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Comment from Monsanto Chairman, President and Chief Executive Officer Hugh Grant:
"Our results in the first quarter represent a solid start to the fiscal year and highlight the strong performance of our Latin American business. With the most significant part of our annual business cycle still to come, we believe these results position us for another strong fiscal year for our business. Were seeing tremendous progress in projects across our R&D pipeline, and this underscores both our momentum and the value that our business is poised to deliver to farmers."
Outlook
The second and third quarters of fiscal year 2008 are expected to be the primary drivers for the companys fiscal year 2008 EPS results. These quarters reflect both the relative size of the companys U.S. business and the importance of its seeds-and-traits business to Monsantos earnings.
Monsantos full-year 2008 EPS is now expected to be in the range of $2.50 to $2.60, excluding the impact of Solutias emergence from bankruptcy, both on a reported and ongoing basis. The company also announced that it now expects that its free cash flow guidance for fiscal year 2008 will be higher even as it expects higher capital expenditures in fiscal year 2008. Strong demand for the companys corn seed products pulled forward the capital expenditures at its North American corn seed manufacturing facilities which had been previously announced as part of its two-year $610 capital expenditure plan.
The company noted that its free cash flow for fiscal year 2008 is now expected to be in the range of $900 million to $1 billion. The company expects net cash provided by operating activities to be in the range of $1.95 billion to $2.05 billion, and net cash required by investing activities to be approximately $1.05 billion for fiscal year 2008. (For a reconciliation of free cash flow, see note 1.)
Because Monsanto cannot predict with certainty when Solutia will be able to satisfy the conditions of its bankruptcy emergence, Monsantos full-year 2008 EPS and cash flow guidance does not reflect any receipt of cash or equity reimbursements associated with Solutias anticipated emergence from bankruptcy and the resolution of Monsantos claim. If Solutia emerges from bankruptcy protection as it currently projects in January 2008, Monsanto anticipates that it could realize a non-recurring gain (net of tax) of approximately $0.22 to $0.24 per share in second quarter 2008 for the settlement of Monsantos claim.
Seeds and Genomics Segment Detail
($ in millions) Net Sales Gross Profit
First First First First
Seeds and Genomics Quarter Quarter Quarter Quarter
2008 2007 2008 2007
Corn seed and traits $467 $360 $285 $223
Soybean seed and traits 162 170 111 122
Cotton seed and traits 42 25 24 15
Vegetable and fruit seed 130 100 64 51
All other crops seeds and traits 35 25 11 5
TOTAL Seeds and Genomics $836 $680 $495 $416
Earnings Before
($ in millions) Interest & Taxes
(EBIT)
First First
Seeds and Genomics Quarter Quarter
2008 2007
EBIT (For a reconciliation of EBIT, see note 1.) $(20) $1
Unusual Items Affecting EBIT
Loss on Discontinued Operations None $(8)
The Seeds and Genomics segment consists of the companys global seeds and traits business, and genetic technology platforms.
Sales for Monsantos Seeds and Genomics segment were $836 million for the first quarter of fiscal year 2008, or 23 percent higher than the same period last year.
Results in the quarter benefited from increased sales from the companys corn seed and traits business, which were 30 percent higher when compared with sales in the same period last year. The increase in the quarter related primarily to strong demand for the companys corn seed products in key corn-growing areas including Brazil and Argentina.
During the quarter, Monsantos U.S. corn business also realized strong early orders for the companys corn products including its triple-trait technology which offers farmers both above-the-ground and below-the-ground insect protection, as well as weed control flexibility. The company is now forecasting that its triple-stack product could be planted on 25-to-27 million acres in the United States, an increase of some 50 percent over the prior year. Monsanto also now expects that its DEKALB corn seed brand in the U.S. could realize an increase of 2-to-3 percentage points, up from its previously announced range of 1-to-2 points.
Agricultural Productivity Segment Detail
($ in millions) Net Sales Gross Profit
First First First First
Agricultural Productivity Quarter Quarter Quarter Quarter
2008 2007 2008 2007
Roundup and other glyphosate-based
herbicides $1,008 $649 $487 $194
All other agricultural
productivity products 255 210 73 72
TOTAL Agricultural Productivity $1,263 $859 $560 $266
Earnings Before
($ in millions) Interest & Taxes
(EBIT)
First First
Agricultural Productivity Quarter Quarter
2008 2007
EBIT (For a reconciliation of EBIT, see note 1.) $385 $103
Unusual Items Affecting EBIT None None
The Agricultural Productivity segment consists primarily of crop protection products, residential lawn-and-garden herbicide products, and the companys animal agriculture business.
Sales for Monsantos Agricultural Productivity segment were $1.3 billion for the first quarter of fiscal year 2008, or 47 percent higher compared with sales in the same period last year. The primary contributors to the segments growth in the quarter were higher pricing and volume of the companys Roundup agricultural herbicides in Brazil, Argentina and Europe.
Gross profit for the segment in the first quarter was $560 million or than more double compared with gross profit in the same period last year. The increase in the quarter related primarily to higher pricing of branded Roundup herbicides as well as higher volumes.
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