KWS

KWS Group kicks off fiscal 2016/2017 with growth in net sales and income

Operational growth in the first quarter – Revenue increases in particular in Argentina and Brazil – Net income for the period influenced positively by special effects – Additional expenditures reduce EBIT margin expectations for the fiscal year as a whol

The KWS Group has increased its net sales by 13.7% to €133.3 million in the opening quarter of fiscal 2016/2017. Net income for the period before taxes (EBIT) was €–28.8†million, an improvement of 38.7%. Corn and soybean seed business in Brazil and Argentina was expanded. Winter rapeseed business in Europe also contributed to the increase in net sales. However, winter cereals business in Europe declined slightly. Due to additional expenditures, KWS anticipates an EBIT margin of between 10.0% and 10.5%.

"We are pleased about our overall good performance in the first quarter. However, the major part of the fiscal year is still ahead of us. How the spring sowing season goes in our core markets is crucial to KWS’ success in the year as a whole,” said Eva Kienle, Chief Financial Officer of KWS†SAAT†SE, about the published results. Higher revenues were accompanied by a moderate rise in the cost of sales. Among other things, the fact that the company no longer has to pay license fees for corn technology in Argentina had a positive impact. While selling expenses remained stable year on year, expenditure on research & development rose by around 9%. Administrative expenses declined. As to the other operating expenses, negative exchange rate effects had a far lower impact on net income for the period than in the previous year. Inventory write-downs increased slightly due to the rise in inventories. All in all, EBIT for the first quarter improved by 38.7%. It was €–28.8 million as of
September 30, 2016.

Segment reports: Corn and oil seed business help increase net sales

The Corn Segment grew its operational business in the first quarter, increasing its net sales by nearly 42% to €71.4†(50.3)†million. The strongest growth in net sales was from corn business in Argentina, despite significant negative exchange rate influences. An increase in local corn cultivation area helped in this regard. Revenue also increased in corn and soybean seed business in Brazil. The segment’s income benefited among other things from lower negative exchange rate effects and the fact that the company no longer has to pay license fees in Argentina. It totaled €–24.5 (–45.2) million. The positive trend in the segment’s income in the first quarter does not allow any conclusions to be drawn about earnings for the entire fiscal year due to the quarter’s slight importance for the year as a whole. The lion’s share of net sales at the segment is generated in the third and fourth quarters (January to June).

Net sales at the Cereals Segment fell by around 11% to €50.0 (56.4) million. Rapeseed business in the first quarter was a little lower year on year; some net sales shifted to the second quarter. Revenue from rye declined slightly and the performance of the British pound also had a negative impact on the segment’s net sales. However, barley business remained stable and revenue from wheat was increased. As a consequence of the decline in net sales, the segment’s EBIT fell to €11.9†(15.7)†million.

Net sales in the Sugarbeet Segment remained at the good level of the previous year and totaled €12.8 (12.8) million. Revenues in the first quarter come mainly from the sale of sugarbeet seed in the U.S., Chile and the Middle East. The segment’s income improved largely due to lower negative exchange rate influences and was €–13.1†(–16.4) million.

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. A slight increase in research expenditures and the fact that, unlike in the previous year, there were no positive exchange rate effects resulted in an EBIT of
€–20.2 (–16.8) million.

Reconciliation table

in € millions

Segments

Reconciliation

KWS Group1

Net sales

135.6

–2.3

133.3

EBIT

–45.9

17.1

–28.8

1) Excluding the shares of the equity-accounted companies AGRELIANT GENETICS LLC., AGRELIANT GENETICS INC. and KENFENG – KWS SEEDS CO., LTD.

Forecast: Net sales growth below 5% – Reduced EBIT margin expectations

KWS does not expect to see any easing in the economic climate this fiscal year. The competitive situation remains challenging, especially in its core market of Europe. The KWS Group therefore still expects its growth of net sales below 5%. Additional expenses as a result of newly planned distribution projects, the rising cost of sales and higher anticipated write-downs of inventories due to the above-average increase in inventories in the first quarter will reduce expected earnings at the end of the fiscal year. KWS expects an EBIT margin of between 10.0% and 10.5%. Capital spending is forecast at €100†million and the R&D intensity at around 17%.

Contact:

Wolf-Gebhard von der Wense
Head of Investor Relations

Phone: +49-5561-311-968
Mobile: +49-151-188 55 673
wolf-gebhard.vonderwense@kws.com

KWS SAAT SE
http:// www.kws. com

Please choose your country


KWS