monsanto 03-28-07
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Transcript of monsanto 03-28-07
1
HUGH GRANTCHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
LEHMAN BROTHERS GLOBAL CHEMICAL LEADERS INDUSTRY CONFERENCE
March 29-30, 2007
2
Forward-Looking Statements
Certain statements contained in this presentation 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, including proceedings related to Solutia Inc.; developments related to foreign currencies and economies; successful completion and operation of recent and proposed acquisitions, including Delta and Pine Land Company; 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.
TrademarksTrademarks owned by Monsanto Company and its wholly-owned subsidiaries are italicized in this presentation. Mavera™ is a trademark of Renessen. All other trademarks are the property of their respective owners.
© 2007 Monsanto Company
References to periods before 2000 include the agricultural business of Pharmacia Corporation.
3
Building From Established Platform, Monsanto Has a Window of Opportunity to Extend Our Leadership
OVERVIEW
R&D LEADERSHIP
SEED & TRAIT PLATFORM
SEEDS & TRAITSIn the 10 years since the introduction of
the first biotech trait, Monsanto has invested >$5B in seeds-and-traits R&D
TRAITSMonsanto developed and commercialized the first
broad-acre biotech traits; First to launch stacked
traits and second-generation traits
SEEDSGlobal germplasm library
unmatched in scale – with 36 integrated breeding
programs from 12 countries for corn and soy
and the world’s leading vegetable seed company
FINANCIAL PERFORMANCEHigh-margin technology business that generates sustainable free cash flow
COMMERCIAL COORDINATIONRoundup, world’s best-selling herbicide brand, uniquely complements seed-and-trait platform
COMMERCIAL PLATFORMIntegrated platform with commonality of technology and commercial approach among crop platforms
BREEDING>100 breeding research
centers worldwide, underpinning companywide
focus around molecular breeding
CHANNELS TO MARKETIndustry’s only company to widely employ dual market approach of branded and licensed seed and trait sales
STRATEGIC PERFORMANCE
4
Six Building Blocks Extend Leadership and Elevate Gross Margin Opportunity Through 2010
OVERVIEW
44%
46%
48%
50%
52%
54%
CURRENT LEVEL
GROSS MARGIN ‘PULL’
2003 2004 2005 2006 2007F 2008F 2009F 2010F
GROSS MARGIN OPPORTUNITYGROSS PROFIT AS A PERCENT OF SALES
MONSANTO’S OPPORTUNITYDelta between 2006 gross margin and a 51-53% trajectory reflects continued growth opportunity for seeds and traits
FACTOR VALUE1
U.S. corn HIGH
International corn MEDIUM
Global biotech traits MEDIUM
Cotton platform LOW
Seminis MEDIUM
R&D pipeline HIGH
HIGH >$250M MEDIUM $100M - $250M LOW <$100M
1. Increment to total gross profit in the period 2006-2010; Some growth factors will overlap.
5
Farmers Buy Yield; Our Business Strategy Is Oriented Around Meeting That Customer Need
U.S. CORN GROWTH
R&D APPROACH
FAR
M A
PP
RO
AC
H
=
X
SEED• Starting point of all
agriculture; farmers maximize genetics in seed for yield
• 60% of farmers select seed first, thendecide on biotech traits
TECHNOLOGY• Technology is used to
protect and maximize yield potential of seed
GENETIC POTENTIALInherent yield possible from the seed
YIELDFarmer’s Purchase
Decision = XPERCENT OF GENETIC
GAIN PRESERVEDAmount of yield potential
protected
• Germplasm library assembled from 36 programs in 12 countries
• >100 breeding research centers worldwide
• >2,000 genetic markers used by breeders for corn today
• 50% of breeding population comes from intra-company, inter-country crosses
• Molecular breeding improves genetic potential by 2X versus conventional breeding
GERMPLASM BREEDING
• Monsanto is only company to develop and commercialize complete above-ground, below-ground insect-control and weed-control traits
6
First Decision Farmers Make Is Seed Germplasm; More and More Farmers Have Been Choosing Monsanto Seed
U.S. CornSITUATION:
• In 2006, Monsanto’s DEKALB and Asgrow brands grew by 3 market share points
• Over 5 years, comparable market share gain was 9 points
Share gains in national brands through end of the decade
U.S. CORN MARKET SHARE EVOLUTIONMONSANTO BRANDS AND LICENSEES
0%
10%
20%
30%
40%
50%
60%
2001 2002 2003 2004 2005 2007F2006
In 2006, the addition of 1 market share point in a Monsanto national brand translated into an average incremental value of approximately $10M-$15M in gross profit opportunity for Monsanto for the seed alone
ACREAGE EXPANSION
ASGROW AND DEKALB BRANDS
AMERICAN SEEDS, INC. BRANDS
LICENSEES’ BRANDS
U.S. CORN GROWTH
7
With the Corn Trait Technology in Hand Today, There’s Opportunity to Double Penetration By End of Decade
U.S. CornSITUATION:
• Through 2006, roughly 50 percent of the available market has been penetrated with traits
OUTLOOK:
2006 2010F
ROUNDUP READYCORN 2 32.7M 60M
YIELDGARDROOTWORM 10.0M 25-30M
YIELDGARD CORN BORER 32.3M 50-60M
TRIPLE STACK TRAITS 6.0M 25-30M
U.S. CORN TRAIT OPPORTUNITYTOTAL MARKET OPPORTUNITY IN 20101
YIELDGARDCORN BORER
YIELDGARDROOTWORM
TRIPLE25-30M ACRES
Because YieldGard Rootworm has the
lowest market opportunity of the 3
traits, its market potential is the proxy for total potential for triple
stack
DOUBLE20-25M ACRES
Above triple stack, remaining YieldGard Corn
Borer forms double-stack opportunity
SINGLE~10M ACRESAcres exclusively using Roundup Ready, which would include “refuge” acres required for other acres using insect-protected traits
RE
LAT
IVE
RE
TA
IL V
ALU
E
PE
R A
CR
E
10 20 30 40 50 60U.S. TRAIT-ACRE OPPORTUNITY
(ACRES IN MILLIONS)
ROUNDUP READYCORN
ST
AC
KE
D
OP
PO
RT
UN
ITY
U.S. TRAIT ACRE OPPORTUNITY:
CURRENT COMMERCIAL CORN TRAITS
2006:Only 50% penetrated to date
1. Market Opportunity reflects total acres where technology is applicable, not necessarily acres projected for penetration by 2010.
U.S. CORN GROWTH
8
With Higher Demand for Stacks, the “Average” DEKALB Acre Now Contains More Than Two Traits
U.S. CornSITUATION:
• With increased stacking, there is a positive mix effect across the portfolio
OUTLOOK:
• In 2007, the trait intensity for DEKALB and Asgrow will surpass 2.0 for the first time – reflecting that the average corn acre now contains more than 2 biotech traits
• With an infusion of technology, ASI’s trait penetration levels are closing in on DEKALB and Asgrow
20%
15%
7%
2006
TRIPLE STACKED PENETRATION
>35%
>30%
10 - 15%
2007F
STACKED PENETRATIONTRAIT PENETRATION
70 - 75%
65 - 70%
55 - 60%
2007F
69%
55%
43%
2006
90 - 95%
80 - 85%
60 - 65%
2007F
90%
75%
55%
2006
NATIONAL BRANDS
REGIONAL BRANDS
LICENSEE BRANDS
U.S. CORN GROWTH
0
0.5
1
1.5
2
2.5
2003 2004 2005 2006 2007F
TRAIT PENETRATION TRENDSACROSS KEY COMMERCIAL CHANNELS
TR
AIT
IN
TE
SIT
Y I
ND
EX
(A
VE
RA
GE
NU
MB
ER
OF
TR
AIT
S P
ER
T
RA
IT A
CR
E)
DEKALB/ASGROW2007F TRAIT INTENSITY: > 2.0
TOTAL MARKET TRAIT INTENSITY LESS BRANDED: 1.7
9
International CornSITUATION:
• Primary value in international corn markets today is in the seed
• Breeding gains that have been made in the U.S. set pace for market share growth in other international markets
OUTLOOK:
• Monsanto is targeting to grow share in each of the most valuable corn-growing countries
5.9M
7.0M
20.6M3.9M
6.0M
0.7M2.8M2.8M7.1M
HYBRID MARKET
SIZE (ACRES)
• India is primary market of longer-term value in region
LOW+635%15.6MIndia
ASIA-PACIFIC
LOWFLAT35%7.3MArgentina
LOW-134%30.8MBrazil
• Argentina is only country in region with biotech traits
• Next priority for accelerated molecular breeding
MEDIUM+361%17.3MMexico
LATIN AMERICA
LOW+1250%6.0MSouth Africa
HIGH+421%0.8MTurkey
MEDIUM+632%2.8MHungary
HIGH+721%2.8MItaly
• Molecular breeding application is roughly 2 years behind U.S.
• Corn Borer-Roundup Ready 2 stack approved in January in South Africa
HIGH+515%7.1MFrance
EUROPE-AFRICA
OUTLOOKGROSS PROFIT
VALUE PER ACRE1
SHARE POINT
CHANGE (’04-’06)
MONSANTO BRAND SHARE
TOTAL MARKET
SIZE (ACRES)
1. Average incremental value in gross profit opportunity for the seed value (excluding traits) of the addition of an acre in a Monsanto brand:
HIGH >$20 MEDIUM $10 - $20 LOW <$10
Gross Profit Value of Seed Internationally Varies, Yet Still Solid Contributor to Growth, Commercial Platform
INTERNATIONAL CORN GROWTH
10
Gross Profit Value of Seed Internationally Varies, Yet Still Solid Contributor to Growth, Commercial Platform
INTERNATIONAL CORN GROWTH
International CornSITUATION:
• Primary value in international corn markets today is in the seed
• In France, DEKALB market share has grown 5 points over the last 3 years
OUTLOOK:
• For the first time ever, DEKALB is co-leader of French market
• Monsanto is targeting to grow share in each of the most valuable corn-growing countries
HIGH
40-45%COST FACTORS
$62PRICING FACTORS
7.1M(2.9M Ha)
MARKET FACTORS
Average Gross Profit: Per Acre1 $25-28GROSS PROFIT VALUE
Assumed Industry-Standard Gross Margin
Average Seed Retail Price Per Acre
71,000 acresAcre: Market Share Conversion
Total Acres Planted (2006)
FRANCE
GERMPLASM VALUE: FRANCE SEED VALUE RANGE FOR ADDED ACRES IN DEKALB/ASGROW BRANDS
HIGH >$20 MEDIUM $10 - $20 LOW <$10
1. Average incremental value in gross profit opportunity for the seed value (excluding traits) of the addition of an acre in a Monsanto-owned brand:
11
Significant Growth Opportunity Lies in Expansion of Existing Commercial Biotech Traits Globally
GLOBAL BIOTECH TRAIT GROWTH
Global Biotech TraitsSITUATION:
• Historically, most rapid adoption has been in the U.S., also the most highly penetrated market
• Penetration is moving globally, trait by trait, country by country
OUTLOOK:
• As is the case in the U.S., largest category of opportunity internationally is corn trait adoption
• Even where some traits – like cotton – are penetrated, there’s still an upgrade opportunity to second-generation traits
GLOBAL MARKET OPPORTUNITYMARKET OPPORTUNITY FOR BIOTECH TRAITS THROUGH 20101
26%42%29%57%39%86%2006 Penetration
25-30M50-60M60M6-8M10-15M70MUnited States
36-41M84-96M118-120M
28.5-35.8M
34.5-44.8M156.2MTotal Key
Markets
-4M6M10M11M0.2MAfrica
CORNCOTTONSOYBEANS
---0.5M-0.8M
0.5M-0.8M-Australia
5M8M24M--1MEurope
-3 – 5M3 – 5M10-15M10-15M-India
1M4M5M--35MArgentina
5M15M20M2M3M50MBrazil
YIELDGARDROOTWORM
YIELDGARDCORN BORER
ROUNDUP READY CORN 2
BOLLGARD AND
BOLLGARD II
ROUNDUP READY(FLEX)
ROUNDUP READY
1. Market Opportunity reflects total acres where technology is applicable, not necessarily acres projected for penetration by 2010.
12
$0.00
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
2007 2008F 2009F 2010
Roundup Ready Soybean Strategy in Brazil Emphasizes Acreage Penetration
GLOBAL BIOTECH TRAIT GROWTH
Global Biotech TraitsSITUATION:
• Largest soybean market outside U.S. is Brazil
• Recent pricing action taken there to promote penetration of new seed
OUTLOOK:
• In a total Brazilian market of ~50M acres, 2006 penetration was almost 20M acres –reflecting a remaining 30M-acre upside
• Penetration target of 45% for 2007 is on track
CO
NT
RIB
UT
ION
TO
EP
S($
PE
R S
HA
RE
)
ROUNDUP READY SOYBEANS IN BRAZILPROJECTED EPS CONTRIBUTIONS (2007 VS 2010)
$0.09-$0.11
$0.025-$0.05
2007F 2010F
90% PENETRATION
50MMARKET SIZE
$2.50-$3.00/acrePRICING
ASSUMPTIONS
45%PENETRATION
50MMARKET SIZE
$2.50-$3.00/acrePRICING
ASSUMPTIONS
ON PENETRATION ALONE EPS CONTRIBUTION COULD MORE THAN DOUBLE 2007-2010
13
Upgrade to Second-Generation Cotton Traits Flourishes, Highlighted by 2007 Roundup Ready Flex Growth
COTTON GROWTH
PENETRATION RATE OF SECOND-GENERATION TRAITSPENETRATION TREND OF COTTON TRAITS AS
A PERCENT OF ANNUAL PLANTED ACRES1
1. Percent of annual planted acres reflects the ratio of number of actual trait acres planted to total planted acres in the identified year for the specified geography
Bollgard II
Roundup Ready Flex
Bollgard II
Roundup Ready Flex
0% 5% 10% 15% 20% 25% 30%
2007 FORECAST
2006 RESULTS
Even on potentially lower total planted acres, Roundup Ready Flex penetration rate should double in 2007 to >25% of total cotton crop
ROUNDUP READY FLEX
Cotton PlatformSITUATION:
• Cotton trait platform is the first to move forward on complete replacement of first-generation traits with second-generation upgrades
• Roundup Ready Flex cotton launched in the U.S. in 2006; Launched in Australia for FY2007 planting
OUTLOOK:
• Transition to second-generation traits continues in 2007
• Roundup Ready Flex was planted on ~14% of planted acres in 2005 – that should double in 2007
25-30%
25-30%
17%
14%
14
Seminis To Leverage Portfolio, Pricing and Molecular Breeding To Create New Growth
SEMINIS GROWTH
SeminisSITUATION:
• In 2006, narrowed commercial and research focus to 25 crops that generate the most profit
• Began application of breeding technology, with a target of 1,000+ markers each for 9 crops by 2009
OUTLOOK:
• Seminis is targeted to contribute $0.10 - $0.125 to EPS in FY2007 now that inventory step-up charge is complete
Focus on 25 most-profitable key crops
VA
LUE
CR
EA
TIO
N O
PP
OR
TU
NIT
Y
Assemble genetic maps for key crops
Identify and implement opportunities to price products to value
2005 2006 2007 2008 2009 2010
Aggressively make hybrid conversions in strategic crops
Significant use of molecular markers
Monsanto acquires Seminis
Seminis modestly accretive to FY2006 EPS
Seminis projected to be accretive to FY2007 EPS in range of $0.10-$0.125
Commercialize first hybrids developed by molecular breeding
OPERATIONAL EXCELLENCE
SEMINIS VALUE CREATIONSTAGED OPPORTUNITIES FOR INCREASING BUSINESS VALUE
NEW VALUE CREATIONPIPELINE
ADVANCEMENT
15
Development of Fungal-Resistant Peppers For North America Provides New Pricing Opportunity for Seminis
SEMINIS GROWTH
SeminisFungal-Resistant PeppersPROJECT CONCEPT:
Fungal disease pressure affects almost 60 percent of North American pepper acres, diminishing yield and increasing input expenses for growers. Using molecular markers, Seminis is creating hybrid peppers that exhibit fungal resistance.
2006 PERFORMANCE UPDATE:
• Seminis is mapping molecular markers for 9 key crops, which is helping better locate genetic sites for factors like fungal resistance and disease, allowing breeders to apply that information to upgrade product offerings faster
• Ultimately fungal-resistance could be combined with other or additional disease-resistance characteristics for commercial launch
0%PERCENT PENETRATED
200KAVAILABLE MARKET
NORTH AMERICAKEY MARKET ACRES
Fungal-Resistant Peppers
0.00
0.50
1.00
1.50
2.00
CONVENTIONALPEPPERS
FUNGAL-RESISTANTPEPPERS
IND
EX
ED
RE
TA
IL S
EE
D
VA
LUE
PE
R A
CR
E
VALUE OPPORTUNITY: FUNGAL RESISTANCE EXAMPLE: NORTH AMERICAN PEPPERS
49%
Fungal disease affects 60% of the 200K+ acres of peppers grown in the U.S., Canada and Mexico, requiring intensive chemical spraying for controlUsing molecular-breeding tools, Seminis scientists are working on developing hybrid peppers that are resistant to fungal diseaseThe enhanced value of fungal resistance is projected to increasethe per-acre retail price by almost half
16
Pipeline Demonstrates Increased Breadth and Depth; Key Projects on Track for Commercial Launch
PIPELINE UPDATE
DPHASE
1PHASE
2PHASE
3PHASE
4FARMER BENEFITS
ROUNDUP READY FLEX COTTON
HYBRIDIZATION SYSTEM FOR CORN
DROUGHT-TOLERANT CORN
COTTON LYGUS CONTROL
HIGHER-YIELDING SOYBEANS
NITROGEN UTILIZATION CORN
HIGHER-YIELDING CORN
DROUGHT-TOLERANT COTTON
WATER-USE EFFICIENCY SOYBEANS
HIGHER-YIELDING CANOLA
2ND-GEN DROUGHT-TOLERANT CORN
BOLLGARD III
SOYBEAN NEMATODE-RESISTANCE
YIELDGARD ROOTWORM II
INSECT-PROTECTED SOYBEANS
YIELDGARD VT PRO2ND-GEN YIELDGARD CORN BORER
YIELDGARD VT ROOTWORM/RR22ND-GEN YIELDGARD ROOTWORM
DICAMBA-TOLERANT COTTON
DICAMBA-TOLERANT SOYBEANS
ROUNDUP RREADY2YIELD SOYBEANS
ROUNDUP RREADY2YIELD CANOLA
PROCESSOR BENEFITS
OMEGA-3 SOYBEANS
VISTIVE III SOYBEANS
VISTIVE II SOYBEANS
IMPROVED-PROTEIN SOYBEANS
CONSUMER BENEFITS
HIGH OIL SOYBEANS FOR PROCESSING1
FEED CORN WITH BALANCED PROTEINS1
2nd-GEN HIGH-VALUE CORN WITH LYSINE1
MAVERA™ II HIGH-VALUE SOYBEANS1
MAVERA™ I HIGH-VALUE SOYBEANS1
MAVERA™ HIGH-VALUE CORN WITH LYSINE1
PHASE
4PHASE
3PHASE
2PHASE
1D
1. These product candidates are in the Renessen pipeline. Renessen is a Monsanto/Cargill joint venture.
2. The colored bar associated with each project indicates which phase that project is in. It is not intended to represent the relative status of the project within a particular stage.
3. Roundup Ready Flex Cotton advanced from Phase 4 to commercialization in 2006.
R&D PIPELINE: JANUARY 2007
High Impact Technologies (HIT) project
Jan. 4, 2007 Advancements/AdditionsJan. 4, 2006 Advancements/Additions
17
Yield and Stress Biotech Collaboration with BASF Creates Enhanced Opportunity in Key Growth Area for Next Decade
PIPELINE UPDATE
DEVELOPMENT OF SUCCESSIVE UPGRADES TO CREATE A “FAMILY”
OF PRODUCTS
MONSANTO DISOVERY PROGRAM
BASF DISCOVERY PROGRAM
LICENSEE BRANDS
REGIONAL BRANDS
NATIONAL BRANDS
DISCOVERY DEVELOPMENT COMMERCIALIZATION
KEY ADVANTAGES
• Pairs two separate, but complementary discovery engines
• Increased rate of discovery, unlocking more sources of genes than ever before
• With combined effort, products should advance at faster-than-average development timelines, esp. in early-phase research
• Greater volume of leads and cost sharing reduce risk of failure, increasing probability of commercial success
• Successive upgrades emerge sooner, creating steady stream of traits in a “product family” in each crop
• Broad-licensing approach allows for products to reach broadest market possible, allowing farmers to choose traits in the seed brands they prefer for the greatest performance
INTENSIFIED YIELD & STRESS PIPELINECollaboration creates a new joint pipeline focused on stepping up the volume of leads and certainty of commercial success in the emerging category of “yield” traits for corn, soybeans, cotton and canola
18
KEY MARKET ACRES U.S. EU27 BRAZIL ARGENTINA
AVAILABLE MARKET 80M 28M 30M
0%
6M
PERCENT PENETRATED 0% 0% 0%
Multi-Generational Drought-Tolerant Corn Creates Value Across Multiple Market Segments
Drought-Tolerant Corn
PIPELINE UPDATE
P R O J E C T
R&D PipelineDrought-Tolerant CornPROJECT CONCEPT:
First-generation drought tolerance is targeted to minimize uncertainty in farming by buffering against the effects of water limitation, primarily in areas of annual water stress
2006 PERFORMANCE UPDATE:
TOTAL RETAIL VALUE/ACRE: $10 - $30/acre
2006 STATUS: Phase 2
• Yield enhancement demonstrated again in 2006 under water-stress conditions in U.S.
• Lead gene chosen • 2007 trials expected to demonstrate
yield enhancement in multiple hybrids under dryland conditions
VALUE CATEGORIES:
SEGMENTED VALUE OPPORTUNITY ACROSS MARKETS: EUROPE EXAMPLE
Source: Monsanto from rainfall 25 years average
Drought Monitor
D0: Abnormally Dry
D1: Drought - Moderate
D1: Drought - Severe
D1: Drought - Extreme
D1: Drought - Exceptional
STABILITYDRYLANDIRRIGATED
Value is in improved yields when moisture is less than optimal
Value is in improved yields annually, by improving water-use efficiency
Value is in replacing irrigation, reducing variable costs of irrigation
Non-IrrigatedNon-IrrigatedIrrigated
19
KEY MARKET ACRES U.S. BRAZIL ARGENTINA
AVAILABLE MARKET 80M 30M 6M
PERCENT PENETRATED 0% 0% 0%
First of Drought-Tolerant Corn Traits Continues To Deliver Yield Boost in Third-Year Testing
Drought-Tolerant Corn
PIPELINE UPDATE
KE
Y R
ES
ULT
S
In third year field testing in U.S., drought-tolerant leads are consistently delivering higher yields compared with controls under drought-stressed conditionsFirst leads show primary benefit under water-stress conditions
P R O J E C T
R&D PipelineDrought-Tolerant CornPROJECT CONCEPT:
First-generation drought tolerance is targeted to minimize uncertainty in farming by buffering against the effects of water limitation, primarily in areas of annual water stress
2006 PERFORMANCE UPDATE:
TOTAL RETAIL VALUE/ACRE: $10 - $30/acre
2006 STATUS: Phase 2
• Yield enhancement demonstrated again in 2006 under water-stress conditions in U.S.
• Lead gene chosen • 2007 trials expected to demonstrate
yield enhancement in multiple hybrids under dryland conditions
VALUE CATEGORIES:
Hybrid 1: 2004, 4 locations; 2005 5 locs; 2006, 1 loc (20 reps)Hybrid 2: 2004, not tested; 2005, 5 locs, 2006, 3 locs
2004 2005 20060
2
4
6
8
10
12
14
YIE
LD D
IFFE
RE
NC
E
VS
. CO
NT
RO
L (B
U/A
CR
E)
NO
T T
ES
TE
D
Percent yield difference vs. control
7.3% 10.5% 10.9% 23.2% 9.0%
2006 TESTING: YIELD IMPROVEMENT OF LEAD EVENT UNDER DROUGHT STRESS
20
All Six Growth Drivers Are On Track in 2007, Setting Stage for Continued Growth Through End of Decade
SUMMARY
44%
46%
48%
50%
52%
54%
CURRENT LEVEL
GROSS MARGIN ‘PULL’
2003 2004 2005 2006 2007F 2008F 2009F 2010F
MONSANTO’S OPPORTUNITYFACTOR FY2007 PRIORITIES
U.S. corn
• Drive trait penetration, especially triple-stacks
• Seed market share growth in U.S. national and ASI brands
International corn
• Grow market share in key international market
Global biotech traits
• Achieve 2.5-5 cents EPS for Roundup Ready soybeans in Brazil
Cotton platform
• Complete Delta and Pine Land acquisition
• Continue penetration of second-generation stacked traits in U.S.
Seminis • Achieve 10-12.5 cents EPS contribution
R&D pipeline • Emphasis on “HIT” projects
FOCUS: GROSS PROFIT AS A PERCENT OF SALES