Highlights from Monsanto's Q1 Conference Call: Sees Total Acres on Par with 2012

Some highlights from Monsanto's

MON

Q1 earnings conference call:

Geographies:

The Latin America opportunity is tracking very well, setting up the full-year growth that we expect from this important element of our 2013 strategy.
The initial corn acres in Brazil's summer season were lower than last year, but the market is set for one of the largest-ever second season bacrenia [ph] crops, keeping total acres on par with last year
Even with some early rain delays in Argentina, the corn crop is on target with our planning projections.
A portion of the uptick in earnings in the quarter captures the fact that we shipped more corn and soy volume in Q1 than we did last year.

Financials:

Given the uncertainty and timing of the legal system and the opportunity from alternate business solution, we've decided the best way to address the potential unpredictability and provide clarity for the business and outlook is to exclude any contribution from the Brazil Round Up Ready 1 trait from our Cotton earnings and cash flow guidance.
In the first quarter, the Seeds & Genomics segment gross profit was nearly $200 million higher than prior year.
If you take Seeds & Genomics and Ag Productivity together, our increased guidance today reflects a step up in combined full-year gross profit in the range of $7.65 billion,
Quarterly free cash flow was $1.47 billion compared with $856 million last year.

R&D:

We've advanced 18 projects plus three additional projects moving into our Ground Breakers program.
We are positioned to launch a major new technology effectively every year through the end of this decade.
Breeding is a cornerstone capability that differentiates us competitively and sets the tone for our emphasis on yield. For example, the new Cotton varieties we've launched are consistently out-yielding the competitors.
We're using our Ground Breakers On-Farm Testing Program to set up successful commercial introductions for our next wave of seed product upgrades.
New additions to the pipeline reflect our technology leadership in action. As we're focused on third and fourth generation products, while most in the industry are still pursuing first-generation technologies.
We've used our core Genomics knowledge to add two new R&D platforms this year: biological and IFS.
We're able to take advantage of the advances in RNAI technology and naturally occurring processes to create topical applications from molecules found in nature. I believe that these can facilitate expedited regulatory approvals, lower cost product development and ability to benefit markets where biotech traits aren't allowed today.
The ability to combine genomics, biology and data management capability is driving yield in spectacular new ways. We're on the leading edge of that.

Q & A:

(*Q - Don Carson, Susquehanna Financial Group*) A question on your guidance. You bumped up your gross profit guidance, Pierre, by $100 million, but Agree Productivity is up $200 million to $300 million. So what or where is the reduction in Seed and Genomics? Is it all in the Brazilian Soy royalty collections? And of that $0.20 to $0.25 full-year hit on Brazil, how much did you take in the first quarter?
(*A - Pierre Courduroux, CFO*): As far as the first quarter is concerned and Soybeans are concerned, a fairly large part of the year-to-year reduction we are seeing in the first quarter is linked to Brazil and the Soybean business.
(*Q - Frank J. Mitsch, Wells Fargo Securities*): Thank you. Hey, following up on the little bump you're getting on the Roundup side with generics staying at a little bit of an elevated level here, when do you – how long do you anticipate that lasting? When would you anticipate that to cycle back down to more normal levels?
(*A - Hugh Grant, CEO*): I think we're a lot more agile and nimble and ready for that downturn when it occurs. And the premium that we're charging versus the Chinese is still very moderate.