monsanto 12-09-08

539 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
539
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
8
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

monsanto 12-09-08

  1. 1. CANACCORD ADAMS AGRICULTURE CONFERENCE DR. ROBB FRALEY CHIEF TECHNOLOGY OFFICER December 9, 2008
  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 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 2
  3. 3. STRATEGIC OUTLOOK Monsanto’s Growth Opportunity Lies at the Intersection of Demand, Innovation and Execution Monsanto’s Simple Philosophy on Opportunity: YIELD More demand requires more INNOVATION More yield requires more GROWTH More innovation delivers more 3
  4. 4. STRATEGIC OUTLOOK 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 ► DEMAND PERSISTS OVER TIME 120% 900 ► Global corn ending stocks- to-use ratio projected to be STOCKS-TO-USE RATIO 800 100% ~14 percent for 2008/09 M METRIC TONS 700 80% ► Stocks-to-use are below the 600 nearly 50-year average of 60% 500 24 percent and at ratio not 40% seen for almost 35 years 400 20% 300 ► Largest corn crops on record were produced 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 2007 and 2008 1986/1987 2008/2009 1964/1965 ► Production needs to be sustained at 2% above this GLOBAL CORN STOCKS-TO-USE1 year’s crop, and demand unchanged, to build stocks- GLOBAL CORN CONSUMPTION1 to-use to 15 percent 1. USDA PSD View database query for global corn 4
  5. 5. STRATEGIC OUTLOOK Monsanto’s Innovation Targeted at Doubling Yield by 2030, Extending Competitive Lead and Creating New Value DOUBLING YIELD WITH TECHNOLOGY: DOUBLING YIELD BY 2030 U.S. CORN EXAMPLE U.S. BASELINE CROP 2000 BASELINE1 300 137 bu/ac Corn: 280 HISTORIC YIELD GAIN 37 bu/ac Soybeans: AGRONOMIC PRACTICE IMPROVEMENTS 260 632 lbs/ac BREEDING IMPROVEMENTS Cotton: BUSHELS PER ACRE BIOTECH IMPROVEMENTS 240 STRATEGIC RATIONALE Helping meet global 220 demand 200 Furthering competitive lead 180 Creating new value for 160 farmers that creates sustainable growth 140 opportunities 120 2000 2005 2010 2015 2020 2025 2030 2030 U.S. YIELD TARGET >2x 2000 BASELINE 2030: OF 137 BU/AC 5
  6. 6. FINANCIAL OUTLOOK Yield and Innovation Create the Runway of Growth to 2012 for Seeds & Traits and for Monsanto as a Whole GROSS PROFIT COMMITMENT: MILESTONES TO 2003-2012F 2012 TARGET $9.5- ►Grow branded corn seed $9.75B share 1-2 points in key $10,000 SEEDS & GENOMICS GROSS PROFIT countries annually AG PRODUCTIVITY GROSS PROFIT $7.2- ►2009 U.S. release of $8,000 $7.4B GP (in millions) Roundup Ready 2 Yield ►2010 U.S. launch of ~2.25X $6,000 SmartStax 2007 BASELINE $4.2B ►Upgrade to second- $4.20- $4,000 generation technologies $4.40 in cotton in the U.S. and ONGOING India EPS $2,000 ►Vegetable seed business to deliver 65% margins through pricing to value, $0 mix and operational 2003 2004 2005 2006 2007 2008 2009F 2012F excellence BASELINE 6
  7. 7. SEED & TRAITS Breeding and Biotech Combine to Provide the Most Robust Seed Package for Growers and Drive Growth to 2012 DISCOVERY PHASE I PHASE II R&D PHASE: PHASE III PHASE IV LAUNCH BREEDING G COMMERCIAL IT PLATFORM GERMPLASM ANALYTICS GENOMICS MARKERS SEED ELITE Germplasm SOLD TO R FARMERS BIOTECHNOLOGY 7
  8. 8. SEED & TRAITS Seed Platforms Are Business Foundation, Establish Footprint for Traits, and Create Diversified Crop Portfolio Globally U.S. 2012 2008 SHARE TARGETS EU27 25.5% 30-34% 2008 SHARE 2012 TARGETS DEKALB 10.5% ~15% 12% 16-20% ASI CORN 20% 24-28% Asgrow 9% 10-12% ASI INDIA 2008 SHARE 2012 TARGETS 41% ~50% Deltapine 36% 40-44% CORN 5% 12% COTTON LA - NORTH 2008 SHARE 2012 TARGETS 62-66% 58% CORN BRAZIL 2008 SHARE 2012 TARGETS 40% 44-48% CORN ARGENTINA 2008 SHARE 2012 TARGETS 21% 31% COTTON 46% 50-54% CORN Share for row crops provided reflects sales volume for Monsanto brands divided by total planted acres in respective geography. Corn represents hybrid corn share in each respective market. Source for Deltapine share in the U.S. is dmrkynetic 2008 new certified seed share estimates. 8
  9. 9. CORN SEED & TRAITS 2008 Yield Trial Results Reinforce Consistent Yield Advantage of DEKALB Seed in the U.S. 2008 FINAL U.S. COMPETITIVE CORN YIELD COMPARISON: DEKALB 12 DEKALB ANNUAL YIELD ADVANTAGE GEOGRAPHY: U.S. (APPROXIMATE DIFFERENCES) DEKALB THREE -YEAR ROLLING 10 Grow 2 Share 2009 YIELD ADVANTAGE OBJECTIVE: Points 9.6 2008 PERFORMANCE UPDATE BUSHELS/ACRE 8.8 8 8.4 8.4 8.3 8.2 • In 2008 in > 15,300 7.8 7.1 comparisons, DEKALB 6 out-yields competitive best by 9.6 bu/acre on 4 average • Farmers have been able 2 to count on DEKALB to consistently deliver a yield advantage of seven 0 or more bushels per acre 2005 2006 2007 2008 Source: Annual yield advantage calculated each year by comparing leading DEKALB volume products within each RM zone to national competitor products within 2 RM days. 2008 data as of November 23, 2008. Weighted average calculated to 15% moisture. >230,000 comparisons represented in the four years of rolling averages. 9
  10. 10. CORN SEED & TRAITS Value to Farmer Over Competitive Offering Combines Yield and Harvest Moisture Advantages MOISTURE YIELD 2008 Grower Income Advantage -$/Acre $60 $54 $55 $50 $50 GEOGRAPHY: U.S. $41 2008 PERFORMANCE UPDATE $40 • DEKALB Harvest $33 moisture and yield $30 advantage creates total value advantage over the competition of $33- $20 $55/acre $10 $0 100 RM 105 RM 110 RM 115 RM 90/95 RM RELATIVE MATURITIES (DAYS)► COMPARISONS: >1,040 >2,550 >790 >4,700 >4,550 APPROXIMATE BU/AC 11.0 11.3 1.9 10.8 8.3 ADVANTAGE: HARVEST MOISTURE 0.9% 1.2% 2.3% 1.2% 0.9% ADVANTAGE: 1. Source – 2008 Monsanto and third party head-to-head comparisons of 5 leading DEKALB brands within each RM Zone to national competitor products containing similar crop 10 protection traits within 2 RM as of November 23, 2008. Drying cost based on $0.06/bu per point of moisture and corn price calculated at $4.00/ bu.
  11. 11. CORN SEED & TRAITS Triple-Stack Penetration Accelerates, Creating Added Growth and Setting Stage for SmartStax Launch U.S. CORN TRAIT OPPORTUNITY: 2007-2010F 70 MONSANTO TRIPLE-STACK ACRES 60 SMARTSTAX ACRE OPPORTUNITY GEOGRAPHY: U.S. 2008 PERFORMANCE UPDATE 50 (IN MILLIONS) U.S. ACRES • The majority of U.S. branded corn seed orders to date are triple-stack 40 orders, reflecting farmers’ demand 30 for technology and yield 20 • Over the past two years, DEKALB VT Triple outperformed Pioneer® 10 triples by nearly 9.7 bushels1 in >12,000 head-to-head comparisons 0 across the U.S. 2007 2008 2009F 2007 2008 2009F 2010F 2010 Opportunity • Those two years were remarkably Triple 17.6M 29.1M 34-35M 60-65M different in insect and moisture Stack/SmartStax stress, yet DEKALB VT Triple Opportunity widens in 2010 with planned launch of SmartStax consistently delivered a yield advantage 1. Source: 2008 Monsanto and third party head-to-head comparisons of 5 leading DEKALB hybrids within each RM zone to Pioneer® products containing similar crop protection traits within 2 RM days as of November 23, • This is value above and beyond the 2008. Weighted average calculated to 15% moisture. 15-20 bu/acre advantage of our triple-stack over conventional seed 11
  12. 12. CORN SEED & TRAITS Leadership Continues With Next Game-Changer in Corn; SmartStax On Track to Reset Trait Platform in 2010 SMARTSTAX COMMERCIAL OPPORTUNITY LAUNCH TARGET: 2010 TARGET ACRE 60-65M OPPORTUNITY: VALUE PROPOSITION 2008 trials evaluating SmartStax in elite germplasm, quantifying sources of potential on-farm yield advantages: Improved 1-2% consistency: SmartStax STATUS Primary pests Improved • Precedent established with U.S. EPA on consistency: 1-2% dual-mode-of-action traits: Secondary pests REFUGE • YieldGard VT PRO received reduced REDUCTION Reduced refuge1 3-6% STRATEGY: refuge in Southern geographies • Bollgard II natural refuge in cotton 5-10% • On track for 2010 • COMMERCIAL All components have U.S. approvals TRACK: • Final regulatory package with 5% refuge request submitted in June 2008 12 1. Subject to the approval of the EPA
  13. 13. SOYBEAN SEED & TRAITS Initial Soybean Yield Performance Continues to Reinforce Breeding Leadership 2008 PRELIMINARY U.S. COMPETITIVE SOYBEAN YIELD COMPARISON: ASGROW ASGROW 3-YEAR ROLLING 2 ASGROW ANNUAL YIELD (APPROXIMATE DIFFERENCES) AVERAGE YIELD ADVANTAGE ADVANTAGE GEOGRAPHY: U.S. OBJECTIVE: Grow footprint 1.5 2008 PERFORMANCE UPDATE BUSHELS/ACRE 1.5 • Yield data from 2008 1.4 indicates continued yield 1.2 1 advantage for national 1.1 1.0 brands versus best-in- class competitors 0.7 0.5 • The game-changing event in soybean yield will be the introduction of 0 Roundup Ready 2 Yield in 2009 2006 2007 2008 Source: Preliminary- all Asgrow commodity Products; Commercial Data (Market development and side x side) as of 11/21/08; head-to-head comparisons within +/-0.4 RM vs. Pioneer & Syngenta >77,000 comparisons represented in the three years of rolling averages. 13
  14. 14. SOYBEAN SEED & TRAITS Roundup Ready 2 Yield Soybeans Is One Of the Most- Anticipated Launches Because of Step-Change In Yield ROUNDUP READY 2 YIELD LAUNCH PLANS ► U.S. controlled commercial release on 1-2M acres in maturity groups 2 and 3 ► >50% of the U.S. soybean acres planted are in groups 2 and 3 ► Multiple varieties available for 2009 2009 release VALUE PROPOSITION ► EU import approval recently obtained, YIELD IMPROVEMENT ON 3-5 bu/ac AVERAGE YIELDS demonstrating continued global IN GROUPS 2 & 3: acceptance INCREMENTAL YIELD VALUE TO $27-$45/ac ► Launch on 5-6M acres in the U.S. with FARMER (VERSUS ROUNDUP READY): 2010 up to 30 new varieties with expanded PRICING maturity groups SEAMLESS PRICE FOR FIRST- $49-$52 ► Expand majority of Asgrow varieties to GENERATION ROUNDUP READY 2011 SEED (PER ACRE)1: Roundup Ready 2 Yield SEAMLESS PRICE $69-$72 FOR ROUNDUP READY 2 YIELD SEED (PER ACRE)1: 14 1. Reflects seamless price to the farmer, including trait value, germplasm value and value provided by the seed treatment.
  15. 15. SOYBEAN SEED & TRAITS Roundup Ready 2 Yield Will Be the First Biotech Yield Trait Offered in Soybeans NEW: ROUNDUP READY 2 YIELD SOYBEANS: COMMERCIAL CHECKS PRELIMINARY 2008 COMPARISONS TO COMMERCIAL ROUNDUP READY SOYBEANS COMPETITORS’ PRODUCT WITH 59 ROUNDUP READY 2 YIELD ROUNDUP READY TRAIT 57 57 55 56 Bushels per Acre 53 53 51 52 49 47 45 43 41 39 37 35 2 3 SOURCE: RELATIVE MATURITIES► Preliminary 2008 head-to-head COMPARISONS: >100 >800 comparisons of all Roundup Ready 2 APPROXIMATE BU/AC Yield products ADVANTAGE FOR ROUNDUP 4.1 3.7 available for sale in READY 2 YIELD: 2009 vs. national competitors PERCENT YIELD Roundup Ready as ADVANTAGE FOR ROUNDUP 7.9% 7.0% of Nov. 19, 2008 READY 2 YIELD: ► Power in the Pod: Roundup Ready 2 Yield soybean varieties produce more 3-bean pods per plant1 SOURCE: 19 Monsanto field trials with seed counted from over 4,728 plants from 340 plots. p value <0.001 Data as of November 24, 2008. 15
  16. 16. SOYBEAN SEED & TRAITS Roundup Ready 2 Yield Soybeans to Serve as Platform for Robust Soybean Pipeline STATE OF AGRICULTURE: SOYBEAN RENAISSANCE A New Soybean Platform ► Roundup Ready 2 Yield becomes the platform for soybean traits U.S. SOYBEAN ACRE TRAIT STACKING POTENTIAL ► Four traits in soybean pipeline in Phase 3 focused on U.S. market: Vistive III soybeans HIGHER-YIELDING Dicamba-Tolerant soybeans DICAMBA-TOLERANT Omega-3 soybeans OIL TRAITS Higher-Oil soybeans ROUNDUP READY 2 YIELD ► Phase 3 Insect-Protected + Roundup Ready 2 soybean targeted for Brazil; farmers currently spend ~$6.00/acre for insecticides and application BRAZIL SOYBEAN ACRE TRAIT STACKING POTENTIAL ► Higher-yielding soybeans, with 10 percent yield increase target above Roundup Ready 2 Yield, have potential INSECT-PROTECTED BY to reset soybean yield bar in middle of ROUNDUP READY 2 next decade 16
  17. 17. R&D PIPELINE Investment in Traits Yields Significant Returns for Both Monsanto and Growers ROUNDUP READY SOYBEAN TRAIT LIFE-TO-DATE NET SALES = ~$4.0B GROWERS RECEIVED ~$11B1 OF FARM INCOME BENEFIT ~40X INITIAL INVESTMENT ~$100M INITIAL R&D INVESTMENT 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1. SOURCE: Graham Brookes & Peter Barfoot PG Economics Ltd, UK June 2008 “GM crops: global socio-economic and environmental impacts 1996-2006” Amounts in nominal terms and represent global farm income benefit from 1996-2006. Argentina benefit excluded from Roundup Ready soybean grower farm income benefit. 17
  18. 18. R&D PIPELINE R&D Engine Is Poised to Launch Average of One Game- Changing Technology Every Other Year Through Mid-Decade R&D PIPELINE: ADVANCED GAME-CHANGING TECHNOLOGIES 2008 2009 2010 2011 2012 TO MID-DECADE Roundup Drought- Nitrogen- SmartStax Ready 2 Yield Tolerant Corn Utilization Soybeans Family1 Corn Family1 • Second-gen soybean • All-in-one corn trait • Value likely in improved • Targets ways to use trait platform platform yield under stress and nitrogen more efficiently potential for water • China import approval • On track for 2010 launch replacement received September – Submitted for 2008 regulatory review and refuge reduction • On track for 2009 release SUPERIOR, NE - FIELD TRIALS – 2007 FARM PROGRESS SHOW – 2007 WITH GENE CONTROL HYBRID FARM PROGRESS SHOW – 2007 (94 BU/AC) (76 BU/AC) 1. Part of the Monsanto-BASF Yield and Stress R&D Collaboration 18
  19. 19. R&D PIPELINE Monsanto’s Biotech Pipeline Is Accelerating, With Analysis Under Way for January 2009 Update on Progress R & D PIPELINE UPDATE First Quarter Earnings Call to Highlight Annual R & D Pipeline Review and Update Currently completing statistical analysis on 100’s of 2008 field trials; nearly 175 trial locations for Q4 Q1 yield & stress projects alone Multiple projects expected to Q3 Q2 advance in January 2009 19
  20. 20. SUMMARY Monsanto’s Growth Opportunity Lies at the Intersection of Demand, Innovation and Execution Monsanto’s Simple Philosophy on Opportunity: YIELD More demand requires more INNOVATION More yield requires more GROWTH More innovation delivers more 20

×