“We’re pleased about our good start to the fiscal year. It seems that our drought-tolerant rye has won over many farmers against the backdrop of difficult growing conditions at the time of the fall sowing season,” said Eva Kienle, Chief Financial Officer of KWS SAAT SE, about the published quarterly results. The increase in net sales was accompanied by a slight rise in function costs. EBIT totaled € –34.3 (–38.8) million. The company’s receivables management activities contributed income, and there were positive exchange rate effects. Net income after taxes for the period declined by –1.3% to € –39.0 (–38.5) million. Since KWS does not generate the main part of its business until the third quarter (January to March), it is not possible to deduce a trend for its performance for the year as a whole from these quarterly results.
Segment reports: Cereals seed business expanded, exchange rate effects weigh on corn
In the first quarter of fiscal 2018/2019, the Corn Segment generated net sales of €34.8 (40.2) million. In South America, net sales were slightly below the figure for the previous year, and in particular the Argentinean peso fell sharply in value again. If exchange rates had remained stable at the level of the previous year, the segment’s net sales would have been €52.8 million, an increase of 34.5%. In the core regions of Europe and North America, the first quarter sees no significant revenue from early sales of corn seed. The segment’s income was € –41.2 (–40.4) million.
Net sales in the Sugarbeet Segment were slightly up year on year at €13.3 (10.3) million. Revenues at this time of the fiscal year mainly come from the sale of sugarbeet seed in the U.S., Chile, East Asia and North Africa. No significant net sales are generated in the other regions in the first quarter. The segment’s income was € –13.4 (–17.4) million.
Net sales in the Cereals Segment in the first quarter increased by 8.2% to €95.3 (88.1) million. A main contributory factor to that was the successful performance of our rye seed business, which increased by 24% and benefited from the difficult weather conditions at the time of the fall sowing season, among other things. Rye varieties deliver a relatively reliable yield under dry conditions compared to other cereal crops. However, the same conditions for the sowing season hampered European winter rapeseed business, where net sales declined, while net sales from barley and wheat remained stable all in all. The segment’s income rose due to the higher contribution margins from rye business and was €32.9 (27.9) million.
Net sales in the Corporate Segment totaled €1.2 (0.9) million. They are generated mainly from the company’s farms. Since all cross-segment costs for the KWS Group’s central functions and basic research expenditure are charged to the Corporate Segment, its income is usually negative. The costs consolidated in this segment rose slightly in the first quarter, among other things due to additional work as part of the ongoing reorganization project ONEGLOBE. The segment’s income was € –28.1 (–25.1) million.
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: