Stable growth despite a difficult market environment

May 28, 2015

Compared to the previous year, revenues increase by 6.9% to €777.8 million in the first nine months - Functional costs to strengthen long-term growth increased according to plan - EBIT margin is 10.0%

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KWS SAAT SE (ISIN: DE0007074007) was able to increase revenues in the first nine months of the 2014/2015 fiscal year by 6.9% to €777.8 million (previous year: €727.4 million)

. The corn and sugarbeet segments achieved market share gains in a difficult economic environment thanks to a strong variety sales performance. In line with our long-term corporate strategy, the planned expansion of our research & development (R&D) and sales activities in the first nine months resulted in an increase in functional costs. Therefore the operating result (EBIT) of €140.1 million was below the previous year’s level (€145.8 million).

At the same time, we continued our extensive investment program for future growth. Investments in tangible and intangible assets increased significantly over the previous year and reached €95.3 (37.2) million after nine months. In addition to the expansion of R&D and office capacities at the Einbeck site, a new corn processing plant was completed in Serbia. “This is a logical step in the implementation of our long-term business strategy and strengthens our position in the important southeastern and eastern European growth markets,” explained Hagen Duenbostel, CEO of KWS SAAT SE. Last fall, KWS acquired the remaining 51% stake in the French joint venture SOCIETE DE MARTINVAL S.A. (MOMONT).

Change of name completed

The conversion of KWS SAAT AG into a European stock company (“Societas Europaea”), which was approved by the annual shareholder meeting in December 2014, became legally effective with entry in the commercial register in April 2015. The company now operates as KWS SAAT SE. As a result, shareholders of KWS SAAT AG are now shareholders of KWS SAAT SE. The listing of the shares has been changed accordingly, but has no effect on stock exchange trading. The change in legal form and the associated establishment of a European Employee Committee reflect our extensive business activities in Europe.

Sales growth in all product segments

In an environment of continued low sales prices from farmers and a slight decline in acreage in Europe, we achieved sales growth of 6.3% to €596.9 (561.3) million in the corn segment. In North America, sales of our joint venture AGRELIANT rose due to expected stabilization of acreage. This development benefited from the US dollar appreciation during the year, which outweighed the negative impact of the Ukrainian hryvnia and Russian ruble devaluation. In South America as well, we once again recorded an increase in sales. In contrast, the segment result was significantly lower than in the same period of the previous year, mainly due to the planned increase in functional costs for research & development and sales. The segment result was €87.8 (103.4) million after the first nine months of the current fiscal year.

KWS sugarbeet varieties currently hold leading positions in their variety sales performance in all major markets, which has allowed us—despite difficult market conditions— sugarbeet segment to gain market share in almost all markets. In North America and Turkey we once again increased our seed sales. In the seed potato business, however, sales volumes were below the previous year. Sales revenues from the sugarbeet segment were up compared to the previous year at €288.6 (259.2) million. The segment result amounted to €88.6 (75.6) million.

Sales in the the cereals segment totaled €98.2 (97.2) million after the third quarter, which was slightly above the same period of the previous year. The sometimes significant differences in producer prices for wheat and rye shaped the course of business. The hybrid rye acreage declined slightly, which had a negative impact on the segment result. In addition, expenditures for sales and research & development increased, which is why the segment result in the reporting period was below the previous year’s level at €20.9 (25.4) million.

The corporate segment includes cross-segment costs and research expenditures with long planning horizons. These are offset by revenues in the single-digit million range from agricultural activities. The segment result is therefore negative for structural reasons. In the current fiscal year, it developed as planned and amounted to
–€40.5 (–36.7) million in the first three quarters of 2014/2015.

Growth targets confirmed

“We are confident that we will achieve our annual targets for the KWS Group despite new challenges in the market environment,” summarized Eva Kienle, CFO of KWS SAAT SE. The slightly reduced expectations for the corn segment are offset by the positive business development in the sugarbeet segment. For the 2014/2015 fiscal year, the KWS Group is expected to achieve sales growth of more than 7% to around €1.27 billion (€1.178 billion) and an EBIT margin of around 10%. The R&D proportion is expected at 13%, the distribution cost proportion at more than 18%.

About KWS*

KWS is one of the leading plant breeding companies worldwide. 4,850 employees in 70 countries generated sales of 1.037 billion euros in the 2015/2016 fiscal year, generating earnings before interest and taxes (EBIT) of 113 million euros. KWS has been run autonomously and independently for more than 160 years as a family-owned company. The focus is on plant breeding and the production and sale of corn, sugarbeets, cereals, rapeseed and sunflower seed. KWS uses state-of-the-art methods of plant breeding to further improve yields and resistances to diseases, pests and abiotic stress. In order to achieve this goal, the company invested EUR 182 million in the past fiscal year, accounting for 17 percent of its revenue in research and development. Further information: www.kws.de.

*All figures exclude the shares of the companies accounted for using the equity method AGRELIANT GENETICS
LLC., AGRELIANT GENETICS INC. and KENFENG – KWS SEEDS CO., LTD.