Monsanto Company Earnings Call Insights: Cash Flow, Summer Corn Season

On Wednesday, Monsanto Company (NYSE:MON) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Cash Flow

Vincent Andrews – Morgan Stanley: Just wondering – I guess, I’ll actually ask a non-fundamental question, you generated or you now $1.2 billion in net cash and your cash balance grew by $711 million and your dividend is $642 million, I’m just curious, I know you bought some businesses as well this year, I’m just curious, why not raise the dividend more than you have or what should we be thinking about along those lines?

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Pierre Courduroux – SVP and CFO: The way we have been thinking about our deployment of cash has been very consistent over the last couple of years, I mean we are committed to growing our business and as you mentioned we’ve been making some investments and acquiring a couple of companies and this is still an area we are actively looking into and in terms of the return of the cash to the share owners, our board allowed us another $1 billion buyback plan and as we mentioned, we’ve also raised our dividends by 25% in the previous quarter. So we are very, very conscious of returning the cash to our share owner in a disciplined way as well and one of the key things is the sustainability of the commitments we make, so when we raise our dividend 25%, we are very committed to continuing this growth and being very focused on that, but we also have to manage the opportunities we have on the acquisition side, so it’s always a balance we have to maintain. We’ve been very active last year, I mean, actually over the last couple of years, I mean, actually over the last couple of years we returned twice about $1.1 billion to our shareowners in between dividends and buy back that’s really something we are focused on.

Summer Corn Season

Robert Koort – Goldman Sachs: I think maybe Brett commented that the full season corn numbers in South America might be a little bit lower as farmers plant more soy acreage. So wondering, if you could just talk about the profit implications there? Then secondly what you might expect in the summer corn season and maybe the relative intensity of hybrid corn in both those seasons?

Hugh Grant – Chairman, President and CEO: I think you really hit the heart of one of the issues that Brett talked to this morning. So I’ll ask him to say a few words, but the way I think about this is we feel really great about the season and as Pierre mentioned we see the first quarter shaping up to be very, very significant. So if you don’t lose sleep in the quarter and you look at the total season in Latin America, it shaped up real nice. Brett maybe a few words between first season and second season corn.

Brett D. Begemann – President and Chief Commercial Officer: Bob, I think that’s something that’s really relevant in South America, is the fact that farmers have that option to look both at first and second season. So with the commodity prices pointing them towards soybeans in the first season, many of them are going that way, which will put pressure on corn acres but they have the opportunity to come back in the second season where we expect that acres will rebound in corn particularly in Brazil to where you won’t see such a substantial reduction for the whole year. But to Hugh’s point the season is setting up very well as we track our business looking at how our orders match up with our expectations for our first quarter, we are very much on track.

A Closer Look: Monsanto Earnings Cheat Sheet>>

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