012 2012 TO END OF DECADE Drought 2nd Gen. Higher Nitrogen Tolerant Yielding Drought Utilization Corn1 Soybeans1 Tolerant Corn1 Corn1 • Advanced to Phase IV • Advanced to Phase III • Phase II project • Phase I Project • First dry-land drought • Built upon yield platform • 9% yield advantage in • Consistent yield product submitted to of Roundup Ready 2 2008 in water-stressed benefit after two years USDA and FDA Yield environments of testing • 5 years of testing • Lead events 1 & 2 • Currently selecting • 8% yield benefit at exceeded 6%-10% yield experienced average commercial event for lower nitrogen levels improvement target yields of 7.4% and 6.7%, broad-acre application respectively SUPERIOR, NE - FIELD TRIALS – 2007 FARM PROGRESS SHOW – 2007 Dayton, Iowa -- 2008 Transgenic Control WITH GENE CONTROL HYBRID (94 BU/AC) (76 BU/AC) 16 1Part of the Monsanto-BASF Yield and Stress R&D Collaboration
  17. 17. USDA Submission Made for Lead Drought-Tolerant Corn Project; 2008 Dry Land Field Tests Mark Fifth Season of Increased Yield FIFTH YEAR OF CONSISTENT YIELD R&D Pipeline NEW: IMPROVEMENT UNDER DROUGHT STRESS Drought-Tolerant Corn Family: Lead Project Average Yield Improvement of Lead Event ADVANCED: HIT Project Phase 4 Percentage yield difference vs. control 16 Yield Difference (bu/acre) VALUE: 10.5% 11.3% 7.7% 13.4% 6.7% 14 LAUNCH-COUNTRY 55M 12 ACRES-FAMILY1: 2020 VALUE- 10 $300-$500M FAMILY2: 8 SOURCES OF VALUE: 6 Improved yield 4 Targeting 6-10% yield improvement in water-stress environments; 2 historically the dry land farms of the Western Great Plains 0 2004 2005 2006 2007 2008 5 TOTAL 9 TOTAL 11 TOTAL 8 TOTAL 15 TOTAL LOCATIONS LOCATIONS LOCATIONS LOCATIONS LOCATIONS ▲ 2008 Western Great Plains Testing: Lead event continued to demonstrate a yield advantage in a drought stress environment Evaluation of best germplasm and trait combinations underway Regulatory submissions in progress, with FDA submission made 1Acre opportunity reflects acres where technology fits at December 19, 2008 and USDA submission on February 20, 2009 Monsanto's current 2008 market share in respective crops 22020 value reflects gross sales opportunity in launch 17 country in year 2020 PART OF THE MONSANTO BASF YIELD AND STRESS R&D COLLABORATION
  18. 18. Strong Cash Position Creates Opportunity to Bolster Strategic Position and Drive Differentiation Through Innovation USES OF CASH CUMULATIVE: 2005-2008 Fiscal Years SHARE REPURCHASES 10% OF CASH USED • Completed 4-year $800M share-repurchase program and began previously announced 3-year $800M authorization in December 2008 DIVIDENDS 12% OF CASH USED $906 • From 2002-2008, Monsanto’s Board of Directors has raised the dividend seven times for a total increase of 300 percent. $1,058 TECHNOLOGY SPENDING 4% OF CASH USED $307 • Over $300M spent to expand technology partnership network $4,485 ACQUISITIONS 51% OF CASH USED $2,078 • American Seeds • Delta & Pine Land (2007) (2004-2007) • Agroeste (2007) • Seminis (2005) • De Ruiter and Cristiani (2008) $ in millions CAPITAL SPENDING 24% OF CASH USED • Spent $918M in 2008, 60% for new or expanding seed facilities 18
  19. 19. 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