monsanto 11-08-07-1_v2


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monsanto 11-08-07-1_v2

  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, including proceedings related to Solutia Inc.; developments related to foreign currencies and economies; successful completion and 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. © 2007 Monsanto Company 2
  3. 3. 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 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 on-going 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. These non-GAAP financial measures are not intended to replace net income (loss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with accounting principles generally accepted in the United States. 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, which can be found at the end of this presentation. Monsanto is unable to provide a reconciliation of the 2008 ROC goal to projected net income and financial position for 2008 with out 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 our 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
  5. 5. OVERVIEW Given Growth Opportunities, Monsanto Has Potential to More Than Double Gross Profit Over the Next Five Years MONSANTO GROSS PROFIT 2012 GROWTH RANGE 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 $0 Earnings continue to translate into operating cash, and value 2004 2007 2012 MILESTONES 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
  6. 6. U.S. AND INTERNATIONAL CORN Trait Expansion Opportunity Still Early Globally; SmartStax Resets the Deck in 2010 and Beyond COMMERCIAL PLATFORM: 2007-20101 TRAIT PLATFORM: 2010+ GLOBAL MARKET OPPORTUNITY: • SmartStax resets trait • Reflects technology fit; actual opportunities penetration determined by CORN TRAITS regulatory approvals and • Competition, penetration 2010 VS 2012 competitive share and technology fit being • Competitors continue to license evaluated further for Monsanto traits in key markets each geography 2007 HYBRID SmartStax MARKET SIZE2 (ACRES) U.S. 92M 80M 60-70M 45-55M 60-65M Europe (EU27) 27M 24M 8M 5M 15-20M Brazil 23M 15-20M 15-20M 5M 15-20M Argentina 8M 9M 7M 5M 5-7M India 7M 6M 6M -- 5-6M Total Markets 157M 134-139M 96-111M 60-70M 100-118M 43-45% 46-53% 30-35% 2007 Penetration 1. Market Opportunity reflects total acres where technology is applicable, not necessarily acres Targets marked in green representing countries currently planting projected for penetration by 2010. 80M or with primary regulatory approval secured for respective trait 2. Corn acreage and production; USDA FAS 2007/08 projections report and internal estimates 6
  7. 7. SOYBEANS Preparations Under Way for Large Scale U.S. Launch of Roundup RReady2Yield ROUNDUP RREADY2YIELD SOYBEANS: CROP: Soybeans LAUNCH PLANS Launch OBJECTIVE: Roundup U.S. Full-Scale RReady2Yield Launch Target: P R O JE CT 5- 6M Acres 2008 STATUS U.S. Controlled • Consistent 7-11% yield Commercial advantage with Roundup Release Target: RReady2Yield 1- 2M Acres • USDA, EPA and FDA Grower level marketing, awareness and trial approvals received; awaiting key export Licensee breeding approvals • Pre-launch activities Industry coordination and communications under way • American Soybean Association and key agri-food PRICING stakeholders • Yield improvement shared Pursuit of export approvals in Japan, China, with grower; average Europe and Mexico 5-year soybean Branded and licensed seed production commodity price 2007 2008 2009 2010 approximately $6.40 per bushel1 7 1. Source: NASS, USDA data 2003 to August 2007
  8. 8. COTTON Second-Generation Trait Conversion Accelerates Globally to Expand Gross Profit Contribution of Cotton GLOBAL COTTON SEED AND TRAITS GROSS PROFIT INDEX=2007 2012F 2007 1.8X OVER 2007 INDEX • In five years, Delta and Pine Land fully contributing with U.S. market share and second-generation trait growth • India becomes a larger player with conversion to second INTERNATIONAL generation traits • Australia and Brazil are small acre, but important markets 8
  9. 9. SEMINIS Seminis Expected to Outpace Industry Sales Growth Projection with 6 Percent CAGR Through 2012 VEGETABLE SEED: GLOBAL MARKET SIZE $4,000 $3,500 $3,000 ANNUAL REVENUE (IN MILLIONS) 4 percent CAGR drives $2,500 seed market $2,000 opportunity of $3.7 Seminis expected to grow billion annually by 2012 faster than industry with 6 $1,500 percent CAGR $1,000 $500 $0 2007 2008F 2009F 2010F 2011F 2012F MARKET BENCHMARKS SEMINIS REVENUES SEED MARKET $3B PRODUCTION ALL OTHER VEGETABLE SEED REVENUES 96M ACRES 9 Source: Company estimates
  10. 10. R&D PIPELINE Strong Pipeline Value Reflects Commercial Opportunity in Latter-Stage Projects and Emerging Value in Yield and Stress DISCOVERY PHASE 1 PHASE 2 PHASE 3 PHASE 4 Drought- HIGH Tolerant FAMILY TRAITS► Family COLLABORATION CORN: 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 Insect- 2020 VALUE RANGES: protected Roundup Omega-3 RR2Y RReady2Yield soybeans soybeans soybeans MEGA HIGH Bollgard III $300M-$500M >$1BM High-oil Dicamba- YieldGard soybeans tolerant VT PRO soybeans MID LOW corn Vistive III <$150M $150M-$300M Roundup Improved- RReady2Yield protein Corn Soybeans Cotton Canola canola soybeans 10
  11. 11. FINANCIAL FOCUS Monsanto’s Strategic and Financial Opportunity Lies in Seeds and Traits GROSS PROFIT PERFORMANCE BY SEGMENT Gross Profit 2007-2012F $10,000 2008 STATUS • FY2008 targets $3.5B gross profit for Seeds and Genomics; $8,000 $1.3B for Ag Productivity 2012 OUTLOOK IN MILLIONS $6,000 2012F $6.5-$7B SEEDS & GENOMICS $4,000 ROUNDUP AND OTHER $1.2B GLYPHOSATE-BASED HERBICIDES ALL OTHER AG $2,000 $350M PRODUCTIVITY $0 2007 2008F 2012F ROUNDUP AND OTHER GLYPHOSATE- SEEDS & GENOMICS BASED HERBICIDES ALL OTHER AGRICULTURAL PRODUCTIVITY 11
  12. 12. OVERVIEW Monsanto’s Opportunity Through 2012 Is Function of Ability to Execute Against Identified Growth Drivers 2007 INVESTOR DAY: AGENDA TIME SPEAKER TOPIC Growth Drivers: Corn, U.S. and 10:30 AM CARL CASALE EXECUTIVE VICE PRESIDENT International 11:00 AM Q&A SESSION: CARL CASALE 11:15 AM BRETT BEGEMANN Growth Drivers: Soybeans and Cotton EXECUTIVE VICE PRESIDENT 11:45 AM Q&A SESSION: BRETT BEGEMANN NOON LUNCH 1:00 PM TERRY CREWS Growth Drivers: Seminis CHIEF FINANCIAL OFFICER 1:30 PM Q&A SESSION: TERRY CREWS 1:45 PM ROBB FRALEY Growth Drivers: R&D Pipeline CHIEF TECHNOLOGY OFFICER 2:15 PM Q&A SESSION: ROBB FRALEY Translating Growth Drivers 2:30 PM TERRY CREWS Into Financial Results 3:00 PM Q&A SESSION: MONSANTO EXECUTIVE TEAM HUGH GRANT 3:30 PM Conclusion CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER 12