March 26, 2008
Monsanto boosts fiscal-year 2008 earnings per share
Press Release
Leading corn market share positions, accelerated biotechnology trait penetration and new value generated by Roundup and other glyphosate-based herbicides have led Monsanto Company to well exceed its expectations for second-quarter results and to raise its full-year guidance for ongoing earnings per share (EPS) and free cash flow.
The company now projects full-year ongoing EPS of US$3.15 to US$3.25, an increase versus the previous ongoing guidance of US$2.70 to US$2.80. For the second-quarter, the company expects ongoing EPS in the range of US$1.75. As-reported EPS is expected to be in the range of US$1.98 for the second quarter and in the range of US$3.38 to US$3.48 for the full year. Both periods will be affected favorably by US$0.23 per share from the settlement of Monsanto's claims in conjunction with Solutia's emergence from bankruptcy.
The upside contribution from the company's seeds and traits business, together with the performance of its Roundup and other glyphosate-based herbicides business and the Solutia settlement, has translated to a stronger operating cash position. Given the increased level of operating cash, Monsanto now expects free cash flow of approximately US$1.4 billion for the fiscal year versus prior guidance of US$900 million to US$1 billion. The company expects net cash provided by operating activities to be in the range of US$2.45 billion, and net cash required by investing activities to be approximately US$1.05 billion for fiscal year 2008.
"As we move closer to the Northern Hemisphere planting season, we've not only gained confidence in our 2008 opportunity, but also in our strategic path to 2012," said Hugh Grant, chairman, president and chief executive officer of Monsanto. "Our growth over the next five years will be built on our seeds-and-traits platform, and we've already exceeded a number of milestones that put us ahead of our plan to deliver consistent, sustainable growth."
The company's stronger-than-expected performance through the first-half of the fiscal year reflects three factors, including:
-- Monsanto's seeds and traits business is ahead of plan. Based on
expanded corn-trait penetration and brand share growth, as well as
increased volume in the soybean business, Monsanto now expects its
seeds and traits business to deliver in the range of US$3.6 billion to
US$3.7 billion in gross profit for fiscal year 2008, up 20 percent from
gross profit in fiscal year 2007.
-- The strong demand environment is driving Roundup performance.
With demand outpacing supply globally, Monsanto now expects its Roundup
business to deliver US$1.7 billion to US$1.8 billion of gross profit in
fiscal year 2008.
-- Operational discipline continues around spending. The company has held
spending for SG&A at 20 percent of sales for this fiscal year, the
lower end of its previously forecasted range, even as it has
experienced growth in sales and growth through the prior year's
acquisitions. Additionally, R&D as a percent of sales is now expected
to be approximately 9 percent of sales for fiscal year 2008.
As a result of the expected overall gross profit growth, Monsanto is expected to achieve its original target of reaching a 52-to-54 percent gross margin by 2010 two years ahead of schedule.
Crews indicated that the increase in operating cash will provide the company with increased resources to continue to use its strong cash position to benefit shareowners. Notably, Monsanto will continue to look for ways to invest in acquisitions that further growth, projects that support the current business' growth and dividend and share-repurchase programs that return value to shareowners.
Monsanto will release its second quarter earnings results on Wednesday, April 2, 2008, prior to market open. In conjunction with the announcement of its results, Monsanto will hold a conference call at 8:30 a.m. central time (9:30 a.m. eastern time) on that date.
The call will focus on the company's second quarter results and future expectations and may also include a discussion of Monsanto's strategic initiatives, product performance and other matters related to the company's business.
