Speaking at an investor meeting in London last week, Monsanto chairman Hugh Grant outlined the key factors expected to drive the companys growth through 2010.
"The leadership we enjoy today is not accidental," said Grant. "It represents our strategic decision to orient our business around our seeds and traits platform, and then passionately execute against that strategy literally farm-by-farm and field-by-field.
"While our early investment gave us a head start, it is our performance backed by the industrys leading R&D pipeline, and coupled with our principles of relentless innovation, commercial execution and delivery against our commitments that will help us build on our leadership in the years ahead."
Monsanto is a leading biotech group, and the issue of GM (genetically modified) approval within the EU is one of the most contentious in agriculture. The recent announcement that US authorities had traced amounts of unapproved genetically modified (GM) food in samples of rice prompted the EU to clamp down on all imports from the US.
The immediacy of this action illustrated the stringent controls the EU has in place to guard against unauthorised products entering the food chain, and also reflected consumer fears over the technology.
Nonetheless, Monsanto's management team identified six elements that it believes will contribute to the growth of the companys seeds and traits business between now and 2010. These include its US and ex-US corn seeds and traits business, its international traits business, its cotton business, its Seminis fruit and vegetable seed business and its R&D pipeline.
By executing its strategy against these six contributors, said Grant, Monsanto will not only be able to deliver value to its farmer customers, but expects to grow the profitability of the business, increasing gross profit as a per cent of sales from 48 per cent today, to a target of 51 to 53 per cent by the end of the decade.
In addition, Monsanto used the London meeting to review the companys key financial projections. Executive vice president and chief financial officer Terry Crews noted that the company continues to expect that its full-year 2007 EPS guidance, both on a reported and ongoing basis, is expected to be in the range of $1.50 to $1.57.
"Our projected 15 to 20 per cent growth rate for ongoing EPS in 2007 reflects our confidence in the substantial organic growth potential of our seeds and traits, even in a dynamic agricultural market," he said.
"If we accomplish our objectives over the mid-term, we have a unique window of opportunity to extend our leadership and reward our shareowners for their investment in our company."
Crews also underscored that the company still expects guidance for free cash flow for fiscal year 2007 will be in the range of $875 million to $950 million. The company expects net cash provided by operating activities to be in the range of $1.3 billion to $1.4 billion, and net cash required by investing activities to be approximately $500 million for fiscal year 2007.