Monsanto positioned to deliver integrated solutions for long-term growth
During Monsanto's eighth Whistle Stop tour event for investors, chairman and CEO Hugh Grant will highlight how the industry's leading technology platforms and digital integration are addressing evolving grower needs and accelerating the future of agriculture, underpinning confidence in the company's long-term growth.
"Monsanto has the right strategic plan in place to create significant shareowner value over the long term, built on strong business fundamentals," said Grant. "With proven leadership in seeds, traits, digital agriculture and a robust supporting R&D pipeline, Monsanto remains uniquely positioned to address evolving grower needs through our integrated solutions strategy, while delivering on our long-term earnings potential."
Monsanto confirmed it remains on track to be at the low end of its US$3.36 to US$4.14 as reported for its 2016 full-year guidance range and at the low end of its ongoing EPS 2016 full-year guidance range of US$4.40 to US$5.10. Net cash provided by operating activities is expected to be US$2.2 billion to US$2.6 billion, and net cash required by investing activities to be approximately US$900 million to US$1.1 billion for fiscal year 2016. The company also confirmed its 2016 full-year free cash flow guidance range of US$1.3 billion to US$1.5 billion.
Looking ahead to fiscal year 2017, the company continues to expect a return to growth in EPS driven by the return on innovation for products such as Intacta RR2 PROTM and Roundup Ready 2 XtendTM soybeans, improved cost of goods and financial discipline. Beyond fiscal year 2017, the opportunity to expand is expected to be driven by a continued return on innovation for the company's growth drivers, coupled with ongoing financial discipline and a balanced approach to capital allocation. This includes an expected target of mid-teens compounded annual EPS growth rate from the end of fiscal year 2017 through fiscal year 2021.
During the event, Monsanto executives will also highlight the company's industry-leading core pipeline with a value of up to US$25 billion in peak net sales. The event will focus on cutting-edge innovation that continues to fuel the company's leadership in its breeding, biotechnology, chemistry, biologicals and data science platforms. It will also showcase in-field demonstration of late-stage technologies including SmartStax® PRO corn, Roundup Ready 2 Xtend® soybeans, DEKALB® Disease ShieldTM corn hybrids, next-generations of Intacta RR2 PROTM soybeans and the latest offerings in its Climate FieldViewTM platform.
This technology underpins the company's growth targets, highlighted by the key growth drivers featured at the event:
Corn –Steady growth is enabled by upgrading the germplasm in its leading share positions around the world, as well as next-generation trait platforms, such as SmartStax PRO® and TreceptaTM corn. The company also announced its investment plans for greenhouses in Arizona, which will support protected culture capabilities and serve to increase the long-term rate of genetic gain in both corn and soybeans.
Soybeans - For soybeans, the coming years are significant, with key blockbuster traits such as Intacta RR2 PROTM and Roundup Ready 2 Xtend® soybeans accelerating penetration. The recent royalty-bearing license agreement for Syngenta to sell dicamba-tolerant soybean technologies further enables the opportunity for 55 million acres of Roundup Ready 2 Xtend soybeans in the US by fiscal year 2019. Management also sees the opportunity for 45 to 55 million acres of Intacta RR2 PRO in South America in fiscal year 2017.
Next-Generation Weed Control - The introduction of the Roundup Ready® Xtend Crop System is expected to enable the upgrade of the Roundup Ready platform, creating tremendous value through integrated solutions. With the recent receipt of the European import approval for the trait, the company is one step closer to delivering on a target of 15 million acres by fiscal year 2017. The continued advancement of the company's Vapor GripTM Technology formulation of dicamba and signed agreement with DuPont to offer this technology further shows the value of the platform. The company looks forward to the EPA's expected final decision by late summer or early fall for over-the-top dicamba use, which enables a full system launch in the US in 2017.
Complementary Crops - Bollgard II® XtendFlexTM cotton is expected to exceed three million acres in the US in 2017 - a four-fold growth over 2016. In addition, the cotton lygus control trait, the first-ever biotech solution for the control of piercing and sucking insects, holds the potential to drive future growth.
Ag Productivity - Monsanto's emphasis on cost discipline and portfolio optimisation enables potential growth in this segment after fiscal year 2017. With the expected introduction of the Roundup Ready® Xtend Crop System and its dicamba plant investment, Monsanto will have the world's two largest agricultural herbicides - glyphosate and dicamba - in its portfolio. In addition, the company's unique asset-light approach for externalised active ingredient discovery, such as the collaboration with Nimbus for a synthetic fungicide with broad spectrum control, provides for longer-term growth opportunities.
Climate FieldView Platform Expansion
With its strong "first mover" advantage, the company is well-positioned to make its Climate FieldView platform the go-to digital agriculture platform of the future due to the enhancement of its current digital tools, significant growth potential from its platform extension to third parties and global acre expansion.
Climate FieldView services reached more than 14 million paid acres in fiscal year 2016 and is targeting 25 million paid acres in fiscal year 2017. By 2025, the target climbs to 300-400 million paid acres that have the potential to be "upgraded" annually with tailored applications to optimise on-farm productivity.
The company revealed it is developing the agriculture industry's first in-field sensor network, representing significant R&D advancement and enabling the development of a connected digital ecosystem for farmers. The company also plans to extend its Climate FieldView platform, currently on more than 92 million acres in the US, to enable other agriculture innovators to build on top of its software infrastructure and complement their offering with additional agriculture data inputs. This extension firmly establishes the Climate FieldView platform as the industry leader, provides new opportunities to capture value beyond row crops, and enables a faster path to market for other agriculture innovators to bring their products to farmers.
Monsanto will provide a webcast of the overview presentations each day with sessions on August 17-18.