Monsanto reports fiscal Q4 net loss of US$229M on sales of US$2.11B, compared with year-ago net loss of US$112M on sales of US$2.25B; ongoing EPS growth reaches 25% for fiscal 2012

Nevin Barich

ST. LOUIS , October 3, 2012 (press release) – Monsanto Company (NYSE: MON) today announced it concluded fiscal year 2012 with ongoing earnings per share growth of 25 percent, and added that it is well-positioned to attain mid-teens ongoing earnings per share growth next year. The company delivered growth in its base business in the United States on the continued adoption of its key corn and soybean platforms, complemented by international seeds and traits performance. Executives also highlighted early 2012 U.S. corn harvest results, which reinforce Monsanto's long-standing yield advantage even in one of the most difficult growing seasons on record.

"We've proven our business on a global stage with back-to-back years of tremendous performance and momentum," said Hugh Grant, chairman and chief executive officer for Monsanto. "With more waves of innovation and global opportunities than ever before, I'm confident that by building off what we accomplished in 2012 we can achieve steady growth in fiscal year 2013 as we continue to deliver sustainable yield to our farmer customers."

Results of Operations

Monsanto reported net sales of $2.1 billion for the fourth quarter of fiscal year 2012. Net sales for the full fiscal year were $13.5 billion, a 14 percent increase over fiscal year 2011. Full year net sales results were driven primarily by higher global corn seeds and traits revenue, and increased soybean seeds and traits revenue in the United States and Brazil.

Seeds and Genomics segment net sales were $1.2 billion for the quarter, a decrease from the prior year. For the fiscal year, net sales for the Seeds and Genomics segment reached $9.8 billion, a 14 percent increase over the prior year. Agricultural Productivity segment net sales were $895 million for the quarter. Net sales for the Agricultural Productivity segment for the fiscal year grew to $3.7 billion.

Monsanto reported a net loss of $229 million in the fourth quarter of fiscal year 2012, compared with a reported net loss of $112 million in the same period last year. Net income for fiscal year 2012 was $2 billion, an increase over fiscal year 2011 net income of $1.6 billion.
The company's fiscal year 2012 earnings per share (EPS) was $3.70 on an ongoing basis and $3.79 on an as-reported basis. For the fourth quarter, the company reported a loss per share of $0.44 on an ongoing basis and $0.42 on an as-reported basis.

Cash Flow

For fiscal year 2012, net cash provided by operating activities was a source of $3 billion, compared with a source of $2.8 billion in fiscal year 2011. Net cash required by investing activities was $1 billion in fiscal year 2012, compared with net cash required of $975 million last year. Net cash required by financing activities was $1.2 billion for fiscal year 2012, compared with net cash required of $864 million in fiscal year 2011. Free cash flow was a source of $2 billion for fiscal year 2012, compared to a source of $1.8 billion in fiscal year 2011.

Outlook

In fiscal year 2013, Monsanto expects to achieve mid-teens ongoing EPS growth off the 2012 base of $3.70 for a range of $4.18 to $4.32. The company expects as-reported EPS to also be in the range of $4.18 to $4.32.

The Seeds and Genomics segment is expected to deliver gross profit in the range of $6.55 billion in 2013, with gross profit growth projected to be divided roughly evenly between the United States and international regions.

Gross profit for the Agricultural Productivity segment next year is expected in the range of $1 billion.

The company projects free cash flow in the range of $1.7 billion to $1.8 billion for fiscal year 2013. The company expects net cash provided by operating activities to be $2.8 billion to $3.1 billion, and net cash required by investing activities to be approximately $1.1 billion to $1.3 billion for fiscal year 2013.

In fiscal year 2013, the company expects selling, general and administrative expenses to be in the range of $2.55 billion. The company's research and development spend is projected in the range of$1.53 billion for fiscal year 2013.

The Seeds and Genomics segment consists of the company's global seeds and related traits business.

For the fiscal year, Monsanto realized Seeds and Genomics segment sales of $9.8 billion, reflecting a 14 percent increase over the prior year. Segment sales in the fourth quarter were $1.2 billion, a decrease from the prior year period.

In the United States, branded seed volume in fiscal year 2012 grew by the largest increment in three years and outpaced market expansion. In corn, the company reached 27 million planted U.S. acres for its Genuity® Reduced Refuge Family. While harvest is still in progress, the company shared some early highlights of what the 2012 U.S. corn harvest has shown to date:

• In a year when average corn yields are significantly down, DEKALB® continues its historic advantage relative to competitive products. In 2012, DEKALB® is outperforming competitive products with approximately a 8 bushels per acre national yield advantage, with Monsanto's germplasm providing greater consistency in performance amidst this season's drought conditions. Results to date by region also show an advantage over competitors for DEKALB®, including approximately a 9 bushels per acre yield advantage in the Central Corn Belt and approximately a 8 bushels per acre yield advantage in the Southern Region.

• Monsanto's Genuity® DroughtGard™ Hybrids system, which combines germplasm selected for its drought-tolerant characteristics, the drought-tolerant biotechnology trait and agronomic recommendations, has demonstrated strong performance in Ground Breakers℠ on-farm testing this season. Compared head-to-head to competitor hybrids marketed to the drought segment, DroughtGard™ Hybrids results across the Western Great Plains show approximately a 5 bushels per acre yield advantage to date.

In 2013, the company is targeting 36 million to 38 million acres for the Reduced Refuge Family. Genuity® VT Triple PRO® RIB Complete®, a convenient, single-bag refuge option, will join Genuity®SmartStax® RIB Complete® and Genuity® VT Double PRO® RIB Complete® corn blends as an additional product choice available for the 2013 season. The DroughtGard™ Hybrids system will also be introduced in 2013 in the Western Great Plains under stewardship requirements pending import approvals in key export markets.

In soybeans, the company reached a total of 32 million acres for its Genuity® Roundup Ready 2 Yield® product in the United States. The company expects the Genuity® Roundup Ready 2 Yield®platform growth to continue, targeting 39 million to 41 million acres in 2013.
In 2013, the company expects Latin America to again be a strong source of growth complementing the U.S. business, driven by the continued corn opportunity in Brazil and Argentina. In Argentina, the company has introduced Genuity® VT Triple PRO® corn as another product choice for farmers and expects the acceleration of the conversion of double stacks to the triple-stack product. Similarly, inBrazil, growers choosing to upgrade from single trait corn products to the first double stack, VT PRO™ 2, is also expected to accelerate. Complementing the continued strong adoption of the company's next-generation soy platform in the United States, the Intacta RR2 PRO™ soybean product is expected to be a driver of growth with expanded Ground Breakers℠ on-farm testing planned for 2013 as the product ramps up for commercial launch in Brazil and is introduced in other countries in coming years.

Vegetable sales, up in the fourth quarter compared to the prior year period, were down year-over-year. In 2013, the company expects the vegetable business to return to growth and continues to anticipate it elevating to its third largest crop platform in terms of gross profit in the coming years. Cotton revenue decreased year-over-year due in part to acre shifts to other crops.

The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products.

Segment sales for the quarter reached $895 million with gross profit of $250 million. For the fiscal year, the segment delivered net sales of $3.7 billion with gross profit of $986 million, with year-over-year increases that reflect strong performance from the company's Roundup®, lawn-and-garden and selective herbicides businesses.

About Monsanto Company

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. Monsanto remains focused on enabling both small-holder and large-scale farmers to produce more from their land while conserving more of our world's natural resources such as water and energy. To learn more about our business and our commitments, please visit: www.monsanto.com.

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