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: