KWS increases net sales and improves earnings
Einbeck, March 7, 2017 No. 11 | ww
KWS increases net sales and improves earningsOperational growth continues - Revenue in Brazil doubled - Net income for the period influenced positively by special effects - Anticipated EBIT margin for the current fiscal year raised slightly
The KWS Group (ISIN: DE0007074007) has increased its net sales in the first half of 2016/2017 by 27.6% to EUR280.0 million. Net sales in South America - in particular in Brazil - were grown sharply. Winter rapeseed business in Europe also contributed to the increase in net sales. However, winter cereals business in Europe declined slightly. Earnings before taxes (EBIT) were EUR -70.3 million, an improvement of 33.9%. The KWS Group now expects its EBIT margin to achieve at least 10.5% for the fiscal year as a whole due to the expansion in sugarbeet cultivation area.
"All in all, the financial statements for the first half of the year indicate a very positive trend. Our steady growth in net sales in Brazil is a major success for us, especially since KWS hasn't been operating in that market for very long," said Eva Kienle, Chief Financial Officer of KWS SAAT SE, about the figures for the first six months. "However, third-quarter business in our core markets, which is now proceeding at high speed, is what is crucial for our performance in the year as a whole."
In the first half of the year ended December 31, 2016, growth in net sales, together with an improvement in the cost of sales, resulted in a sharp rise in the contribution margin. Expenditure on distribution was increased by 4.6% and that on research & development by 6.0%. Administrative expenses, on the other hand, fell by 8.0%. As for the other operating expenses, negative exchange rate effects had - as in the first quarter - a lower impact than in the same period of the previous year. The KWS Group's EBIT at December 31, 2016, was EUR -70.3 (-106.3) million or around 34% over the previous year.
Segment reports: Business in South America sharply expanded
Net sales at the Corn Segment in the first half of the year rose by 56.3% to EUR180.8 (115.7) million. Corn seed business was grown by 68% and oil seed business by 35%. The increases are mainly attributable to the successful business performance in South America, where net sales in Brazil were more than doubled. Sales in Argentina benefited from a sharp increase in corn cultivation area, but the increase in net sales, which are consolidated in euros, was curbed by the peso's devaluation. Winter rapeseed business in Europe grew as well. The increase in the segment's net sales and a better earnings situation in Argentina - as a result of the fact that KWS no longer pays license fees for corn technology there, among other things - were the main reasons for the increase in the segment's income. Allowing for the increase in expenditure on research & development and on distribution, EBIT rose to EUR -59.1 (-87.3) million. It was reduced overall to a smallish extent by exchange rate effects.
Following completion of winter cereals business for the year, net sales at the Cereals Segment were EUR83.4 (86.0) million. Net sales of almost all the segment's crops declined slightly. Only wheat business grew. However, the devaluation of pound sterling had a sharp negative impact on the segment's net sales; adjusted for exchange rate effects, revenue rose slightly. The segment's EBIT was EUR21.4 (19.0) million.
Net sales in the Sugarbeet Segment were just under the level of the previous year and totaled EUR45.2 (46.9) million. Net sales from sugarbeet seed increased by around 17%. The previous year's figure contained revenue from seed potato business totaling around EUR8 million. The extra net sales from sugarbeet seed were generated mainly in the regions Asia, Northern Europe and South America. The segment's income improved to EUR -19.2 (-28.6) million due to the increase in sales and the fact that the sale of seed potato operations means they will no longer reduce its income this fiscal year. As in the Corn Segment, there were lower costs due to exchange rate influences.
All cross-segment costs, such as expenditure for all central functions at the KWS Group and long-term research projects, are carried in the Corporate Segment. Its income is therefore always negative. While the costs of central functions fell, research expenditures increased slightly. EBIT was EUR -35.2 (-33.0) million. In addition, exchange rate effects had a significant positive impact on earnings in the previous year.
In EUR million Segments Reconciliation KWS Group1 Net sales 312.6 -32.6 280.0 EBIT -92.1 21.8 -70.3
1 Excluding the shares of the equity-accounted companies AGRELIANT GENETICS LLC., AGRELIANT GENETICS INC. and KENFENG - KWS SEEDS CO., LTD.
Forecast: Sales growth still almost 5% - Expected EBIT margin raised slightly
Indications are that sugarbeet seed business will grow in the further course of fiscal 2016/2017 due to an increase in cultivation area. The KWS Group still expects to increase its net sales by almost 5% on the back of an anticipated slight improvement in income. The EBIT margin is expected to be at least 10.5% for the fiscal year as a whole. Capital spending will be about EUR100 million and the R&D intensity around 17%.
The full semiannual report can be downloaded on the Internet at www.kws.com/ir.
About KWS* KWS is one of the world's leading plant breeding companies. In fiscal 2015/2016, 4,850 employees in 70 countries generated net sales of EUR1,037 million and earnings before interest and taxes (EBIT) of EUR113 million. A company with a tradition of family ownership, KWS has operated independently for 160 years. It focuses on plant breeding and the production and sale of seed for corn, sugarbeet, cereals, rapeseed and sunflowers. KWS uses leading-edge plant breeding methods to continuously improve yield and resistance to diseases, pests and abiotic stress. To that end, the company invested EUR182 million last fiscal year in research & development, 17 percent of its net sales. For more information: www.kws.de. Follow us on Twitter(R) at https://twitter.com/KWS_Group.
*All figures exclude the joint ventures AGRELIANT GENETICS LLC., AGRELIANT GENETICS INC. and KENFENG - KWS SEEDS CO., LTD.
07.03.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.deLanguage: English
Company: KWS SAAT SE Grimsehlstraße 31 37555 Einbeck
Germany Phone: +49 (0)5561 311-0 Fax: +49 (0)5561 311-322 E-mail: email@example.com Internet: www.kws.de ISIN: DE0007074007 WKN: 707400 Indices: S-DAX Listed: Regulated Market in Frankfurt (Prime Standard), Hanover; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange End of News DGAP News Service