Monsanto FY 1Q16 Earnings Call Notes

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Monsanto Company’s (MON) CEO Hugh Grant on Q1 2016 Results – Earnings Call Transcript

Start with the topic of industry consolidation

“I’d like to start the talk today with a topic of industry consolidation right at the beginning. First, we have an incredible standalone growth plan backed by our commitment to innovation and the industry’s broadest, deepest and most important pipeline. Second, we expect industry consolidation to continue and it should given the opportunities for significant synergies and value creation and R&D across the industry.”

Two of our largest competitors are combining

“Yes, two of our largest competitors recently announced that they’re combining but they’re also two of our largest technology licensees and we expect that to continue given the opportunities of our unparallel pipeline.”

Currency headwinds have gotten worse thanks to actions in Argentina

“the headwinds from currency and commodity prices that we outline at the start of this fiscal year have not yet abated, and in fact currency has become a much stronger headwind with the recent events in Argentina. We are pleased to see the early decisive approach of the new President and we believe that his actions, particularly the lifting of export taxes in grain will create longer-term benefits for agriculture for which we’re well positioned to participate. However, the approximate 35% to 40% devaluation of the Argentine peso is expected to create an estimated $0.20 to $0.25 charge in Q2”

Industry challenges mean that integration with Syngenta would be even bigger boost

“A lot has changed in the industry since last spring. The industry has gotten tougher and I would say we expected some of that. The operating environment has become tougher as well. And I think because of that, there’s a greater need now than there was last spring to be able to quantify what that opportunity would look like and quantify what that integrated platform would look like. So, engagement becomes more important now than it did before with Syngenta and we haven’t seen much progress on that front.”

Dow Dupont will change things

“I can’t really speculate. They are big. I think this makes them the biggest in the world, but as Rob said they are also a customer. So we will continue our licensing efforts with them. There’s clearly going to be a disruption how you bring two entities of this size together but I think that’s really more for them to comment on than us.”

Maintain innovation pipeline in tough times

“We’ve talked since last spring we’ve talked about continuing to focus on our core and as the industry as a sector goes through a tough time, you need to double down on that. We’re managing our costs but at the same time we’re not shorting on innovation. And I think we are more successful in that innovation drive than anyone else in the space, so I kind of like the cards that we hold. But I think there’s going to continue to be consolidation in this space when you see what’s happening with commodity prices today.”

Brett D. Begemann

Pierre Courduroux

Dr. Robert T. Fraley