KWS reports significant growth in sales and earnings for the first nine months of 2023/2024

KWS reports significant growth in sales and earnings for the first nine months of 2023/2024

• Preliminary key figures confirmed as published on April 30, 2024
• Revenue up 10.4% to €1,360.4 (1,232.2) million (excluding FX effects: +18.4%)
• EBIT rises by 47.8% to €336.4 (227.6) million
• Sugarbeet segment with another strong performance thanks to sustainable solutions
• Sale of Chinese corn business completed with significant positive earnings contribution
• Nicolás Wielandt's Executive Board contract extended

"With an extremely strong sugarbeet season, we have laid the foundation for another successful 2023/2024 fiscal year for KWS," commented Eva Kienle, Chief Financial Officer of KWS. "In addition, with the divestment of our corn activities in China and South America, we are paving the way for our strategic objectives of increased focus on plant-based foods and at the same time higher profitability."

Business development 9M 2023/2024

Following the agreement reached at the end of March 2024 to sell the South American corn business, the key figures for the first nine months of 2023/2024 relate to KWS's continuing operations. The South American corn business will be reported as a discontinued operation in KWS's financial reporting until the transaction is completed.

In the first nine months of fiscal year 2023/2024, the KWS Group's sales increased significantly by 10.4% to €1,360.4 (1,232.2) million. Negative currency effects, especially from Eastern European currencies, the Turkish lira and the US dollar, had a negative impact on sales. On a comparable basis (excluding currency effects), sales increased by 18.4%.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 37.4% to €401.9 (292.4) million, while earnings before interest and taxes (EBIT) rose by 47.8% to €336.4 (227.6) million. EBIT and EBITDA include a one-time positive earnings contribution of approximately €30 million from the completed sale of the Chinese corn portfolio.

The financial result, on the other hand, declined significantly to €–24.7 (–3.2) million. Income taxes amounted to €83.2 (57.0) million. This resulted in earnings after tax for continuing operations of €228.5 (167.3) million. Free cash flow amounted to €–89.6 (–66.9) million due to seasonally higher trade receivables and higher inventories.

Overview of the key figures (for continuing activities)

Business performance of the segments

The corn and sorghum business in Brazil and Argentina is no longer included in the management reporting for the Corn and Cereals Segments because of the intention to sell it. Comparative segment information has been adjusted retroactively.

The Corn Segment posted a decline in net sales by around 9% to €572.1 (629.4) million. Negative exchange rate effects, particularly from Eastern European currencies, the Turkish lira and the US dollar, meant that the change on a comparable basis* was –4%. In Europe, net sales after adjustment for exchange rate effects remained stable. However, our U.S. joint venture AgReliant recorded a decline in its business activities in a challenging environment and thus performed worse than expected. The segment’s income rose to €82.7 (60.7) million and includes a positive earnings contribution of around €30 million from the completed divestment of the Chinese corn portfolio.

Net sales in the Sugarbeet Segment rose exceptionally sharply by around 25% to €687.6 (551.1) million in the period under review (on a comparable basis*: +38%). The strong increase in net sales resulted from double-digit growth in all main sugarbeet markets. In addition to positive market conditions for sugarbeet cultivation overall, the sustainable product innovations CONVISO® SMART and CR+ made a particular contribution to that and now account for around 56% (40%) of net sales. The success in this year’s growing season once again underscores KWS’ leading position in the sugarbeet seed market. The segment’s income rose above-proportionately to €291.0 (194.7) million due to the improved product and price mix.

Net sales in the Cereals Segment, which generates the predominant share of its annual net sales in the first half of the year, rose by 9% to €250.9 (230.1) million, mainly due to growth in rye, oilseed rape and wheat seed. Allowing for negative exchange rate effects, particularly in Eastern Europe, the increase on a comparable basis* was even 12%. This growth was mainly achieved in the core markets Central and Northern Europe. The Brazilian sorghum business, which was previously included in the Cereals Segment, was reclassified to discontinued operations. Given the growth in net sales and an improved product mix, the segment posted an increase in income to €79.0 (69.8) million.

Net sales at the Vegetables Segment fell by 11% to €40.6 (45.7) million, mainly due to lower net sales in China and North America. The segment’s income fell to € –21.8 (–9.5) million due to greater planned expenditure on the long-term expansion of the vegetable business and lower earnings contributions from existing business operations (mainly spinach and bean seed). The segment’s income includes effects from the purchase price allocation as part of company acquisitions totaling € –8.8 (–9.0) million.

Net sales in the Corporate Segment totaled €7.1 (7.2) million. They are mainly generated from KWS farms. Since all cross-segment costs for the KWS Group’s central functions and research expenditure that cannot be allocated to the segments are charged to the Corporate Segment, its income is usually negative. The segment’s income fell to € –96.0 (–82.6) million, in particular due to higher R&D expenditure.

*excluding exchange rate and portfolio effects

Forecast for fiscal year 2023/2024 increased
(see ad-hoc release dated April 30, 2024)

Given the positive business performance in the first nine months and on the basis of KWS’ continuing operations, the Executive Board expects net sales in fiscal 2023/2024 to increase by 6% to 8% year on year (adjusted for exchange rate and portfolio effects: 11% to 13%; previous year: €1,500 million; previous forecast: 3% to 5%) and anticipates an EBIT margin of 15% to 17% (including the non-recurring positive earnings contribution from the divestment of the Chinese corn business; previous forecast: 11% to 13%). The R&D intensity is expected to be around 20% (previous forecast 18% to 19%).

Nicolás Wielandt's Executive Board contract extended

The Supervisory Board of the personally liable partner (KWS SE) has extended Nicolás Wielandt’s Executive Board contract, which was due to expire at the end of 2024, by five years with effect from July 1, 2024. Nicolás Wielandt has been a member of the Executive Board since 2022 and is responsible for the Corn Segment.

Conference Call for analysts and investors

A conference call & webcast for analysts and investors with Eva Kienle (CFO) will be held at 10:00am (CEST). All access information can be found here.

About KWS

KWS is one of the world’s leading plant breeding companies. More than 5,000 employees* in over 70 countries generated net sales of around €1.8 billion in fiscal 2022/2023. A company with a tradition of family ownership, KWS has operated independently for over 165 years. It focuses on plant breeding and the production and sale of seed for corn, sugarbeet, cereals, vegetables, oilseed rape 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 €300 million last fiscal year in research and development.

*Excluding seasonal workers

More information: www.kws.de. Follow us on Twitter® at https://twitter.com/KWS_Group.

Contact:

Peter Vogt  
Head of Investor Relations
Phone: +49-30 816914-490
peter.vogt@kws.com

Sina Barnkothe
Corporate Communications
Phone: +49-5561 311-1783
sina.barnkothe@kws.com

sina.barnkothe@kws.com