New York, New York
April 4, 2002
At an investor meeting here
today, Monsanto Company
(NYSE: MON) executives will discuss the current state of the
company and its prospects for growth. "We're continuing to
deliver significant shareowner value by growing earnings and
increasing cash flow in the near term," Monsanto President and
Chief Executive Officer Hendrik Verfaillie is expected to say.
"The strategy we're implementing also prepares us for
double-digit earnings growth in the medium- to long-term as we
realize global expansion of current and future products."
Verfaillie notes that while Monsanto awaits regulatory approvals
that will unlock the full potential of biotechnology, the
company's 2002 and 2003 earnings per share (EPS) growth rates
are expected to be in the single digits. The growth rates
exclude special items and the effect of the company's adoption
of a new accounting standard beginning with 2002 results.
Earnings growth is expected to accelerate as Monsanto receives
additional regulatory approvals for its biotechnology products
and the company expands the use of its current biotechnology
traits in new markets. In the interim, the company will
fine-tune its organizational structure, including the
rationalization of some facilities and a small reduction in
staff.
Following Verfaillie's strategy overview, three other Monsanto
executives will provide reviews of their particular areas. These
presentations include: An operations review by Chief Operating
Officer Hugh Grant; a research-and- development review by Chief
Technology Officer Robb Fraley, Ph.D.; and a financial review by
Chief Financial Officer Terry Crews.
Operations Review
In his operations review, Hugh Grant will discuss the company's
unique business model that gives Monsanto the ability to offer
farmers integrated solutions that combine seeds, biotechnology
traits, and crop protection chemistry. "Our integrated-solutions
approach is designed around the needs of our customers. It's
cost-effective for farmers, and allows them greater convenience
and flexibility," says Grant. "This approach also gives Monsanto
multiple opportunities to sell our products and technologies on
each acre a farmer cultivates."
Grant says the global demand for Roundup and other
glyphosate-based herbicides continues to increase. "Monsanto's
success in differentiating our Roundup products through improved
product formulations and branding, our state-of-the-art
manufacturing technologies and efficiencies, and our
customer-oriented delivery systems give us a competitive
advantage in the market," he says.
Grant also says the company's strategic decision to invest in
seeds differentiated Monsanto from others in the industry, and
Monsanto is now seeing a step-by-step improvement in its branded
seeds. "By making our investment in the seed business early, we
were able to accelerate the adoption of biotechnology traits,
while also improving the quality of our base seed business," he
says. "We can now concentrate more on branding and continually
updating our product portfolio in seeds, much like what we've
accomplished with great efficiencies in our Roundup franchise."
Research-and-Development Review
Robb Fraley will review how Monsanto's research-and-development
(R&D) efforts are differentiated from others in the industry by
the company's strengths in genomics, breeding and biotechnology.
"We reinvest 10 percent of sales back into our R&D pipeline and
are driving productivity step-changes in agriculture," Fraley
says. "Our innovation and focus has resulted in the most
productive pipeline, with the highest rate of commercialized
biotechnology traits in the industry."
Fraley emphasizes that the company's R&D platforms are advanced
on two parallel paths to market -- with one track using
biotechnology traits to bring new biotechnology crops to market
while the second track includes the use of molecular breeding
and genomics to improve seed hybrids and varieties faster than
traditional breeding methods can.
He notes that of the products poised for near-term
commercialization and expansion to new markets, Roundup Ready
corn and YieldGard Rootworm corn could be large contributors to
Monsanto's revenue and income growth going forward. "The
satisfaction among growers who have used Roundup Ready corn
exceeds those of Roundup Ready soybeans, which is our most
widely grown biotech crop," says Fraley. Fraley also notes that
when commercialized, YieldGard Rootworm corn will allow farmers
to dramatically reduce insecticide use to control rootworms, and
it will control the pest more effectively than currently
available options.
Financial Review
In his financial review, Terry Crews will outline the company's
plans to deliver steady profit and cash growth. "We have the
businesses and the processes in place today that allow us to
continue to manage costs, grow EPS, and accelerate the growth of
free cash flow," Crews says.
Crews reiterated that the company intends to deliver EPS growth
in 2002 in the range of 4 percent to 6 percent, excluding
special items and the effect of the company's adoption of a new
accounting standard. In 2003, the company targets EPS growth in
the range of 4 percent to 9 percent, excluding special items. As
additional approvals for the company's biotechnology products
are approved, EPS growth is expected to accelerate to
double-digits in 2004 and beyond.
After delivering free cash flow of $183 million in 2001, Crews
says the plan is to more than double free cash flow in 2002 and
to increase it by an additional 10 percent to 30 percent in
2003. "The key factors contributing to our cash flow success
include continual implementation of the more rigorous and
disciplined financial processes we've put in place, especially
with regard to cost containment opportunities and discipline
around capital expenditures," Crews says. He also noted that the
company plans to improve its working capital position by
continuing its focus on improving collections and pursuing new
financing options for its customers.
Crews also says the company is implementing a restructuring
which will cost up to $124 million and targets facility
rationalizations and related work force reductions for the year
2002. It's expected that work force reductions would affect less
than 5 percent of the company's current employee base. Roughly
half of the $124 million affects cash and the cash required for
this targeted restructuring is included in the company's free
cash guidance for the year.
Monsanto Company is a leading global provider of
technology-based solutions and agricultural products that
improve farm productivity and food quality.
Roundup, Roundup Ready and
YieldGard are registered trademarks owned by Monsanto Technology
LLC.
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