KWS grows in all segments and increases the 2011/2012 annual forecast

February 24, 2012

Cereal and corn business exceeds plan – sales growth of around 10% expected for the KWS Group – staff development domestically and abroad

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KWS SAAT AG (ISIN: DE0007074007), one of the leading international seed companies, grew across all segments in the first six months of the 2011/2012 fiscal year (as of June 30). Buoyed by strong growth in the cereal and corn business, sales rose by 27% to €191.5 million (previous year: €151.1 million). The operating result (EBIT) improved by €8.4 million to –€31.2 million compared to the previous year (–39.6). It should be noted that the actual sales activity in the main business segments of corn and sugarbeet do not start until spring. In the first half of the financial year, the sales revenues of the KWS Group always reach just under one fifth of the annual sales. The result for the first half of the year is therefore primarily influenced by costs.

Cereal segment exceeds the previous year’s sales in the first half of the year

Boosted by the strong demand in the hybrid rye business and the significant increase in sales in Poland, revenues in the cereals segment rose to €78.1 (63.7) million. Thus the annual sales for 2010/2011 were exceeded in the first half of the year. Sales of winter wheat varieties confirmed the high level of the previous year. Overall, the consistently good price level for consumer cereals had a positive effect on segment sales.

Demand for corn continues unabated – sugarbeet segment stable

Sales in the corn business also developed better than expected. Driven by growth in the most important markets of North America, France and Germany, these sales increased by almost 34% to €71.5 (53.5) million. Sales in the sugarbeet segment increased by 22% to €37.2 (30.6) million. In particular, customers from the Netherlands and Russia made their seed purchases early.

KWS hires new employees and increases investments

To ensure long-term growth, KWS is hiring additional employees domestically and abroad. In the first half of the year, the number of workers rose to 3,885 (3,561). The investment course will continue. In the period under review, investments in fixed assets increased to €26.9 (20.2) million, while depreciation was significantly lower at €10.9 (10.2) million. The funds were used, among other things, for the acquisition of new breeding areas and buildings for the potato business in the Netherlands and for the expansion of production capacity in Argentina.

Outlook: Annual forecast is raised slightly

The higher-than-expected grain and corn business requires the KWS Group to adjust its sales and earnings forecast. “Due to the development in the first half of the fiscal year, we have increased our sales forecast slightly to around €940 (previously 910) million. The EBIT margin is expected to be just under 12%,” said Hagen Duenbostel, CFO of KWS SAAT AG.