KWS starts double-digit sales growth in 2012/2013 fiscal year

November 28, 2012

Sales increase by 22% to €113.1 million - Brazil contributes to revenues for the first time - Great demand in the grain business - Investments continue at a high level

KWS SAAT AG (ISIN: DE0007074007), one of the world’s leading seed breeding companies, had a pleasing start to the new 2012/2013 fiscal year (as of June 30). Sales of the KWS group rose by 22% to €113.1 (previous year 93.1) million. One-third of the increase comes from Brazil, where KWS has been in operation since July 2012. The operating profit, which is regularly negative in the first two quarters, due to KWS’s seasonal business development, was at the same level as the same period of the previous year at –€22.2 (–22.6) million. As in previous years, the cereal business was the main revenue driver in the period from July to September, at over 60%. Corn and sugarbeet, our main growth drivers, are, however, only seeded in spring.

Rye in high demand - contra-seasonal corn business had a good start

High demand on the consumer cereals market led farmers to expand their acreage, especially for rye. KWS benefited from a significant increase in demand for the high-yielding hybrid varieties. Sales of winter wheat and winter barley varieties also increased significantly. Sales in the the cereals segment rose to €69.5 (55.5) million in total. Segment results improved significantly to €27.6 (18.9) million.

The Corn segment profited for the first time from the new activities in Brazil. The winter grain rapeseed sales, however, were down on the previous year due to the weather. In total, the revenues in the corn business rose to €32.7 (25.4) million. The segment result of –€24.4 (–24.0) million was at the level of the previous year.

The Sugarbeet seed business at €9.0 (10.6) million, was slightly weaker than the same period last year. The result decreased to –€14.3 (–7.6) million. The absence of special factors, which had a positive effect on the previous year’s result, contributed to this. Profit for the period was therefore back to the level of 2010/2011.

Number of employees rises - investments at a high level

KWS continued their investments in plants and equipment at a high level. At €17.2 (17.4) million, they were as usual, well above the depreciation of €8.7 (6.4) million. Expenditure mainly related to the modernization of sugarbeet seed production in North America, and capacity expansion for corn production in France. The number of employees rose to 4,423 in the reporting period, primarily due to the acquisition of the Brazilian business. By the end of the fiscal year, the number of employees in the KWS Group is to be increased by around 15% compared to the previous year (3,851).

Outlook: KWS plans growth with a double-digit yield

Referring to the forecast for the 2012/2013 fiscal year, Hagen Duenbostel, Chief Financial Officer of KWS SAAT AG, said “Business performance confirms our forecast in the first quarter. For the year as a whole, we expect a sales growth in the group of around 10% (previous year: €986.3 million). With rising expenses in product development and sales, we currently expect to achieve an EBIT margin of a good 11%.”