WELLS FARGO INDUSTRIAL & CONSTRUCTION CONFERENCE. Michael J. Frank, Vice President, Chief Commercial Officer May 10, 2016

Transcription

1 WELLS FARGO INDUSTRIAL & CONSTRUCTION CONFERENCE Michael J. Frank, Vice President, Chief Commercial Officer May 10, 2016

2 Forward-Looking Statements Certain statements contained in this release 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 understanding and acceptance of our biotechnology and other agricultural products; the success of the company s research and development activities; the outcomes of major lawsuits; developments related to foreign currencies and economies; pursuit of acquisitions or other transactions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company s estimates related to distribution inventory levels; the recent increases in and expected higher levels of indebtedness; the company s ability to fund its shortterm financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters, accidents, and security breaches, including cybersecurity incidents, 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 release. 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. Fiscal Year References to year, or to fiscal year, are on a fiscal year basis and refer to the 12-month period ending August Monsanto Company 2

3 Demand-Driven Need for Grain Sets Compelling Runway for Ag Monsanto Uniquely Positioned to Address Key Global Challenges, Generate Significant Value for Farmer Customers, and Return Value to Shareowners DEMAND FOR FOOD LIMITED RESOURCES INNOVATIVE SOLUTIONS GLOBAL MACRO TRENDS Global Population to Increase to 8.5 Billion by CORN DEMAND (IN BILLION BUSHELS) Middle Class Expected to Increase by 2X to Nearly 5 Billion by Demand Trends Remain Robust 3 Actual Forecast Trendline 20 04/05 07/08 10/11 13/14 16/17 19/20 22/23 Acre Expansion Limited 1/2 an acre of arable land per person today, declining to 1/3 of an acre per person by 2050 Climate Change Agriculture s role in reducing carbon in our atmosphere CARBON NEUTRAL CROP PRODUCTION IMPROVING AGRICULTURAL PRODUCTIVITY HALTING DEFORESTATION USING WATER MORE EFFICIENTLY PROMOTING BEST PRACTICES Monsanto maintains broadest, deepest and most integrated pipeline focused on productivity DATA SCIENCE PLANT BREEDING INTEGRATED YIELD SOLUTIONS CHEMISTRY BIOLOGICALS BIOTECHNOLOGY Partner of choice for leading Ag technologies Innovation leadership uniquely positions Monsanto in meeting global macro trends affecting agriculture 1. United Nations 2. OECD & Rubico 3. USDA historical data for Actual and trendline WASDE Apr 2016; future forecast and projections represent Monsanto internal estimates 3

4 Farmer Needs Define Integrated Solutions Goal to Maximize Yields and Return Per Acre through Technology Driven Inputs and Season-Long Advice FARMER NEEDS INTEGRATED MONSANTO S INNOVATION PLATFORM ADVANTAGES YIELD BREEDING Leading Share Positions Proven Product Performance Advantage Unique Germplasm Libraries Breeding 3.0 INSECT CONTROL CHEMISTRY WEED CONTROL Roundup Ready Crop System ~350M acres Roundup Ready Xtend Crop System Dicamba Investment NEMASTRIKE phase 4 nematicide $1B NPV Acceleron Seed Applied Solutions on >75M acres Roundup Ready PLUS solutions on >50M Acres BIOTECH ~400M Acre Seed & Trait Footprint Multi-Generation Insect/Weed Control Traits 14-Gene Stack in Corn and 9-Gene Stack in Soybeans in Development DISEASE & OTHER FERTILITY BIOLOGICALS Industry-leading BioAg Alliance with Novozymes Break-through RNAi technology potential with BioDirect technology platform DATA SCIENCE Industry-leading Digital Platform Highest Adoption Rates Leading Connectivity and Reach through Retail and Ag Equipment Plant Health & Nitrogen Advisors 4

5 Core Business Drives Near-Term Growth New Platforms Provide Additional Layers of Long-Term Growth as Integrated Solutions Strategy Implemented NEAR TERM (FY17-FY19) LONGER TERM (2020+) NEW PLATFORMS CORE BUSINESS NEXT-GEN CROP PROTECTION SOLUTIONS BIOLOGICALS DIGITAL AG SOLUTIONS COMPLEMENTARY CROPS: Bollgard II XtendFlex cotton, vegetables SOYBEANS: Intacta RR2 PRO & Roundup Ready 2 Xtend expansion CORN: Global germplasm refresh, footprint expansion & next-gen traits (Enhanced-Corn Inoculant Lead) (Sub-Field Nitrogen, Assisted Scripts, Enhanced Imagery) (,Cotton Lygus) (3 rd -Gen. Weed Control, 2 nd -Gen. Insect Protection) GROSS PROFIT GROWTH DRIVERS FOUNDATION OF FINANCIAL DISCIPLINE AMPLIFIES GROSS PROFIT GROWTH DRIVERS 1 RESTRUCTURING TRANSFORMATION 3 BALANCED CAPITAL ALLOCATION DISCIPLINED MANAGEMENT OF CORE AG PRODUCTIVITY SEGMENT 2 5

6 Global Corn Portfolio Next Generation Hybrids, Global Share Growth and Licensing Opportunities Drive Expected Long-Term Growth Opportunities GLOBAL SEED & TRAIT UPGRADES 2025 TARGET: ~240M Acres Global Seed & Trait Upgrades CORN LICENSING OPPORTUNITIES FY2016 KEY GLOBAL CORN REGIONS MID-YEAR PERFORMANCE HIGHLIGHTS Germplasm SmartStax PRO Climate Advisors 1 U.S. Position: #1 Share: Mid-30 s% Trecepta 1 Next Generation Biotech Weed Control NEMASTRIKE phase 4 nematicide Acceleron Seed Applied Solutions with Enhanced Disease Control 1 Enhanced-Corn Inoculant 1. Licensing opportunity limited to Corn States licensees and our brands Brazil Position: #1 Share: ~40% Argentina Position: #1 Share: >50% Eastern Europe Position: #1 Share: >20% Western Europe Position: #2 Share: Mid-teens 6

7 Intacta RR2 PRO Soybeans First Generation Expected to Rapidly Penetrate 100M Acre Opportunity; Second Generation Already in Phase 4 INTACTA RR2 PRO 2025 TARGET: ~145M Acres of Trait Upgrades ACRES (IN MILLIONS) FASTEST RAMP OF ANY SOYBEAN TRAIT 3 INTACTA RR2 PRO: RECORD TECHNOLOGY ADOPTION RATE Intacta RR2 PRO penetration exceeded target; tracking to 35M acres in FY16 15 GENETIC DIVERSITY DRIVES ADOPTION ~35M ACRE FORECAST 75M ACRE TARGET 100M ACRES MARKET F 2019F OPPORTUNITY TRAIT PENETRATION STARTING WITH PRODUCT LAUNCH GROWTH PROFILE: Next decade is a period of rapid acceleration with new technology penetration Market opportunity of 100M acres; 2ndgeneration technology in Phase 4 of development expected to commercially launch by KEY MILESTONES: Expect 35M acres across South America in FY16 Technology licensed to germplasm providers with >90% share in South America UPDATE In discussions in Argentina with key stakeholders to find a mutually agreeable soybean technology royalty system for our patented Intacta RR2PRO technology Full review of Argentina business plans underway and assessing related financial implications in light of continued dynamic business environment 7

8 Strong Third-Year Yield Performance Results for INTACTA RR2 PRO Soybeans Results Validate Yield Benefits and Growth Opportunity UPDATE INTACTA RR2 PRO FY16 FIELD PERFORMANCE FIELD PERFORMANCE: PRIMAVERA DO LESTE, MT. JAN 2016 BUSHELS/ACRE BRAZIL THIRD-YEAR COMMERCIAL YIELD DATA >4 BU/AC YIELD ADVANTAGE COMPARISONS: 359 WIN RATE: 77% 51.6 Roundup Ready Soybeans WITH INSECTICIDE TREATMENT INTACTA RR2 PRO ROUNDUP READY PLOT WITH 2 INSECTICIDE APPLICATIONS INTACTA RR2 PRO is showing exceptional performance for control of the key insects that damage soybean crops in Brazil 2016 PERFORMANCE With 67% harvested, yield performance shows a >4 Bu/Ac average advantage. 1. Yield data based on approximately 67 percent of harvest data in commercial field strip trials across 145 locations comparing top Roundup Ready varieties for each region managed with insecticides as needed, compared to untreated Intacta varieties. 8

9 Roundup Ready Xtend Crop System Upgrade of Industry s Largest Seed Technology Platform Underway China Import Approval Received; EPA Comment Period for In-Crop Use of Dicamba Opened ROUNDUP READY XTEND CROP SYSTEM 2025 TARGET: 200M-250M Acres of Trait Upgrades Across Crops ACRES (IN MILLIONS) SOURCES OF VALUE IN ROUNDUP READY XTEND CROP SYSTEM Innovative Traits in Leading Germplasm TRENDING BELOW 2M ACRES Enhanced Chemistry Options Greater Flexibility, Weed Control and Yield Potential ROUNDUP READY 2 XTEND SOYBEANS: U.S. ACREAGE PENETRATION TARGETS DELAYED EU IMPORT APPROVAL LIMITS LAUNCH 15M ACRE TARGET ~55M ACRE TARGET 2016F 2017F 2019F ~80M ACRES MARKET OPPORTUNITY Next decade is a period of rapid acceleration with new technology penetration LAUNCH PLANS IN PROGRESS Now trending to less than 2M acres in the U.S. in FY16; still awaiting EU import approval for the stack after unexpected administrative delays following EFSA positive opinion last June >70 products across all relative maturity zones; 6x the products in Roundup Ready 2 Yield ~40M launch ACRES Targeting seed companies with > 90% U.S. soybean seed share EPA comment period opened for the in-crop use of dicamba on March 31 st ; registration expected by late summer to early fall PRICING $5-10/acre premium vs. Roundup Ready 2 Yield varieties; offering introductory $5/unit price reduction DICAMBA Initial supply agreements secured to cover first 3-5 years postlaunch BOD approved $975M investment in manufacturing plant expected to supply 25-35% of the fully mature demand 1. USDA deregulation received. EPA approval for in-crop use of dicamba is pending. 9

10 Bollgard II XtendFlex Cotton Next Generation Weed Control System for Cotton 1 Expected to Penetrate >2M Acres in FY16, More Than 2.5X Prior Year ROUNDUP READY XTEND CROP SYSTEM BOLLGARD II XTENDFLEX COTTON TRIALS JACKSON, TN TARGET: 200M-250M Acres of Trait Upgrades Across Crops GROWTH PROFILE: UNTREATED CONTROL UNTREATED CONTROL Next decade is a period of rapid acceleration with new technology penetration ROUNDUP READY XTEND CROP SYSTEM AND ROUNDUP READY PLUS SYSTEM 1. USDA deregulation received. EPA approval for in-crop use of dicamba is pending. KEY MILESTONES: Excellent performance demonstrated on yield and fiber quality for available varieties in maturities with a fit across the entire cotton belt Anticipated back-to-back years in share gains of 3 points or more High grower demand; expect to more than double penetration to >2M acres in EPA comment period opened for the in-crop use of dicamba on March 31 st ; registration expected by late summer to early fall Priced at a $6/acre price premium; fully discounted in FY16 as we await the EPA label for in-crop use of dicamba 10

11 Dicamba Plant Investment to Enable Upgrade of Industry s Largest Seed Technology Platform Supports Commercialization of the Next-Generation in Weed Control ROUNDUP READY XTEND CROP SYSTEM 2025 TARGET: 200M-250M Acres of Trait Upgrades Across Crops DICAMBA OPPORTUNITY 1 : DICAMBA INVESTMENT 1 CURRENT INDUSTRY PRODUCTION CAPACITY TO MEET EXISTING MARKET NEEDS Conventional uses to control broadleaf weeds 1. Monsanto internal estimates ~40M ACRES MONSANTO PLANT INVESTMENT Investment targeting ~80M to 100M acres of capacity; ~25-to-35% of the fully mature demand CURRENT & EXPECTED INDUSTRY CAPACITY EXPANSION FOR ROUNDUP READY XTEND CROP SYSTEM Starting to see industry capacity expansion driven by broad-sourcing agreements in support of early expected demand BOD approved $975M investment in manufacturing plant in Luling, LA. Investment expected to provide: Economies of scale with proximity to the Luling, LA plant Logistical advantages with convenient access to the Americas Strong formulation pipeline to deliver crop safety and convenience to growers Value Creation: Total Roundup Ready Xtend crop system drives 30%+ returns; dicamba plant alone expected to drive mid-teens return 11

12 The Digital Ag Platform Near-Term Strategy and Expansion Plans Unlock Path to Broad Acre Platform Adoption NEW 2016 OPERATIONAL PRIORITIES PRODUCT HIGHLIGHT Climate FieldView Platform Launched as Tiered Offering to Drive Adoption, Connect Cabs and Deliver Insights 1 PAID SERVICES: On Track to Exceed 12M Paid Acre Services in US 2 PLATFORM ADOPTION 1 : In line to exceed 90 Million Acres across Climate Fieldview 3 GEOGRAPHIC EXPANSION: In cab visualization Data Connectivity Climate Fieldview Drive Field-level weather Notifications Scouting N Advisor Field Health Script Creator Beta Testing Locations NEW Expanded in-field beta testing in Brazil & Canada for 2017;first product launch expected in the next two years FieldView Pro available on 120M acres across corn and soy in the U.S, 50% increase vs FY15 Advisor Tools Provide New Benefits to Farmers Nitrogen Advisor 2 : Over 50% of US Corn fields have opportunities to optimize nitrogen application based on 2015 sample across >3,800 fields Field Health Advisor: Informed scouting In-season images on average, about every 10 days Whole-farm overview tool 1. Platform includes Climate Fieldview Prime, Pro and Plus acres. 2. Representative and random sample of >3,800 Nitrogen Advisor Fields where main Nitrogen application was the mineral fertilizer. Assumes $4/bushel corn, $.40/lb-N fertilizer costs and average yield of 168 bushels per acre. 12

13 NEMASTRIKE Technology Estimated $1 Billion NPV 3 Broad Spectrum Nematode Control Resulting In Improved Emergence, Plant Health and Yield Protection; Launch Planned for 2018 SEED CARE: NEMATICIDE 2025 TARGET: 125 Million Acres in New Crop Protection Solutions BLOCKBUSTER PRODUCT ESTIMATED $1B IN NPV MONSANTO TRIALS - AVERAGE YIELD ADVANTAGE Corn represents greatest opportunity area Followed closely by soybeans Value also exists for other crops ~$1B NPV VALUE Yield benefits derived from reduced root damage BUSHELS PER ACRE CORN ~9 BU/AC YIELD ADVANTAGE COMPETITIVE STANDARD ACCELERON SAS 2 + NEMASTRIKE TECHNOLOGY BUSHELS PER ACRE SOY ~2 BU/AC YIELD ADVANTAGE COMPETITIVE STANDARD ACCELERON SAS 2 + NEMASTRIKE TECHNOLOGY PROJECT HIGHLIGHTS: NEMASTRIKE technology is currently in Phase 4 Novel nematode-control technology with a fit on 125M acres of opportunity across corn, soy and other crops Licensing structure in place to allow for broad commercial access Planning for launch in the U.S. in Product is subject to regulatory approvals and is expected to be branded as Nemastrike Technology 2. Acceleron SAS = Acceleron Seed Applied Solutions 3. Estimated non risk-adjusted value 13

14 Restructuring & Cost Savings Initiatives Expected to Yield Annual Savings of $500 Million RESTRUCTURING & COST SAVINGS INITIATIVES: Create Four Strategic Commercial Hubs Create Global R&D Center of Excellence Enable greater customer value while driving excellence and cost efficiency North America South America Europe and Middle East Asia and Africa Modernize and optimize IT and supply chain networks Accelerate use of data and analytics to dramatically improve our field testing and product development cycle Unlock synergies across platforms and drive greater scale and speed to bolster rate of discovery and delivery of new innovations while driving efficiencies Rendering of Monsanto s future R&D Center of Excellence at its Chesterfield Village research site in St. Louis Streamline and re-prioritize some of our commercial, enabling, supply chain and R&D efforts Includes the exit of the sugarcane business and streamlining of the Yield & Stress program approach Plans expected to drive further optimization of operating leverage and COGS 14

15 Core Business Drives Near-Term Growth New Platforms Provide Additional Layers of Long-Term Growth as Integrated Solutions Strategy Implemented NEAR TERM (FY17-FY19) LONGER TERM (2020+) NEW PLATFORMS CORE BUSINESS NEXT-GEN CROP PROTECTION SOLUTIONS BIOLOGICALS DIGITAL AG SOLUTIONS COMPLEMENTARY CROPS: Bollgard II XtendFlex cotton, vegetables SOYBEANS: Intacta RR2 PRO & Roundup Ready 2 Xtend expansion CORN: Global germplasm refresh, footprint expansion & next-gen traits (Enhanced-Corn Inoculant Lead) (Sub-Field Nitrogen, Assisted Scripts, Enhanced Imagery) (,Cotton Lygus) (3 rd -Gen. Weed Control, 2 nd Gen. Insect Protection) GROSS PROFIT GROWTH DRIVERS 1 FOUNDATION OF FINANCIAL DISCIPLINE AMPLIFIES GROSS PROFIT GROWTH DRIVERS RESTRUCTURING TRANSFORMATION 3 BALANCED CAPITAL ALLOCATION DISCIPLINED MANAGEMENT OF CORE AG PRODUCTIVITY SEGMENT 2 15