KWS SAAT AG meets growth targets (2010-05-28)

(Einbeck, May 28, 2010/No. 16/gf) – KWS SAAT AG (ISIN: DE0007074007), one of the leading international seed breeding companies, underpinned its steady growth of recent years in the first nine months of fiscal 2009/2010. The good performance of its two largest segments – corn and sugarbeet – more than offset the restrained demand for cereals. Net sales at the KWS Group improved by around 3% to €586.9 (€572.3)* million in the period under review. Now that most of the spring sowing season is completed, KWS expects net sales to increase by about 4% and operating income to be on a par with the previous year (€77.9 million) for fiscal 2009/2010 as a whole.

Net sales of corn and sugarbeet rise again
Demand for certified high-yielding corn seed increased as a result of our good variety performance. Net sales rose by just over 6% to €317.6 (€298.7) million at March 31, 2010. “We are confident about winning additional market share in our most important European corn sales regions. We will defend our position in North America, despite considerable competitive pressure,” said Hagen Duenbostel, Chief Financial Officer of KWS SAAT AG, about the good performance in the corn segment. The sugarbeet segment likewise posted an increase in net sales of just over 6% to €188.1 (€177.1) million in the current fiscal year. While business stabilized in the EU 27 (the countries covered by the European Sugar Market Regime), a boost was felt from high market prices for sugar and increasing cultivation area in Eastern Europe. Net sales at the cereals segment fell to €65.0 (€79.4) million. The breeding & services segment posted net sales of €16.2 (17.1) million, which were generated from seed potato business and the farms.

Research & development secures KWS’ future
To secure and expand its good market position, KWS is significantly intensifying its research and product development work, as reflected in the 10% increase in the R&D budget over the previous year (€89.5 million). Capital expenditure in the past nine months was €42.6 million, at about the level of the previous year’s €44.1 million. As a result of the company’s good performance and these investments to secure its future, the number of employees increased again to 3,501 (3,285) at March 31.

The KWS Group’s operating income (EBIT) improved to €118.2 (€105.8) million. However, the figure at the end of the year will be reduced by further expenditure on research & development. Net financial income/expenses was € –4.1 (€ –4.2) million. After income taxes of €32.2 (€30.9) million, net income for the period rose to €81.9 (€70.7) million.

Further increase in net sales by the end of the fiscal year
KWS expects to grow its consolidated sales by about 4% in the current fiscal year. Operating income will probably be at the level of the previous year (€78 million), despite the increase in expenditure on product development. “Economies of scale associated with the gratifying expansion of our business volume will improve our return on investment at the corn segment. Higher unit revenue for our herbicide-tolerant sugarbeet in the U.S. will bolster results for this segment. In contrast, income at the cereals segment will fall as a result of restrained business in our high-margin hybrid rye. At breeding & services, we will spend a considerable sum on research & development in the fourth quarter,” said Duenbostel.

Contact:
Georg Folttmann
Phone: +49 (0)55 61 / 311-640
g.folttmann@kws.com

* The figures in parentheses are those for the previous year