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NYSE:MON. MII Robel Chiappini November 4 th , 2008. Agenda. Business Overview Competition Investment Overview Valuation & Key Stats Risks VAR Questions?. Business Overview. Global provider of agricultural products for farmers – seeds, biotech traits, and herbicides

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nyse mon

NYSE:MON

MII

Robel Chiappini

November 4th, 2008

agenda
Agenda
  • Business Overview
  • Competition
  • Investment Overview
  • Valuation & Key Stats
  • Risks
  • VAR
  • Questions?
business overview
Business Overview
  • Global provider of agricultural products for farmers – seeds, biotech traits, and herbicides
  • $11.3 Billion in revenues for FY2008
    • Half of total sales came abroad
business overview cont seeds and genomics
Business Overview Cont.Seeds and Genomics
  • $6.3 Billion in sales last year
    • Corn and Soybeans account for 75% of sales
  • Germplasm
    • Hybrid corn, soybean, tomato, melon, and cucumber seeds
  • Biotechnology Traits
    • Enable crops to protect themselves from insects and herbicides
  • Seen as driver of future growth for company
business overview cont agricultural productivity
Business Overview cont.Agricultural Productivity
  • $5 Billion in Revenue for last year
  • Roundup brand herbicides – 82% of sales
competition
Competition
  • Global and Regional competition
    • Most of seed competitors are also licensees of MON’s germplasm or biotechnology traits
  • Roundup is market leader with great brand recognition
    • Integrated into seed business: Roundup Ready
investment overview
Investment Overview
  • World food demand
  • Industry Leadership
  • Management
world food demand increased corn and soybean demand
World Food DemandIncreased Corn and Soybean Demand
  • Income + Population = Need More Food
  • 25% increase in U.S. corn production by 2017
  • 30% increase in Soybean related products
world food demand closer look at soybeans
World Food DemandCloser Look at Soybeans
  • Most of Soybean production growth will come from Brazil and Argentina
    • MON’s existing and growing presence in both Nations: 20% of 2008 sales
world food demand increased demand for livestock
World Food DemandIncreased Demand for Livestock
  • More Wealth = More Meat
  • 27% increase in U.S. meat exports
  • How is this livestock going to be supported?
    • Main ingredients used in commercially prepared feed are corn and soybeans
world food demand limited supply of farmland
World Food DemandLimited Supply of Farmland
  • 9% increase in farmland across U.S.
  • Corn and Soybean producing states
      • IL – 15.5%
      • IN – 11.3%
      • NE – 18.7%
      • IA – 17.6%
      • MN – 11.5%
      • ND – 20.7%
      • SD – 17.7%
world food demand limited supply of farmland1
World Food DemandLimited Supply of Farmland
  • “Industry experts” – prices stable
  • Increased interest in agricultural real estate
  • Safe tangible investments poised to increase in popularity
  • “Perfect Storm” for Monsanto
    • Need for more efficient seeds with higher crop yields
industry leadership continued focus on r d
Industry LeadershipContinued focus on R&D
  • $3.5 Billion invested over past 5 years
  • BASF joint R&D collaboration
    • $1.5 Billion to focus on high-yielding and high tolerance crops
industry leadership competitive advantage
Industry LeadershipCompetitive Advantage
  • 1st generation vs. 2nd and 3rd generation
  • Higher quality seeds = higher prices
  • Patent protection through 2025
  • 35% top line growth in Roundup business on price increases
industry leadership product pipeline
Industry LeadershipProduct Pipeline
  • Roundup Ready 2 Yield Soybeans
  • YieldGard VT Triple Pro
  • YieldGard VT Pro
  • SmartStax Corn
  • Emerging Market Penetration
    • YieldGard stacked w/ Roundup Ready Corn 2
    • YieldGard Corn
management
Management
  • CEO (2003-Present): Hugh Grant
    • M.S. degree in Molecular Biology and Agricultural Zoology, MBA
    • With the company since 1998
  • EVP, Strategy and Ops (2007-Present): Carl Casale
    • B.S. degree in agricultural economics, MBA
    • With company since 2003
management aggressive acquisitions
ManagementAggressive Acquisitions
  • De Ruiter
  • DPL
  • Semillas Cristiani
  • Agroeste
  • Aly Particpacoes
valuation and key stats
Valuation and Key Stats
  • PPS: $87.34 (close monday)
  • Mkt Cap: 48.76B
  • P/E: 25.31
  • 52 week range: ($68.02-$145.80)
  • Div. Yield: 1.1%
  • A+ and A-1 short term
  • Trading at 5 times book value
  • ROE: 23.78%
  • Cash: $1.6B
risks
Risks
  • Tight Credit
  • Regulatory Approval
  • Negative Consumer perceptions
slide24
VAR
  • Melvin Woodson, Loan Originator, Country Mortgages Farm Credit
    • How are you helping farmers?
    • Slowdown in farming?
    • Historical Perspective?
  • Anonymous, Fed. Gov. with industry expertise
    • Market turmoil affect on farming credit?
    • Rates?
    • Is it hard to secure credit now?