During Monsanto company’s Biennial Investor Event in St. Louis, chairman and chief executive officer Hugh Grant and other members of the Monsanto executive leadership team will highlight the company’s core business growth drivers and expanding new platform opportunities that reinforce the company’s unique leadership position within the industry and underpin its confidence in its long-term growth opportunities.
“The fundamentals of our business are strong and we continue to be the best positioned company in the industry,” Grant said. “Our priorities are clear as we remain acutely focused on driving growth within our core business, building out our growth platforms and continuing to fund our R&D pipeline advantage to serve farmers around the world. Through focus and discipline, we are confident in delivering on the milestones we’ve established in the near term and that extend over the next decade.”
Strategic Growth Drivers Clear to FY19
During the event, the company will confirm its fiscal year 2016 earnings per share guidance of $5.10 to $5.60 on an ongoing basis and $4.00 to $4.66 on an as reported basis. The company also continues to project free cash flow in the range of $1.6 billion to $1.8 billion for fiscal year 2016. The company expects net cash provided by operating activities to be $2.7 billion to $3.1 billion, and net cash required by investing activities to be approximately $1.1 billion to $1.3 billion.
In 2016, the company will continue to focus on executing on key milestones within its core seeds and traits business led by new global corn hybrid portfolio introductions, continued significant Intacta RR2 PRO™ soybean adoption and additional licensing opportunities. It also plans to remain disciplined in its agricultural productivity strategy, drive further optimization in spend through its announced restructuring actions and accelerate progress toward its targeted capital structure. A focus on these priorities in fiscal year 2016 will set the foundation for rapid future growth, beginning in fiscal year 2017, as the company targets to more than double fiscal year 2014 ongoing EPS by fiscal year 2019. The company’s expanding core growth drivers and R&D leadership advantage, emergence of new platforms and financial discipline underpin confidence in this five-year growth target. The company expects innovation to drive 80 percent of the expected gross profit growth from the end of fiscal year 2016 to fiscal year 2019, with roughly only 20 percent contingent on macro economic factors.
Innovation to Unlock New Growth
Monsanto executives also will highlight its industry-leading R&D approach, which combines its core platforms of breeding, biotechnology and chemistry with its transformational growth platforms of data science and biologicals to provide a truly integrated approach to delivering yield solutions for global farmers. The company has advanced 55 projects in the past two years and anticipates more than 20 advancements in fiscal year 2016.
Monsanto’s current R&D pipeline has the potential to deliver up to $25 billion in peak net sales through the success of products like third generation trait technologies and continued germplasm upgrades. Today, the company operates from a global footprint of more than 400 million acres currently using its technologies, with the company anticipating more than 1.3 billion acres of next-generation technology upgrades by 2025. Approximately 800 million acres of upgrades are expected to come from its core growth drivers like Intacta RR2 PRO™ soybeans, Roundup Ready 2 Xtend™ soybeans and from its global corn portfolio. The company anticipates another 550 to 900 million acres of technology upgrades from its new growth platforms, including 300 to 400 million acres from the Climate FieldView digital agronomic platform and 250 to 500 million acres from the BioAg Alliance with Novozymes. These growth platforms hold the potential to serve global farmers beyond Monsanto’s current core crops and geographies.
The Climate Corporation Emerges as the Digital Agricultural Platform
Executives also will highlight progress in The Climate Corporation platform, which has solidified its position as the industry leader in digital agriculture – driven by its unique capabilities, leading commercial reach and unprecedented farmer adoption. The recently announced agreement with John Deere, providing exclusive third-party, near real-time data connectivity with certain John Deere equipment, rounds out the platform’s connectivity options for growers across the three major equipment providers. This ease of use and level of connectivity, coupled with the tremendous retail distribution reach of the comprehensive Climate FieldView digital agronomic platform, has enabled the company to stake its leadership position in the digital agriculture space. The company remains focused on rapid farmer adoption and creating a positive experience for farmers as it targets 90 million acres in fiscal year 2016, including 12 million acres of paid services. The Climate insights continue to deliver significant opportunities to help address the more than forty decisions farmers make each season, with the platform’s nitrogen advisor identifying an approximately $1 billion opportunity to improve productivity for U.S. farmers in corn alone.
Harvest Results Highlight Monsanto’s Products Continue to Outperform Competitors
Initial results from the 2015 U.S. harvest reinforce Monsanto’s performance advantage DEKALB® corn is outperforming competitive products for the tenth consecutive year, with early 2015 harvest results once again highlighting a strong performance advantage of more than 7 bushels per acre on average. In soybeans, early Roundup Ready 2 Yield® harvest results reinforce the platform’s industry-leading yield advantage of more than 4 bushels per acre on average versus first-generation Roundup Ready soybeans. Importantly, this becomes the foundation for Roundup Ready 2 Xtend™ soybeans whose performance is expected to be at parity with Roundup Ready 2 Yield® soybeans from a yield performance perspective, with the benefits of improved weed control for those hard to control weeds.