DGAP-News: KWS posts stable business performance in the first quarter despite negative exchange rate effects - Guidance for the year confirmed

Einbeck, 24 November 2020

KWS posts stable business performance in the first quarter despite negative exchange rate effects - Guidance for the year confirmed

Total net sales of the KWS Group (ISIN: DE0007074007) fell by 3.6% in the first three months of fiscal 2020/2021 due to negative exchange rate effects but increased by 6.8% on a comparable basis. As is customary in the first quarter, the key figures of EBITDA, EBIT and net income were negative.

"Our operational business performance was stable by and large in the first quarter," said Eva Kienle, Chief Financial Officer of KWS. "However, the fall in the value of a number of currencies, in particular in South America and Eastern Europe, weighed on our key financial indicators."

Net sales for the first three month were at € 184.1 (191.0) million. EBITDA was € -27.3 (-21.8) million, while EBIT was € -50.5 (-42.3) million. The Group recorded a lower gross profit, as well as higher function costs for research and development and administration, while selling expenses fell year over year.

Net financial income/expenses was € -15.2 (-22.2) million. Since the earnings contributed by the equity-accounted joint ventures do not materialize until the third quarter, net income from equity investments in the first quarter is well in the red. It totaled € -12.0 (-16.9) million. The interest result improved to € -3.2 (-5.3) million due to a fall in interest expenses.

Income taxes totaled € -17.7 (-18.0) million. The result was net income for the period of € -47.9 (-46.6) million or € -1.45 (-1.41) per share.

Free cash flow improved to -119.1 (-138.4 million €; excluding the acquisition of Pop Vriend Seeds) in the reporting period.

Overview of the key figures

Business performance of the segments

The Corn Segment grew its net sales by around 6% to €46.9 (44.4) million in the first quarter despite negative exchange rate effects. In main markets in South America, Argentina and Brazil, business expanded significantly in them (in terms of local currency). However, net sales were impacted heavily by negative exchange rate effects from the fall in value of the Argentinean peso and the Brazilian real. In the regions of Europe and North America, the segment does not generate any significant net sales in the first quarter due to seasonal reasons. The segment's income was € -41.0 (-37.5) million.

The Sugarbeet Segment posts only low net sales in the first quarter due to seasonal reasons. Net sales in the first three months were €16.1 million and thus above the level of the previous year (€10.6 million). The revenue mainly comes from the sale of sugarbeet seed in Chile and North Africa. The segment's income fell to € -32.2 (€ -28.5) million.

Net sales in the Cereals Segment in the first quarter declined by around 3% to €109.1 (112.0) million, but were at the level of the previous year after adjustment for exchange rate effects. The level of hybrid rye seed business varied in our sales regions, and net sales from it were around 5% below the same period of the previous year. However, the growth prospects for hybrid rye remain positive. Winter rapeseed business grew by around 5% on the back of improved conditions in the sowing season in a number of European countries. The segment's income was €36.0 million and thus at the level of the previous year (€36.6 million).

Net sales in the Vegetables Segment fell significantly to € 13.3 (27.0) million compared to the same quarter of the previous year, which showed a strong sales development. In addition, the food service market segment saw lower demand in connection with the COVID-19 pandemic. As a result of the course of business, EBITDA fell to € 2.4 (8.7) million and EBIT (including non-cash effects as part of the purchase price allocation for the acquisition of Pop Vriend Seeds) also fell to € -3.3 (3.0) million.

Net sales in the Corporate Segment totaled €1.8 (1.6) million. They are mainly generated from KWS 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 segment's income improved to € -22.0 (-30.9) million, mainly due to positive, exchange rate-related measurement effects from financial instruments.

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:

Reconciliation table

Guidance for the 2020/2021 fiscal year confirmed

For the KWS Group, the Executive Board continues to expect net sales at the previous year's level (€1,282.6 million). Assuming that net sales are stable, the EBIT margin is expected to be in the range between 11% and 13% (after adjustment for the non-cash effects as part of the purchase price allocation for the acquisition of Pop Vriend Seeds).

Annual General Meeting 2020 in virtual format

The Annual General Meeting of KWS SAAT SE & Co. KGaA will take place on December 16, 2020 from 11:00 a.m. (CET) in virtual format (without physical presence). The documents and further information on the Annual General Meeting are available at www.kws.com.

About KWS^*

KWS is one of the world's leading plant breeding companies. More than 5,700 employees in 70 countries generated net sales of around €1.3 billion in fiscal 2019/2020. A company with a tradition of family ownership, KWS has operated independently for more than 160 years. It focuses on plant breeding and the production and sale of seed for corn, sugarbeet, cereals, vegetables, rapeseed and sunflowers. KWS uses leading-edge plant breeding methods to continuously improve yield for farmers and plants' resistance to diseases, pests and abiotic stress. To that end, the company invested more than €200 million last fiscal year in research and development.

* All figures excluding the shares of the equity-accounted companies AGRELIANT GENETICS LLC., AGRELIANT GENETICS INC. and KENFENG - KWS SEEDS CO., LTD.

More information: www.kws.com. Follow us on Twitter(R) at https://twitter.com/KWS_Group.

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