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Monsanto's Game-Changing Technologies Poised to Help Seeds & Genomics Segment Generate More Than 60 Percent Gross Profit Growth Over Next Three Years

Posted on: Wednesday, 18 February 2009, 07:00 CST

NEW YORK, Feb. 18 /PRNewswire-FirstCall/ -- Fueled by its innovative research-and-development (R&D) platform, Monsanto Company's (NYSE: MON) seeds and traits strategy is the fundamental driver to the company's future growth and fiscal 2012 financial goals. Between now and fiscal 2012, Monsanto expects the gross profit of its Seeds & Genomics segment to grow by more than 60 percent. This is the message Carl Casale, Monsanto's executive vice president, will tell investors today as part of a presentation at the Morgan Stanley Global Basic Materials Conference in New York.

For fiscal 2009, Monsanto expects to achieve 20 percent-plus ongoing earnings growth and generate more than $1.8 billion in free cash. Casale will reconfirm Monsanto's objective to deliver on-going earnings per share (EPS) in fiscal 2009 of $4.40 to $4.50, compared with $3.64 per share in fiscal 2008. This includes expectations for EPS growth in the second and third quarters to both be in the 10-to-12 percent range compared with the same periods in fiscal 2008.

The company's Seeds & Genomics segment additionally expects to maintain an approximately 18 percent compound annual growth rate in its gross profit through fiscal 2012. This growth is expected to come as the company manages the anticipated decline in gross profit from its Roundup and other glyphosate herbicides business, which is projected to peak in fiscal 2009 at an expected $2.4 billion to $2.5 billion gross profit range and settle to roughly $1.9 billion in gross profit in fiscal 2012.

Monsanto's consistent investment in research in the 9-to-10 percent range of net sales has maximized returns. Most of that R&D investment is for breeding and biotechnology to support the company's seeds and traits business, which has grown at a compound annual growth rate of 28 percent on a gross profit basis from 2001 through 2008.

"Our investment in R&D has been focused on opportunities that create new value for farmers globally," Casale will say. "We leverage R&D as a springboard that accelerates success and drives future growth with commercial products that solve farmers' most pressing needs to reduce crop stress and enhance yields."

Two such technologies on the verge of commercialization are SmartStax(TM) corn and Roundup Ready 2 Yield(TM) soybeans.

Casale will discuss how SmartStax will raise the bar as the most durable and complete on-farm package for weed and pest management, and will become the platform for all of the company's future corn technologies. SmartStax is designed to deliver a higher-yielding package by combining a broader spectrum for herbicide tolerance and insect control with the potential for reduced refuge requirements.

Currently, corn growers are required to plant structured refuges or plots of corn that do not use in-plant protection technology near corn acres that do. The percentage of refuge acres varies based on the specific geography, but in general has been set at 50 percent in cotton-growing regions of the United States and 20 percent in the northern Corn Belt. Monsanto submitted a request to the EPA in June 2008 to reduce refuge requirements for SmartStax to 20 percent in cotton-growing states and 5 percent in the northern Corn Belt.

In addition to SmartStax, Monsanto has successfully moved another technology platform -- Roundup Ready 2 Yield soybeans -- into the early commercial stages, marking the start of a new era in soybean production.

Like SmartStax, Roundup Ready 2 Yield will be the trait platform for future soybean technologies such as higher-yielding soybeans, which are demonstrating yield improvements of more than 7 percent on top of the 7 to 11 percent yield boost that Roundup Ready 2 Yield soybeans will provide over comparable Roundup Ready soybeans. Earlier this month, Monsanto delivered the first bag of Roundup Ready 2 Yield soybeans to a farmer in northern Illinois. The demand for this new technology is expected to help boost soybean seeds and traits gross profit by approximately 70 percent between fiscal 2009 and fiscal 2012.

Casale will highlight that Monsanto is poised to launch several industry- leading technologies between fiscal 2012 and the end of the decade. Two products -- second-generation drought-tolerant corn and higher-yielding soybeans -- have joined nitrogen-use-efficiency corn and first-generation drought-tolerant corn as game-changing technologies under development.

Webcast Information

Casale's presentation slides and simultaneous audio webcast of the presentation may be accessed by visiting the company's Web site at http://www.monsanto.com/investors. Following today's live broadcast set for 12:15 p.m. ET, a replay of the webcast will be available for two weeks.

About Monsanto Company

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. Monsanto remains focused on enabling both small-holder and large- scale farmers to produce more from their land while conserving more of our world's natural resources such as water and energy. To learn more about our business and our commitments, please visit: http://www.monsanto.com.

SmartStax is not registered with the U.S. Environmental Protection Agency. It is a violation of Federal law to promote or sell an unregistered pesticide.

Cautionary Statements Regarding Forward-Looking Information:

Certain statements contained in this release are "forward-looking statements," 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 release. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results.

Note to editor: Roundup, Roundup Ready 2 Yield, Roundup Ready and SmartStax are trademarks of Monsanto Company and its wholly owned subsidiaries. Monsanto Company Selected Financial Information (Dollars in millions) Unaudited 1. Ongoing EPS and Free Cash Flow: The presentations of ongoing EPS and free cash flow are not intended to replace net income (loss), cash flows, financial position or comprehensive income (loss), and they are not measures of financial performance as determined in accordance with generally accepted accounting principles (GAAP) in the United States. The following tables reconcile ongoing EPS and free cash flow to the respective most directly comparable financial measure calculated in accordance with GAAP. Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations. The company is not able to provide a reconciliation to reported EPS guidance for fiscal year 2009 at this time, as it is still evaluating purchase accounting adjustments related to its recent $264 million acquisition of the Brazilian sugar cane business Aly Participacoes Ltda. Such adjustments are dependent upon the completion of valuations of certain intangible assets, including acquired in-process R&D which requires immediate expense recognition and is expected to be significant. Fiscal Year 2008 Diluted Earnings per Share $3.62 Items Affecting Comparability - EPS Impact Income on Discontinued Operations $(0.04) Acquired In-Process R&D (De Ruiter) $0.29 Solutia Claim Settlement $(0.23) Diluted Earnings per Share from Ongoing Business $3.64 Reconciliation of Free Cash Flow: Free cash flow represents the total of cash flows from operating activities and investing activities, as reflected in the Statements of Consolidated Cash Flows presented in this release. With respect to the fiscal year 2009 free cash flow guidance, Monsanto does not include any estimates or projections of Net Cash Provided (Required) by Financing Activities because in order to prepare any such estimate or projection, Monsanto would need to rely on market factors and conditions that are outside of its control. Fiscal Year 2009 Guidance Net Cash Provided by Operating Activities $3,000 Net Cash Provided (Required) by Investing Activities (1,200) Free Cash Flow $1,800 Net Cash Required by Financing Activities N/A Effect of Exchange Rate Changes on Cash and Cash Equivalents N/A Net (Decrease) Increase in Cash and Cash Equivalents N/A Cash and Cash Equivalents at Beginning of Period N/A Cash and Cash Equivalents at End of Period N/A Contact Media: Danielle Stuart (314-694-2478) Investors: Scarlett Lee Foster (314-694-8148)

SOURCE Monsanto Company

Source: PR Newswire

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