Business performance of the segments
Net sales in the Corn Segment fell year on year to €133.4 (145.3) million, mainly due to seasonal fluctuations in the time of sowing. The sowing season for winter corn in Brazil, a major corn-growing region, began later than in the previous year, with the result that some of our deliveries were not made until after the end of the period under review. In North America, there was a sharp increase in revenue in the previous year as a result of early sales, especially of soybean seed. Business in Argentina performed very well, with volumes there rising by 13%. Only low revenue is usually generated in Europe in the first half of the year.
The segment’s EBIT was € –68.2 (–64.0) million. The segment generates the lion’s share of its revenue and income in the spring sowing season in the third quarter (January to March).
Net sales at the Sugarbeet Segment fell in the first half of the year to €27.9 (45.3) million. A higher proportion of early sales in some regions resulted in a sharp increase in net sales in the same period of the previous year. In the current fiscal year, however, we did not record such sales and deliveries until after the New Year.
The segment’s income in the first six months was € –46.3 million, well down from the previous year (€ –22.7 million). That is mainly attributable to the lower net sales in the period under review and to income generated by receivables management activities in the previous year. As is customary, revenue from sugarbeet seed is still low in the first half of the year; significant net sales are not expected until the spring sowing season in the third quarter (January to March).
Net sales in the Cereals Segment in the first half of the year rose by 13% to €157.1 (139.0) million. This increase was mainly attributable to successful hybrid rye seed business (+29%), which benefited from good general conditions and, related to that, higher cultivation area. While dry conditions for the sowing season hampered European winter rapeseed business, rye varieties deliver a relatively reliable yield under dry conditions compared to other cereal crops. The segment’s income increased to €53.8 (47.0) million, in particular due to higher contribution margins from hybrid rye business. The segment generates the lion’s share of its revenue and income in the first half of the year.
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 €44.3 million to the KWS Group’s increase in net sales in the first half of the year. On a pro-forma basis, the business has continued to grow dynamically and benefited from sustained high demand for spinach seed, in particular in North America. The segment’s income (before acquisition-related effects) was €19.1 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 (€ –5.7 million) and from amortization of intangible assets (€ –11.1 million), the segment’s income was €2.3 million.
Net sales in the Corporate Segment totaled €2.5 (2.7) million. They are mainly generated 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 in the first half of the year, in particular due to higher personnel costs as part of the reorganization project GLOBE. The segment’s income was € –54.4 (–51.6) 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: