KWS narrows guidance after a successful third quarter

Einbeck, May 19, 2020

Spring sowing season business largely completed – Strong increase in net sales and EBITDA in the first nine months of 2019/2020 – Growth in all product segments – Net sales and EBIT margin for the year now expected to be at the upper end of the forecast range

The KWS Group (ISIN: DE0007074007) increased its net sales by 18.0% to €1,012.5 million in the first nine months of fiscal 2019/2020. Organic growth was 10%. EBITDA improved significantly to €247.4 (210.6) million, while EBIT rose to €184.3 (173.1) million. Earnings per share increased to €4.18 (3.88).

Global business activity was impacted by the COVID 19 pandemic in the third quarter. Despite these challenging conditions, the KWS Group managed to supply farmers with seed in good time for the spring sowing season.

“KWS’ top priority is to protect its employees’ health. We therefore took prompt and extensive measures at our global locations based on or even exceeding the recommendations and directives of the national and international health authorities,” stated Eva Kienle, Chief Financial Officer of KWS. “At the same time, we maintained all key production and logistics processes so as to ensure that farmers were supplied with seed during this critical phase.”

Notwithstanding the restrictions resulting from the COVID-19 pandemic, the KWS Group increased its net sales in the first nine months of the fiscal year by 18% to €1,012.5 million. The earlier start of sowing in some regions had a positive effect compared to the previous year.

The KWS Group’s operating income before depreciation and amortization (EBITDA) increased by 17.5% to €247.4 (210.6) million. Including noncash effects as part of the purchase price allocation for the acquisition of Pop Vriend Seeds, EBIT rose by 6.5% to €184.3 (173.1) million.

A significantly increased gross profit was partly offset by higher functional costs for research & development as well as for sales and administration. The other operating result was negatively impacted, among other things, by charges related to currency hedging instruments. In the previous year, there was also a positive effect from income from the sale of shares in KWS Potato B.V. and from receivables management activities.

Net financial income/expenses was €6.0 (9.8) million and thus down from the previous year, mainly due to a fall in the interest result to € –13.2 (–7.3) million. Net income from equity-accounted companies increased to €19.1 (17.2) million.

Income taxes totaled € –52.3 (–54.8) million. The result was net income for the period of €137.9 (128.1) million or €4.18 (3.88) per share.

Overview of the key figures*

In € million 1st - 3rd quarter of 2019/2020 1st - 3rd quarter of 2018/2019 +/–
Net sales 1,012.5 857.7 18.0 %
EBITDA 247.4 210.6 17.5 %
Operating income (EBIT) 184.3 173.1 6.5 %
Net financial income/expenses 6.0 9.8 –38.8%
Result of ordinary activities 190.2 182.9 4.0%
Taxes 52.3 54.8 –4.6%
Net income for the period 137.9 128.1 7.7%
Earnings per share (€)* 4.18 3.88 7.7%

* Earnings per share for the previous period have been adjusted to reflect the share split (1:5)

Business performance of the segments

The Corn Segment posted an increase in net sales of around 6% to €607.4 (575.4) million in the first nine months. Business in Europe benefited, among other things, from an earlier sowing season compared to the previous year, as well as higher demand in France, Turkey and Southeastern Europe. In North America (joint venture AgReliant), net sales increased slightly on the back of good growth in corn seed sales, although there was a decline in soybean seed business. Aided by a positive market environment, sales volumes grew significantly in Brazil and Argentina; however, negative exchange rate effects reduced the net sales figure in euros. In China, net sales were at the level of the previous year, despite the restrictions to business operations due to COVID-19. The segment’s income improved to €79.7 (73.9) million.

Net sales in the Sugarbeet Segment in the first nine months rose by around 11% to €372.4 (335.1) million. In the previous year, a later sowing season in some regions resulted in a shift in net sales and earnings to the fourth quarter. The successful launch of CONVISO® SMART, an innovative system for controlling weeds that is now available in 24 countries, had a positive impact in the period under review. On the other hand, there was a negative impact from the reduction in sugarbeet acreage in the EU 27 and in Eastern Europe. The segment’s income rose sharply to €156.9 (143.6) million.

Net sales at the Cereals Segment rose in the first nine months by 13.5% to €177.3 (156.3) million. That increase is mainly attributable to successful rye seed business, which benefited from the relatively stable yields hybrid rye delivers in the dry summer conditions in core markets, as well as from good commodity prices. Rye is relatively drought-tolerant compared to other cereals. The segment’s income improved to €47.4 (42.6) million due to higher contribution margins from rye business.

The Vegetables Segment, which includes the business activities of the vegetable seed producer Pop Vriend Seeds acquired effective July 1, 2019, made a significant contribution of €65.0 million to the KWS Group’s increase in net sales in the first nine months. Its business in the third quarter also benefited from large demand for spinach seed in North America. Moreover, sales of spinach and bean seed were increasingly buoyant in Europe. The segment’s income (before acquisition-related effects) was €23.4 million. Including non-cash effects as part of the purchase price allocation from the sale of inventories that were taken over and remeasured at fair value (€ –8.6 million) and from amortization of intangible assets (€ –16.4 million), the segment’s income was € –1.6 million.

Net sales in the Corporate Segment totaled €3.4 (3.2) million. They are mainly generated from the company’s farms. Since all cross-segment costs for the KWS Group’s central- 3 -functions and basic research expenditure are charged to the Corporate Segment, its income is usually negative. The costs consolidated in this segment increased in particular as a result of higher personnel costs as part of the reorganization project GLOBE and due to charges related to instruments used to hedge foreign currency risks. The segment’s income was € –81.6 (–67.3) million. In the previous year, there was also a positive effect on the segment’s income from the sale of shares in KWS Potato B.V. and from receivables management activities.

The difference from the KWS Group’s statement of comprehensive income and segment reporting is due to the requirements of the International Financial Reporting Standards (IFRSs) and is summarized for the key indicators of net sales and EBIT in the reconciliation table below:

Reconciliation table

In € million Segments Reconciliation KWS Group1
Net sales 1,125.5 –213.0 1,012.5
EBIT 200.8 –16.6 184.3

1 Excluding the shares of the equity-accounted companies

Guidance narrowed for the 2019/2020 fiscal year

The KWS Group now expects it will post results at the upper end of the range it has forecast for net sales (8% to 12%) and for the EBIT margin (11% to 13%).

The guidance does not include non-cash effects as part of the purchase price allocation for the acquisition of Pop Vriend Seeds. They result from the sale of inventories that were taken over and remeasured at fair value (anticipated effect in the current fiscal year: around € –10 million) and from amortization of intangible assets (around € –22 million). The KWS Group expects its EBITDA to be significantly up over the previous year.

The measures to contain the COVID-19 pandemic will likely have only a slight impact on the KWS Group’s earnings in the current fiscal year. However, the potential impact on the new 2020/2021 financial year beginning on July 1, 2020 dampen the KWS Group's growth expectations.

Additional information

A conference call & webcast for analysts and investors with Eva Kienle (CFO) will be held at 10.00 am CEST. Further information on this event is available at

About KWS*
KWS is one of the world’s leading plant breeding companies. In the fiscal year 2018/19, more than 5,500 employees in 70 countries generated net sales of EUR 1.1 billion and earnings before interest and taxes (EBIT) of EUR 150 million. A company with a tradition of family ownership, KWS has operated independently for more than 160 years. It focuses on plant breeding and the production and sale of seed for corn, sugarbeet, cereals, rapeseed, sunflowers and vegetables. KWS uses leading-edge plant breeding methods to increase farmers’ yields and to improve resistance to diseases, pests and abiotic stress. To that end, the company invested approximately EUR 200 million last fiscal year in research and development.

*All indications excluding the results from the companies accounted for using the equity method AGRELIANT GENETICS LLC, AGRELIANT GENETICS INC. and KENFENG – KWS SEEDS CO., LTD.

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