Successful business performance for KWS – Full-year targets confirmed after end of the third quarter 2015/2016
Revenues increased after nine months – Earnings in line with expectations – Full-year targets expected to be met
KWS†SAAT†SE (ISIN: DE0007074007), one of the world’s leading seed breeding companies, reports a rise in net sales for the KWS Group of €833.2 million, or 7.1%, after the end of the first nine months of fiscal 2015/2016. Income (EBIT) was down year on year due to negative currency effects, higher costs of sales and increased expenditure on research & development and distribution totaling €128.7†(140.1)  †million. After the end of the important third quarter, KWS confirms the full-year targets: Net sales growth will be 5% to 10%; the EBIT margin is expected to be at least 10%.
“We’re delighted that our customers are again putting their trust in KWS’ good variety performance this fiscal year and that we’ve therefore been able to maintain our market position,” said Eva Kienle, Chief Financial Officer of KWS SAAT SE, summing up the third quarter, which is particularly important due to the spring sowing season. “The stable earnings forecast of an EBIT margin of at least 10% by the end of the fiscal year, despite the challenging current market environment, rounds off these successful results.” The expansion of research & development and distribution were continued during the first nine months. Spending on this increased by €21 million, consistent with expectations. In contrast, administrative expenses increased only slightly and below-proportionately relative to net sales. Increased costs of sales and negative currency effects also influenced the operating income (EBIT). It fell year on year to €128.7 (140.1) million. Total capital expenditure after nine months was €68.3†(95.6) million. This figure was significantly higher in the previous year as a result of the acquisition of the remaining shares in SOCI…TE DE MARTINVAL S.A. (MOMONT).
Segment reporting  : all product segments are growing
Despite the still strained economic situation and declines in cultivation area in many regions, the Corn Segment grew its net sales in the first three quarters to €648.5 (596.9) million, an increase of 8.6% over the previous year. Despite the depreciation of the Brazilian real, net sales in Brazil grew in euro terms. Business in North America, helped in part by exchange rate effects, and the positive trend in rapeseed business in Europe also contributed to the rise in net sales. KWS was largely able to defend its market shares in Europe, despite regional drops in net sales, such as in France. The planned high level of expenditure for expanding distribution and intensifying breeding work, acquisition of the remaining shares in RIBER KWS SEMENTES in Brazil, as well as currency developments had a negative influence on segment income. The segment’s income at the end of the third quarter was thus down year on year at €71.4 (87.8) million.
Net sales at the Sugarbeet Segment rose by 14.8% in the first nine months of the current fiscal year to €331.4 (288.6) million. KWS was able to grow net sales in many markets. In Eastern Europe and Turkey in particular, market share were gained and business in North American also went well thanks to constantly high variety performance. In Europe, the increase in cultivation areas also had a positive effect on net sales development. The segment’s income rose by 22.2% to €108.3 (88.6) million. Positive currency effects from the performance of the US dollar and lower write-downs of receivables also contributed to this.
The Cereals Segment’s net sales after the first nine months of the fiscal year were €104.3†(98.2) million and thus slightly up year on year, despite declining net sales from hybrid rye. This increase is largely attributable to the acquisition of the remaining shares in MOMONT (SOCIET… DE MARTINVAL S.A.) last year and the positive net sales trend for winter barley. Due to the increased expenditure on research & development and distribution in line with planning, as well as the lower contribution margin from hybrid rye business, the segment’s income after the third quarter was €16.7 million and thus below that of the previous year (€20.9 million).
The net sales in the Corporate Segment are generated primarily by the farms. In the first nine months of the fiscal year they totaled €3.3 (3.4) million. In addition, all cross-segment costs for the central functions of the KWS Group and basic research expenditure are allocated to this segment. The segment’s income is thus always negative, and was −€43.4†(−40.5)†million.
Forecast: full-year targets of KWS Group are likely to be met
In view of the business performance so far in the first nine months, KWS confirms the annual targets for the whole of fiscal year 2015/2016. Even in a tough market environment where cultivation areas are falling, KWS will largely be able to maintain or expand its market positions. Net sales are therefore expected to grow by between 5% and 10%. An EBIT margin of at least 10% is anticipated.
KWS will continue to promote product development. Expenditure on research & development will therefore rise as planned and will be around 17% of net sales. Capital expenditure will again exceed €100 million this fiscal year, due to expansion of research and production structures and the acquisition of trait technology in the first quarter.
KWS is one of the world’s leading plant breeding companies. In fiscal 2014/2015, 4,700 employees in 70 countries generated net sales of € 986 million and earnings before interest and taxes (EBIT) of € 113 million. A company with a tradition of family ownership, KWS has operated independently for some 160 years. It focuses on plant breeding and the production and sale of seed for corn, sugarbeet, cereals, rapeseed and sunflowers. KWS uses leading-edge plant breeding methods to continuously improve yield and resistance to diseases, pests and abiotic stress. To that end, the company invested € 174 million last fiscal year in research and development, 17.7 percent of its net sales. For more information: www.kws.com. Follow us on Twitterģ at https://twitter.com/KWS_Group.
*All figures exclude the joint ventures AGRELIANT GENETICS LLC., AGRELIANT GENETICS INC., GENECTIVE S.A.
Wolf-Gebhard von der Wense
Head of Investor Relations
Phone +49 (0) 5561 311 968
Mobile +49 (0) 151 18 85 56 73
KWS SAAT SE