Earnings Call Notes & Investor Presentations – Monsanto & Goldman Sachs – 10.8.2015

Monsanto (MON) CEO Hugh Grant said the company performed well in spite of a challenged macro environment and headwinds in the agricultural sector

“Despite weakening global currencies and commodity prices, we continue to view this as a time of opportunity, but a balance of innovation and discipline can grow our long-term competitive position. There’s always the possibility of fluctuations in the short-term market conditions, but that doesn’t define the overall opportunity or the continued long-term growth trends.  We fully recognize that these are tough times in agriculture and we are committed to continue to drive these advantages in our core business through renewed discipline and focus.”

But went on to say that secular demand for their end products remains healthy

“Macro demand remains robust. In fact, the world is consuming the current oversupply at a record pace with demand for corn growing by an average of 1.3 billion bushels per year over the past three years. More than 90% of this growth in demand over this timeframe has been driven by feed and underpinned by middle-class protein consumption, which we expect to continue.”

Monsanto (MON) CEO Hugh Grant said his firm was unable to acquire competitor Syngenta so they will move on and compete with their current assets

“Our competitive advantage leverages the know-how that we’ve assembled across our industry-leading capabilities in breeding, biotechnology, digital ag, next-generation biologicals and crop protection solutions. The proposed combination with Syngenta would have been complementary to our vision, but now we move confidently forward with our leading position in seeds and digital agriculture to pursue other options to build on our existing crop protection portfolio and in our partnerships.”

Monsanto (MON) COO Bret Begemann says the firm maintains a market share and technological lead over competitors  

“Regarding share, we held or grew share in every major market in 2015 and are seeing significant momentum with our license base in both the U.S. and Brazil.  We expect to repeat this share performance in 2016 and the early read on the U.S. branded corn yield data suggests that we have held or expanded our yield advantage for the 10th consecutive year.”

Monsanto (MON) COO Bret Begemann says the company wants to focus on the growing digital opportunity within agriculture

As we look at the next decade for digital agriculture, one thing is clear. This platform will change the way farmers manage their operation; it will change who we are as a company; and it will transform the industry. In fact, we are targeting expansion of the platform into new crops in the next three to five years, including, but not limited to, soybeans, wheat and canola. “    

Monsanto (MON) CFO Pierre Cordoroux said the company has increased its debt substantially to buyback its own stock 

With the successful completion of our $6 billion accelerated share buyback program, we’ve repurchased more than 10% of our share outstanding since June of 2014.  Our share count now stands at 468 million shares and our net debt to ongoing EBITA ratio sits at 1.1 at the close of the fiscal year.”

Monsanto (MON) CEO Hugh Grant says consolidation in the industry is inevitable

 We continue to see duplication in R&D in the sector. We continue to see the low effectiveness of R&D with some of our competitors and we continue to think that consolidation in this space is inevitable. So we are going to focus on the near term. We are going to drive the near-term performance of our business, but we are going to keep a weather eye on the horizon and we are going to keep our ears close to the ground because of the market realities.”



Goldman Sachs (GS) Chief Information Officer Marty Chavez says the firm is leveraging software to automate previously time intensive manual processes

“There are 160 steps and processes a company must do from the time leadership decides they want to do an IPO to the time the company starts trading on an exchange.  We are working on automating that entire process and making it more efficient with software.”
Goldman Sachs (GS) Chief Information Officer Marty Chavez said even though the company only has 35,000 employees, they hope to be able to transact with a larger base of customers by leveraging open architecture software
“We are greatly increasing the surface area of Goldman Sachs with API’s and software.  We will allow more people to transact with us.”