Seeds and traits business continues to deliver against gross profit targets while Roundup herbicide business faces lower volumes in the U.S. growing season ST. LOUIS, May 27, 2009 /PRNewswire-FirstCall/ -- Monsanto Company (NYSE: MON) announced that it is on track to meet the lower end of its previous ongoing earnings guidance for fiscal year 2009 as it balances continued outstanding performance from its seeds and traits business against stronger-than-expected competition for its Roundup agricultural herbicides business. For fiscal year 2009, Monsanto now expects ongoing earnings per share (EPS) guidance of approximately $4.40 per share, the lowest point in its previously announced range of $4.40 to $4.50. The results would translate to approximately 20 percent growth year over year, and the company's fifth consecutive year of 20 percent or greater earnings growth. Monsanto also noted that free cash flow is now expected to be approximately $1.4 billion for fiscal year 2009, reflecting $2.4 billion in operating cash and $1 billion in investing cash. (For a reconciliation of ongoing full year EPS and free cash flow, see note 1.) Monsanto expects its seeds and traits segment to deliver gross profit toward the upper end of its prior guidance of $4.4 billion to $4.5 billion in fiscal year 2009. The projected increase of more than 15 percent year over year reflects the combination of greater value, growth in the company's branded seed businesses and expanded use of Monsanto's trait technologies. With strong farmer demand for the company's higher-yielding seeds and trait technologies, Monsanto projects that its corn and soybean businesses combined could generate $3.5 billion in gross profit in fiscal year 2009, or an approximate 20 percent increase compared with the prior year. The company now believes the Roundup and other glyphosate business will generate approximately $2 billion in gross profit, down from its previous forecast of $2.4 billion. The continued strong performance of the company's seeds and traits business, combined with lower spending for marketing, administrative functions and incentives are helping to offset the expected decline in the profitability of Monsanto's Roundup business and enabling the company to maintain its full-year guidance. "Even in the face of a $400 million decline in our expected gross profit from Roundup, we can see a path to our fifth consecutive year of 20 percent or greater earnings growth and a lift in gross margins this year of more than three percentage points for the entire company," said Hugh Grant, Monsanto chairman, president and chief executive officer. "Regardless of the business or world area, our strategy is focused on delivering value to farmers while maximizing share and penetration," Grant said in prepared remarks at the Sanford Bernstein conference in New York today. "We've held true to this strategy in one of the most dynamic and competitive years that we've seen this decade, and this underscores the value that farmers place on our seeds, our traits and our continuous investment in delivering new innovation to them." Because of the faster-than-anticipated decline in Roundup, the company now expects to deliver third-quarter earnings, both on an ongoing and as-reported basis, of approximately $1.15 per share. For the second half of fiscal year 2009, the company expects that an approximate 10 percent growth in gross profit for its seeds and traits segment combined with lower spending will offset the potential 20 percent gross profit decline in Roundup. Weather and Competition Pressuring Volume for Roundup Business Cooler, wetter weather in some parts of the U.S. Corn Belt has delayed the application timing of Roundup and other glyphosate-based herbicides over the top of Roundup Ready crops this spring. At the same time, generic and other branded competitors continue to aggressively move larger-than-expected volumes of lower-priced material into the marketplace. While Monsanto's supply of Roundup in the distribution channel is within its historical range, the application of the product is half that compared with product use at the end of May 2008. Supply of glyphosate is now exceeding demand globally. In the United States, Monsanto has chosen to focus on protecting the premium of its high-performance products, which is having the effect of reducing volumes. The company now anticipates total volumes sales of approximately 200 million gallons, with a net average selling price for its approximately 110 million gallons of branded Roundup globally of more than $20 per gallon. "Farmers' use of Roundup has made it the keystone for weed control in the Roundup Ready system. Its extraordinary growth in the last two years has allowed us to maximize the free cash generated and return that value to shareowners through a combination of investments, dividends and share repurchases. It also has allowed us to reinvest in our seeds and traits pipeline to bring new yield-enhancing solutions to farmers. We predicted that Roundup was hitting its peak in terms of gross profit contribution this year, and that forecast has proven to be accurate, albeit at a lower level than we originally forecast," Grant added. U.S. Seeds and Traits Business Remains on Track Despite slower planting rates in parts of the Midwest, Grant noted that the U.S. seeds and traits business remains on track to deliver up to one point of market share growth in each of its DEKALB and American Seeds branded corn seed businesses, and one point of share growth in its Asgrow soybeans. The company's triple-stack mix remains above 70 percent, with an estimated 32 million acres of triple-stacked corn sold or licensed by Monsanto in the United States. Overall, corn gross profit is expected to grow by approximately 20 percent to $2.6 billion for the full year, with a 1-to-2 percentage point lift in margins to 62 to 63 percent. Soybean gross profit is expected to grow by better than 20 percent with margins of roughly 62 percent. Cotton and vegetable seeds are on track to meet their goals of approximately $300 million and $450 million in gross profit, respectively. Selling, general and administrative (SG&A) expenses for the full year are trending toward 18 percent of sales, while research and development (R&D) should remain in the area of 10 percent of sales. The expected corporate tax rate for the full year is 28 to 29 percent. "With the seeds and traits side of the business accelerating, our management team is focusing on how best to manage our Roundup operations in a way that optimizes returns at a lower percentage of overall revenue," Grant said. "That process inherently will slow our overall growth in 2010 even as farmers will have access to larger volumes of our new technologies next year." Grant said that the company will speak more specifically to the longer-term outlook for Roundup during its third-quarter earnings call on June 24. 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: http://www.monsanto.com/. Cautionary Statements Regarding Forward-Looking Information: Certain statements contained in this release are "forward-looking statements," such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company's actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: continued competition in seeds, traits and agricultural chemicals; the company's exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public acceptance of biotechnology products; the success of the company's research and development activities; the outcomes of major lawsuits; developments related to foreign currencies and economies; successful operation of recent acquisitions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company's estimates related to distribution inventory levels; the company's ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters and accidents on the agriculture business or the company's facilities; and other risks and factors detailed in the company's most recent reports on Forms 10-Q and 10-K. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention or obligation to update any forward-looking statements or any of the factors that may affect actual results. Notes to editors: Roundup, Roundup Ready, DeKalb and Asgrow are trademarks of Monsanto Company and its wholly owned subsidiaries. References to Roundup herbicides in this release mean Roundup branded herbicides, excluding lawn-and-garden herbicide products. Monsanto Company Selected Financial Information (Dollars in millions) Unaudited 1. Ongoing EPS and Free Cash Flow: The presentations of ongoing EPS and free cash flow are not intended to replace net income (loss), cash flows, financial position or comprehensive income (loss), and they are not measures of financial performance as determined in accordance with generally accepted accounting principles (GAAP) in the United States. The following tables reconcile ongoing EPS and free cash flow to the respective most directly comparable financial measure calculated in accordance with GAAP. Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations. The following is a reconciliation of EPS to ongoing EPS for the twelve months ended Aug. 31, 2009. Fiscal Year 2009 Guidance Diluted Earnings Per Share $4.23 - $4.33 Income on Discontinued Operations ($0.02) In-Process R&D Write-Off Related to the Aly Participacoes Ltda. Acquisition $0.19 Diluted Earnings Per Share from Ongoing $4.40 - $4.50 Business Reconciliation of Free Cash Flow: Free cash flow represents the total of cash flows from operating activities and investing activities. With respect to the fiscal year 2009 free cash flow guidance, Monsanto does not include any estimates or projections of Net Cash Provided (Required) by Financing Activities because in order to prepare any such estimate or projection, Monsanto would need to rely on market factors and conditions that are outside of its control. Fiscal Year 2009 Guidance Net Cash Provided by Operating Activities $ 2,400 Net Cash Required by Investing Activities (1,000) Free Cash Flow $ 1,400 Net Cash Required by Financing Activities N/A Effect of Exchange Rate Changes on Cash and Cash Equivalents N/A Net Increase (Decrease) in Cash and Cash Equivalents N/A Cash and Cash Equivalents at Beginning of Period N/A Cash and Cash Equivalents at End of Period N/A Contact: Lee Quarles (314-694-2330) DATASOURCE: Monsanto Company CONTACT: Lee Quarles, +1-314-694-2330, for Monsanto Company Web Site: http://www.monsanto.com/

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