KWS
   
 

The KWS Group continues its profitable growth – Profit beats expectations

Operating income (EBIT) surpasses original expectations – Technology platform expanded – Dividend of €3.00 per share proposed – Handover to next generation at Arend Oetker – Further growth anticipated for fiscal 2015/2016

KWS SAAT SE (ISIN: DE0007074007) and its international subsidiaries continued with their profitability in fiscal 2014/2015. Despite the tough market environment and planned higher expenditure for research and development (R&D) and distribution activities, the KWS Group showed operating income of €138.0 ( previous year: 138.4) million. As already announced on September 1, it was thus above the original expectations and, at 10.9%, markedly higher than the long-term EBIT goal of 10%. Net sales at the KWS Group rose by 7.0% to €1,260.4 (1,178.0) million.

 

Unlike in the previous year, net sales and expenses of the 50:50 joint ventures are not allowed to be recognized in the KWS Group’s statement of comprehensive income due to first-time application of International Financial Reporting Standard 11 (IFRS 11). The figures from the previous year have thus been adjusted to enable comparison in the current Annual Report.

In € millions

Net sales

EBIT

 

2014/2015

2013/2014

2014/2015

2013/2014

According to segment reporting

1,260.4

1,178.0

138.0

138.4

According to IFRS statement of comprehensive income
(application of IFRS 11)

986.0

923.5

113.4

118.3

Internal corporate controlling will still take into account the net sales and expenses from the 50:50 joint ventures. To enable better assessment and greater transparency of the individual segments’ operating performance and our capital expenditure, the following figures include, as in previous years, the KWS Group’s 50:50 joint ventures proportionately.

Segment reporting: All segments with an EBIT margin above 10%

The Corn Segment increased its net sales by 5.5% to €754.4 (714.9) million in the year under review. There were considerable boosts to growth in particular in North and South America, while cultivation area declined overall worldwide. Adjusted for exchange rate effects – appreciation of the US dollar and Argentinean peso and depreciation of the Brazilian real, Russia ruble and Ukrainian hryvnia – net sales were €736.0 million. Selling and research expenses rose by €31.7 million over the previous year, giving income for the segment (EBIT) of €84.2 (100.9) million, or an EBIT margin of 11.2 (14.1)%.

The Sugarbeet Segment, which also includes KWS’ seed potato business, grew net sales by 11.2% to €390.5 (351.1) million. Of that figure, sugarbeet seed business accounted for €364.4 (318.5) million and seed potato business for €26.1 (32.6) million. In particular, positive trends in North America, Russia, Turkey and France contributed to this strong overall rise. The segment’s income (EBIT) increased above-proportionately to €93.0 (70.2) million. In particular the strong performance in North America, positive exchange rate effects and lower allowances on receivables had a positive impact, with the result that the significant increase in selling and research expenditure was more than compensated for. The EBIT margin was 23.8 (20.0)%.

Net sales in the Cereals Segment increased by 3.7% to €111.3 (107.3) million. That was an good performance despite low consumer prices for wheat, barley and rapeseed; net sales of barley seed group-wide even increased by around 50%. The complete acquisition of MOMONT added about €6 million to revenue in the year under review. Lower net sales of high-quality hybrid rye varieties and the planned increase in function costs resulted in a decline in the segment’s income (EBIT) to €12.0 (17.1 million), giving an EBIT margin of 10.8 (15.9)%.

All cross-segment costs, such as expenditure for all central functions at the KWS Group and long-term research projects, are carried in the Corporate Segment. Its income is therefore always negative. Due to the increase in R&D spending, its EBIT in fiscal 2014/2015 was
€ –51.2 (–49.7) million.

“Despite some turbulence in agricultural markets and a reduction in cultivation area in many places, we were able to stay on our growth path in the past fiscal year,” said Hagen Duenbostel, Chief Executive Officer of KWS SAAT SE. “Our objective is still to develop the company sustainably by further expanding our research and breeding activities to develop strong, competitive varieties.” The R&D budget rose as planned by 15.9% to €173.8 (150.0) million in fiscal 2014/2015, corresponding to an R&D intensity of 13.8 (12.7)% relative to net sales. The KWS Group obtained 429 (336) marketing approvals for new varieties across all crops, so the product pipeline is very well filled. At the same time, global distribution structures were expanded further as part of the company’s continuing expansion of its international business operations. Selling expenses consequently increased by 11.5% to €236.7 (212.3) million. Net income for the year was €84.0 (80.3) million.

Additional licensing agreements

Additional long-term licensing agreements have been concluded with Syngenta in order to strengthen the technology platforms of KWS and Vilmorin & Cie, listed company of Limagrain. These agreements authorize KWS and Vilmorin & Cie and their common joint ventures GENECTIVE and AGRELIANT on a separate and independent basis to make commercial use of current and future genetically improved corn traits developed and marketed by Syngenta. The upfront payments made by the respective companies total 200 million US dollars. Further payments may mature in the long run, depending on regulatory approvals. The agreement complements and widens KWS’ future product portfolio in addition to the existing long-term trait licensing agreements.

“As an independent seed company it has always been our primary desire to deliver the best products to the farmer. With this renewed agreement we will be able to meet the requirements of our customers, based on the global strength of our corn germplasm and a wide range of competitive GM corn traits delivering sustainable solutions. Furthermore the agreement allows GENECTIVE to follow its open architecture strategy of combining its own corn GM traits with leading trait platforms in the industry,” commented Hagen Duenbostel.

Capital expenditure increases by 70%

The KWS Group invested a total of €140.6 (82.6) million in fiscal 2014/2015, around €58 million more than in the previous year. The focus was on the acquisition of the remaining 51% share in the French seed company SOCIETÉ DE MARTINVAL S.A. (MOMONT) and measures to support planned future growth, such as establishment of a corn processing plant in Serbia and various projects to further expand the Einbeck location.

Unchanged dividend of €3.00 a share proposed

The Executive Board and the Supervisory Board intend to continue the earnings-oriented dividend policy, which envisages a payout of 20% to 25% of the KWS Group’s net income for the year, for fiscal 2014/2015. Their joint proposal on the appropriation of the profits to shareholders is to keep the dividend unchanged at €3.00 a share. Subject to the consent of the Annual Shareholders’ Meeting on December 17, 2015, a total of €19.8 million from the net retained profit of KWS SAAT SE will therefore be distributed.

Handover to next generation at Arend Oetker

Dr. Arend Oetker has informed KWS that he has transferred 95% of the shares of his asset management company in equal parts to the next generation of the family – Marie Schnell, Johanna Oetker, Leopold Oetker, Clara Oetker and Ludwig Oetker – as part of an anticipated succession. This company, Kommanditgesellschaft Dr. Arend Oetker Vermögensverwaltungsgesellschaft mbH & Co., holds 25% of the voting shares in KWS SAAT SE. Arend Oetker has transferred entrepreneurial responsibility for the KWS shares held by the Oetker family to his daughter Dr. Marie Theres Schnell, Munich.

Arend Oetker has pooled his shares in KWS with those of the founding family Büchting since 1994. Arend Oetker’s heirs have now notified KWS that they have likewise joined this pool effective October 7, 2015. The pool still holds the majority of voting rights in KWS SAAT SE, meaning that the families Büchting and Oetker ensure the company’s independence. Both families intend to continue their joint involvement over the long term.

Forecast: Continued sustainable earnings outlook for 2015/2016

Application of International Financial Reporting Standard 11 (IFRS 11) means that the forecast for the KWS Group’s statement of comprehensive income will no longer include the net sales and expenses of the 50:50 joint ventures. In its future financial reporting, KWS will mainly use this forecast as a benchmark and report on the KWS Group’s net sales and profit in accordance with the new standard.

“Our strategic focus is still on expanding our business operations in our young growth markets and increasing our already high level of competitiveness in our core markets,” said Eva Kienle, Chief Financial Officer of KWS SAAT SE. “We’ll therefore further increase our expenditure on research and development and distribution activities.” These measures will be supported by extensive investment projects. A particular focus of that will be on expanding and modernizing production plants in the growth markets of Eastern and Southeastern Europe and in the U.S. and on expanding research and development facilities at several locations. All in all, the Executive Board expects net sales to grow further in a range between 5% and 10% and the EBIT margin to be at least 10.5% in fiscal 2015/2016.

Expectations for the 2015/2016 fiscal year

Forecast In € millions

Sales (e)
for 2015/2016

EBIT margin (e)
for 2015/2016

According to IFRS statement of comprehensive income
(application of IFRS 11)

1,035 - 1,085

> 10.5%

You can find the Sustainability Report at www.kws.com/sr2015.

 

 

Contact:

Georg Folttmann

Head of Supervisory Board´s Office

Phone +49-5561-311-640

Mobile +49-173-2910-520

georg.folttmann@kws.com

 

KWS SAAT SE

http://www.kws.com

 

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