Monsanto showed confidence in its innovation-based growth drivers

During the Wells Fargo 2016 Industrials and Chemicals Conference in New York, Monsanto Company’s vice president and chief commercial officer Mike Frank highlights the company’s core growth drivers and integrated platform opportunities that reinforce its position to help address key global challenges, generate significant value for farmers and return value to shareowners.

 

“The fundamentals of our business are strong – and our strategy and priorities are clear,” said Frank. “Through focus and financial discipline, our attention remains on driving our core business and building out our integrated solutions vision to best serve farmers around the world.”

 

As highlighted at its recent second quarter earnings, Monsanto continues to execute on key milestones within its core business in fiscal year 2016. Through new corn hybrid portfolio introductions across key corn growing regions, as well as at least seven different late stage technologies that have licensing and launch opportunities in the near term, Monsanto’s largest crop platform remains strong. Frank will note that Monsanto continues to expect to hold or grow corn share in the United States in 2016, with the company’s year one to year three hybrids continuing to track at 50 percent to 60 percent of its portfolio. SmartStax® corn remains roughly at the same percentage of the portfolio mix as last year. In Brazil, the company grew share in the first season of the year and its VT Triple PRO® product is expected to be on approximately two million acres across both seasons with strong grower interest and adoption. In Argentina, the company’s corn share remains above 50 percent in a region where acres declined significantly versus the prior year. Finally, across Europe and South Africa, the company also continues to expect to hold or grow share in a region of declining corn acres.

 

Within soybeans, the company continues to build on the strong grower adoption of Intacta RR2 PRO™ soybeans in South America as the company remains on track to reach 35 million acres in fiscal year 2016 on the way to its full 100 million acre opportunity. For the third year in a row, preliminary yield data demonstrates a greater than four bushel per acre yield advantage for Intacta RR2 PRO™ soybeans, as compared to first-generation Roundup Ready® soybeans with insecticide treatment, underscoring the value of the technology. Near-term, discussions continue with key stakeholders in Argentina to find a mutually agreeable solution for a soybean technology royalty collection system to secure the value this patented technology creates for growers, while the testing protocols to detect Intacta RR2 PRO™ technology in grain are currently under review by the ministry. In light of this continued evolving landscape in Argentina, the company will continue to evaluate its business plans as appropriate and will assess any related financial implications to its balance sheet and earnings as necessary.

 

Demand for Roundup Ready 2 Xtend™ soybeans also remains strong as the company continues to await the European Union stack trait approval, which is in the final, administrative stage of approval and is expected to be completed in the near future. The company continues to regularly and transparently communicate throughout the value chain on the status of Roundup Ready 2 Xtend™ approvals. Given the European Union approval delay, Monsanto now expects to be on less than two million acres in its first year of launch in the United States. However, given the strong grower demand for the technology, the company still expects to be on two-thirds of the U.S. soybean acres by 2019 and has plans in place to be on 15 million U.S. soybean acres in fiscal year 2017, assuming timely receipt of the remaining regulatory approvals.

 

Monsanto also continues to make strong progress across its Climate FieldView™ platform as it is now on track to deliver its target of paid services on more than 12 million acres as grower interest and adoption of the new platform continues to grow.

 

Frank will highlight that continued progress on these key milestones in fiscal year 2016 is expected to set up a runway of growth beginning in fiscal year 2017. Growth is expected to be anchored on the company’s expanding innovation growth drivers and R&D leadership advantage, financial discipline and balanced capital allocation. Together, this innovation and financial discipline is expected to continue to drive industry-leading margins and strong cash generation.