South America Overview Morgan Stanley Global Agribusiness & Food Conference. Mike Stern. Vice President, Americas Row Crops April 9, 2014

Transcription

1 South America Overview Morgan Stanley Global Agribusiness & Food Conference Mike Stern Vice President, Americas Row Crops April 9,

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 and the previously announced SEC investigation; 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 Monsanto Company 2

3 Agriculture Mega-Trends: Increasing Demand Requires More From Sustainable Yield Gains Globally CORN DEMAND MOMENTUM EX: GLOBAL CORN DEMAND ESTIMATES ( F) SOY DEMAND MOMENTUM EX: GLOBAL SOY DEMAND ESTIMATES ( F) CORN DEMAND (IN BILLION BUSHELS) FORECAST HISTORICAL 9B BU 9B BU F SOY DEMAND (IN BILLION BUSHELS) FORECAST HISTORICAL 2.5B BU 2.5B BU F World Corn Demand World Soy Demand World Corn Demand Estimates 2013F 2022F 2 World Soy Demand Estimates 2013F 2022F 2 Trend Line Trend Line 1. USDA 2. Monsanto internal estimates REGIONAL HIGHLIGHT South America plays an integral role in meeting the global demand growth through improved yield and productivity Monsanto portfolio is well positioned with strong brand presence and technology footprint across multiple crops INCREASING DEMAND RESPONSE USDA reports of new demand coming on line as lower commodity prices demonstrates elasticity Recent developments in China including reports of migration away from self-sufficiency underscore demand growth 3

4 Company-Specific Catalysts: Strong Core Business Anchors Monsanto s 2014 Growth Ahead of Long-Term Opportunity MONSANTO: EXPANDING INTO LONG-TERM EXPANDING PLATFORMS CORE BUSINESS CORN: BIGGEST BLOCKBUSTER OVERALL PORTFOLIO EXPANSION NEXT-GEN PRECISION AGRICULTURE: Integrated Farming Systems and Precision Ag R&D PIPELINE: Upgrades and New Launches INTERNATIONAL ACCELERATES Factors that drive long-term opportunity are more visible, more proven and more transformational than ever FY14 VALIDATION OF SOYBEANS AS TRANSFORMATIONAL PLATFORM Highlighted by largest-ever soy trait launch with Intacta RR2 PRO toward 100M-acre opportunity STEADY UPLIFT TO GLOBAL CORN PORTFOLIO Contribution from biggest global business year-in and year-out KEY METRICS CORE BUSINESS: SEEDS & GENOMICS MARGIN EXPANSION CORN MARGIN ACCELERATING SOYBEAN MARGINS MID-TERM: 3-5 YEARS NEW PLATFORMS: RAMP TO COMMERCIAL SCALE AND CONTRIBUTION R&D PIPELINE: INCREASED NPV VALUE FROM INTEGRATED YIELD R&D PIPELINE FINANCIAL PERFORMANCE: STRONG RETURN ON CAPITAL (ROC) UNLOCKING NEW PLATFORMS LIKE PRECISION AG AND BIOLOGICALS Key milestones achieved in FY14 that set up completely new categories of growth as Monsanto expands from inthe-seed to in-the-bag and in-the-field technology 4

5 Corn Portfolio Growth: Breeding and Technology Upgrades Enable Rapid Growth in Emerging Markets 2014 DRIVERS ❶ GERMPLASM PORTFOLIO UPGRADES MIX UPGRADE COST IMPROVEMENT MARKET EXPANSION TRAIT UPGRADE OUTLOOK: CORN MARGIN EXPANSION OF ~3PTS in FY14 RELATIVE MIX IN DEKALB PORTFOLIO LOWEST VALUE 10-20% MATURE HYBRIDS 25-40% PROVEN HYBRIDS DRIVERS 25-40% CORE HYBRIDS HIGHEST VALUE 10-20% FIRST-YEAR HYBRIDS New higher-value seed hybrids replace hybrids that average 4-6 years old, creating a compounding benefit as the portfolio adds new products each year Newest hybrids reflect the best-performing available germplasm and can be priced 20-30% higher than the oldest hybrids in the portfolio Q2 UPDATE ❷ CORN TECHNOLOGY UPGRADES FY14 On track for record volume growth in global corn portfolio, despite expected decline in acreage across Americas BRAZIL 32M HYBRID ACRES #1 POSITION REGION L.A. NORTH BREEDING #1 GERMPLASM CORN TECHNOLOGY PLATFORMS INSECT CONTROL BIOTECH WEED CONTROL BIOTECH NEXT-GEN INSECT TRAITS PRECISION AG LONG TERM Corn Portfolio is becoming even more global driving increased geographic balance in portfolio LATIN AMERICA SOUTH 13M PLANTED ACRES #1 POSITION BRAZIL L.A. SOUTH VT PRO 2 (Lead Product) GENUITY VT TRIPLE PRO (Lead) TECHNOLOGY UPGRADES FUTURE PRODUCTS 5

6 INTACTA RR2 PRO: First Year Performance a Clear Success Following Two Successful Years of Groundbreakers INTACTA RR2 PRO FIELD PERFORMANCE: MATO GROSSO TECHNOLOGY BENEFITS Productivity gains from less insecticide use Visible difference in insect protection Clear and consistent yield benefits INTACTA RR2 PRO INSECT DAMAGE ON UNTREATED ROUNDUP READY PLOT 6

7 Soybean Platform Upgrades: Q2 Results Provide Proof Point of New Era with Multiple Platforms and Acceleration of Growth 2014 DRIVERS ❶ SOUTH AMERICA PLATFORMS INTACTA RR2 PRO LATIN AMERICA PLATFORM EXPANSION NORTH AMERICA OUTLOOK: SOY MARGIN EXPANSION OF 6-8PTS in FY14 SOUTH AMERICA NEAR-TERM MID-TERM ~100M ACRE 2 ND GEN INTACTA RR2 PRO PRIORITY Establish Intacta RR2 PRO as broad-based platform Step change in yield combined with insect control drives most rapid launch ever ~90M ACRE FY14 LONG TERM Q2 UPDATE Largest ever launch of a soybean trait, with more than 35 varieties more than double the U.S. Genuity Roundup Ready 2 Yield launch In next 5 years, >$1B net sales growth opportunity from soybean platform led by Intacta RR2 PRO and continued upgrades from additional platforms like Roundup Ready 2 Xtend ACRES (IN MILLIONS) X 3 6 ❷ INTACTA RR2 PRO U.S. Genuity Roundup Ready 2 Yield Soybeans Intacta RR2 PRO Soybeans ~90M ACRE Year

8 Strong First-Year Yield Performance: Early Results for INTACTA RR2 PRO Soybeans Validate Yield Benefits and Growth Opportunity 2014 DRIVERS NEW INTACTA RR2 PRO INITIAL YIELD RESULTS INTACTA RR2 PRO LATIN AMERICA PLATFORM EXPANSION NORTH AMERICA Q2 UPDATE With approximately half of harvest data incorporated, Intacta RR2 PRO first-year commercial yield performance shows significant yield advantage of greater than 4 bu/ac BUSHELS/ACRE BRAZIL FIRST-YEAR COMMERCIAL YIELD DATA >4 BU/AC YIELD ADVANTAGE 54.3 Roundup Ready Soybeans WITH INSECTICIDE TREATMENT COMPARISONS: 542 PERCENT HARVESTED: 43% Consistent with 2 years of Ground Breakers testing, early commercial yield advantage also shows Intacta RR2 PRO with >4 bu/ac advantage over checks managed with insecticides FIELD PERFORMANCE: MATO GROSSO PEST-MONITORING PERFORMANCE 2 INTACTA RR2 PRO INSECT DAMAGE ON UNTREATED ROUNDUP READY PLOT In a year of prominent insect pressure from both expected insect pests as well as increasing pressure from a new class of caterpillar pests, Intacta RR2 PRO provides growers with new tool and betterperforming alternative With more than 3,000 observations, Intacta RR2 PRO has shown unsurpassed insect protection in commercial side-byside trials this season 1. Preliminary data based on approximately 43 percent of harvest data in commercial field strip trials across 239 locations comparing top RR1 varieties for each region managed with insecticides as needed to untreated Intacta varieties. 2. Monsanto Technology Development Pest-Monitoring Results, based on > 3,000 observations 8

9 Monsanto South America Business: Net Sales Growth Reflects Emergence of Seedand-Traits Business NET SALES (IN USD BILLIONS) $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 BRAZIL & ARGENTINA NET SALES 1 FY10-FY13 $1.7 $2.0 $2.5 $2.7 FY10 FY11 FY12 FY13 Percent of Int l Sales 37% 38% 40% 39% FY2013 NET SALES: MONSANTO BRAZIL $1.55 B NUMBER OF FULL TIME EMPLOYEES: ~2,700 KEY BUSINESS MODELS CORN: #1 germplasm share position Rapid Biotech adoption and next generation upgrades New genetics and germplasm refresh provide pricing opportunity SOY: High demand for Intacta RR2 PRO with established point-of-delivery system (POD) License genetics and traits through Monsoy. Risk Management Business Practices: Prepay, barter and customer financing programs reduce risk for collections across South America resulting in some of the lowest DSO rates, as compared to other Ex-US regions. Local production, hedging programs reduce impact of volatility related to currency and commodity prices 1. Monsanto 2013 & K 9