Investor Presentation. KWS SAAT SE Quarterly Statement 9M 2017/2018

Transcription

1 Investor Presentation Quarterly Statement 9M 2017/2018

2 We have strong market positions in the global agricultural crop market with market leadership in sugarbeet, silage corn and hybrid rye seed.

3 Our diverse gene pool with proprietary varieties is the basis for sustainable agriculture.

4 Our business modal is sustainable: The demand for improved varieties is secure and constantly increasing.

5 Our strategy and management are geared to the long-term. They are enabled by the family shareholders. Executive Board of the

6 KWS fiscal year 2016/2017 NET SALES in million 1,075 INNOVATION in % from sales 17.7 EBIT in million 132 EBIT MARGIN in % from sales 12.2 EARNINGS/SHARE in EMPLOYEES worldwide 4,937 COUNTRIES worldwide 70 REST OF WORLD 6% NORTH AND SOUTH AMERICA 30% NET SALES in million 1,075 GERMANY 21% EUROPE (EXCL. GER) 43% 10-years development Incl. our at equity-accounted joint ventures and associated companies NET SALES in % p.a. (avg.) EBIT in % p.a. (avg.) +9.5 SHAREPRICE in % p.a. (avg.) EMPLOYEE in % p.a. (avg.)

7 As a partner of agriculture for high-quality seed we focus on three key business processes Innovation Breeding of improved varieties and development of digital tools. Production Production and multiplication of seeds to the highest standards at 12 locations. Consulting In direct conversation with our consultants and online via our platform. 7

8 We are among the top 5 in our industry, what distinguishes us is our independence Global Net sales of agricultural sales in billion Europe Net sales of agricultural sales in billion Bayer Monsanto Bayer Monsanto DowDuPont Dow + DuPont ChemChina Syngenta ChemChina Syngenta 0.5 Vilmorin BASF 1 Vilmorin References to the listed numbers can be found in the appendix..

9 We focus on 5 medium- and long-term overall stratetic objectives Profitable growth Increase in consolidated net sales by an average of 5 to 10% p.a. EBIT margin 10% Innovation R&D intensity of around 17% of consolidated net sales 1% to 2% increase in yields p.a. and development of tolerances and resistances Internationalization Expansion of the portfolio for subtropical markets Sustainability Integration of international subsidiaries in KWS sustainability reporting Dividend A dividend payout ratio of 20% to 25% of the KWS Group s net income 9

10 Share price development of the past 10 years closing price Xetra, July 1, 2007 to June 30, 2017 Max % 10.3% average share price increase per year +66% +55% Min KWS SDAX DAX 10

11 Dividend payments and dividend ratios of the past 10 years Reliable dividend policy 25% 20% 20.5% 23.7% 24.3% 20.8% 19.6% 21.7% 24.7% 23.6% 23.2% 21.6% 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Dividend payments Dividend ratio (otal dividends / net income) 11

12 Update 9M 2017/2018

13 News, trends and developments Sales decreases in Americas and Turkey, sales increases in Europe EBIT at the previous year s level Globally challenging market environment Unfavorable exchange rate developments Wet weather in Europe affects spring sowing Net sales in million 862 EBIT in million 169

14 Earnings with an abridged income statement: July 1, 2017 March 31, 2018 vs. previous period in million 1st 3rd quarter 2017/2018 1st 3rd quarter 2016/2017 +/- Net sales % Operating income (EBIT) % Net financial income/expenses % Result of ordinary activities % Income taxes % Net income for the period % Earnings per share (in ) % EMPLOYEES worldwide 5,257 (+4.3%) TOTAL ASSETS in million 1,767 (-1.6%) CAPEX in million 44.1 (-2.9%) NET DEPT¹ in million (+3.1%) 1 The development of the working capital is impacted by the seasonal cours of the business. 14

15 Earnings July 1, 2017 March 31, 2018 vs. previous period Net sales development Q1- Q3 in million Net sales development Q1-Q3 by region in % Q1-Q3 2016/2017 Q1-Q3 2017/ Sugarbeet, cereals +5.6% Sugarbeet, cereals +4.0% Currency, corn -24.7% Currency, sugarbeet -18.3% 13/14 14/15 15/16 16/17 17/18 Germany Europe (excl. GER) North and South America Rest of world Due to the strong sesonal nature of our business, the first nine month (1 July to 31 March) most recently contributed good 80% to the Group s annual sales. 15

16 Earnings July 1, 2017 March 31, 2018 vs. previous period EBIT development Q1-Q3 in million EBIT development Q1-Q3 in million* Sales decrease, currency, Reallocation, rapeseed, hybrid rye Reorganization IT-infrastructure Reallocation Sales growth % -22.6% -33.3% +12.8% 13/14 14/15 15/16 16/17 17/18 EBIT 16/17 Corn Sugarbeet Cereals Corporate EBIT 17/18 EBIT at the previous year s level despite higher expenses. * = rounding differences possible 16

17 Earnings July 1, 2017 March 31, 2018 vs. previous year Corn Sugarbeet Cereals Corporate Brazil, currency -16.7% Europe, Germany Sales decrease, currency +3.1% -29.1% Sales growth +12.8% Reallocation, Europe +42.0% Sales growth, Reallocation +80.0% 17 Germany -25.6% Increased expenditure for future growth -22.9% Net sales EBIT Net sales EBIT Net sales EBIT Net sales EBIT 9M 2016/2017 9M 2017/2018 Reconciliation (in million) Segments Reconciliation KWS Group Net sales 1, EBIT

18 The capital expenditures were around 44.1 million euros in the first three quarters from July 1, to March 31, 2018 By region By segments REST OF WORLD 1.1% GERMANY 46.8% CORPORATE 34.8% CORN 32.8% 44.1 million NORTH AND SOUTH AMERICA 21.7% EUROPE (EXCL. GER) 30.4% CEREALS 9.4% SUGARBEET 23.0% We expect for the entire fiscal year 2017/2018 capital expenditures of around 100 million 18

19 Three of our current investment projects at KWS Bild einfügen Bild einfügen Bild einfügen Seed production sugarbeet Expansion of the production and storage capacities for sugarbeet seed in Einbeck Increased flexibility with reduced set-up times Improvement of product quality through innovative process technology Investment volume around 11 million in 2017/2018 Seed production corn Expansion of the production capacities for corn seed in Patos de Minas, Brazil Investment volume around 4 million in 2017/2018 Extension storage capaticy New warehouse in Forli, Italy Additional storage capaticy sugarbeet and corn seed Investment volume around 3 million in 2017/

20 Forecast Fiscal year 2017/

21 Opportunity and risks until the end of the fiscal year (June, ) Late sowing and shifts in net sales to the fourth quarter (+) Slightly increased demand for summer cereals due to wet weather (+) Continued tight market situation in the corn seed business ( ) Continued significant exchange rate fluctuations (+/ )

22 Forecast Forecast for the KWS Group Fiscal year 2017/2018 Tendency Q2 to Q3 Forecast as at 17/05/2018 (Q3) Forecast at 27/02/2018 (Q2) Fiscal year 2016/2017 Net sales At the level of previous year Slight rise 1,075 million EBIT margin % % 12.2% R&D intensity Around 18.0% >18.0% 17.7% Notes The forecast tendency indicates the direction in which an expected value has changed since the last forecast. The forecast is based on the current business performance and the quarterly updated coprorate planning, whereby in the first nine months (July to March) most recently around 80% of the annual revenue was generated. 22

23 Forecast Forecast for the segment reporting 1,2 Fiscal year 2017/2018 Tendency Q2 to Q3 Forecast as at 17/05/2018 (Q3) Fiscal year 2016/2017 Sugarbeet Net sales slightly below previous year 455 million EBIT margin slightly above previous year 33.2% Corn Net sales below previous year million EBIT margin at the previous year s level 7.1% Cereals Net sales between +30 to +40 % million EBIT margin above previous year 9.4% Corporate Net sales at the previous year s level 4.8 million EBIT > 70 million 60.6 million 1 Included our equity-accounted joint ventures.. 2 Taking into account the transfer of rapeseed business into the cereals segment, see Annual Report 16/17, page

24 Seeding the future Challenges and solutions for modern agriculture

25 Wheat, rice, and corn provide just over 50 percent of the world s plant-derived food energy. [ ] It is vital to ensure continued genetic diversity of these major crops to avoid vulnerability to diseases that could affect production worldwide. International Development Research Center

26 For efficient agriculture it is crucial to meet the challenges of high-yield crops Population growth: Food demand is expected to rise by 60% through 2050 Reduction of per capita cultivation area: The population is growing faster than the acreage Climate change: Change in abiotic stress requires new variety characteristics Harvest losses: 10-15% due to insects, weeds, fungal diseases and damage in storage Limited ressources such as water, fertilizers and pesticides 26

27 Our aim is to ensure a future-proof and sustainable agriculture Safe returns securing earnings stability and yield process for sustainable supply Ressource conservation reduced consumption of water, fertilizers and pesticides Increased nutrient content optimization of energy and nutrient content for more efficient use of acreage Diversification of the gene pool 27

28 Our broadly diversified and proprietary gene pool includes seeds for 10 of the 12 most important crops 1, Corn Wheat Rice Potato 1 Soybeans Barley Sugarbeet Sugarcane Rapeseed Sorghum Sunflowers Rye Global area havest (in ha million) Global Production (in t million) Minor strategic potential for KWS Source: faostat.fao.org (Data for 2016), zuckerverbaende.de; 1 No commercial business for KWS, but target of strategic research and development. 28

29 Developing a new variety is a complex process and takes 8 to 12 years 2 years corporate research: first crossings 8 years variety development: selection, multi-year and multisite tests 3 years Pre-Breeding and material development 3 years variety testing through the Bundessortenamt 5 years application-oriented research on important agricultural crops 5 years basic research on modal organisms Acceleration potentials of new breeding methods Coorporation with research institutions Variety release, variety protection 2 years seed multiplication until commercial use Source: BDP, changed and translated from German 29

30 To accelerate variety development, we use all available breeding methods Crossing and selection Combine and select conventional breeding based on Mendelian rules Hybrid breeding Conventional breeding method crossing homozygous parent lines Cell- and tissue culture Regeneration of whole plants from single or multiple plant cells DNA diagnostics Analysis of genetic information for reliable diagnosis of plant properties Genetic engineering genetransfer of the same or a different species to crops Genomics Decryption of the DNA sequence provides valuable insights for plant breeding New breeding methods Breeding objectives are achieved faster and implemented more precisely with eg. CRISP/Cas, TALEN, Zinc Finger, ODM

31 The new breedingmethods of genome editing need to be differentiated and consideres and evaluated with a view to their application Model 1 Model 2 Model 3 Directed, random change of small DNA building blocks eg. point mutations or deletions Directed, targeted transmission of species-specific DNA sections Directed, targeted transmission of non-species-specific genes or gene components or 31 Nature-identical breeds Plants that are produced in this way could also arise naturally in nature or through classical cross-and combination-breeding and are therefore nature-identical. Separate regulation is not necessary. Genetically modified Plants that are produced in this way are genetically modified and fall under the German Genetic Engineering Act in the EU.

32 Three of our strategic projects at KWS Nitrogen-efficient corn Development of nitrogen-efficient corn with continued good yield Advantages: low fertilizer requirement Challenge: nitrogen effiecency is a complex feature with high breeding requirements Hybrid potato seed Development of diploid hybrid potatoes, that can be multiplied and marketed in the form of seed Advantages compared to plant potatoes: more effective breeding, lower risk of pest infection, lower storage and transport costs Crops of the Future International consortium: publicprivate model Focus: Genome editing, genome sequencing and phenomenology, Merges ressources of companies and research organizations Generated knowledge is made accessible in publications 32

33 Thank you for your interest, we are happy to help you with any questions.

34 Financial calendar and IR contact October 24, 2018 Publication of 2017/2018 financial statements, annual press and analyst conference in Frankfurt November 27, 2018 Quarterly Report Q1 2018/2019 December 14, 2018 Annual Shareholders Meeting in Einbeck Wolf-Gebhard von der Wense Head of Investor Relations +49 (0) Grimsehlstr Einbeck Tatjana Kasper Investor Relations Manager +49 (0) Grimsehlstr Einbeck 34

35 Appendix

36 We are excellently positioned and with our distinctive profile we have a model of the future, that is deeply rooted in the history of the company Dr. Hagen Duenbostel (1970) CEO / Member of the Executive Board since 2003 Responsibility: Corn, Developement & Communications, Corporate Compliance

37 We are constantly trying to find new and innovative ways to become even faster and more efficient building on a foundation with a high level of innovation. Dr. Léon Broers (1960) Member of the Executive Board since 2007 Responsibility: Research and breeding

38 Paired with competent advice and a high level of commitment, our goal is to build trust through joint success and act in partnership with farmers. Dr. Peter Hofmann (1960) Member of the Executive Board since 2014 Responsibility: Sugarbeet, Cereals, Marketing

39 The KWS Group is economically sound. We have a solid financial base that enables us to be well prepared for possible investments to ensure additional growth. Eva Kienle (1967) Member of the Executive Board since 2013 Responsibility: Finance, Controlling, Human Resources, Global Services, IT, Law

40 Key figures for the KWS share March 31, 2018 incl. shareholdings and actual coverage General Data ISIN Number of shares Type Closing price March 31, 2018 March 31, 2017 Daily trading volume (avg.) 9M 2017/2018 6M 2017/2018 DE No-bar value shares in in shares/day 1,944 1,752 FAMILIES BÜCHTUNG, AREND OETKER TESSNER BETEILIGUNGS GMBH 54.5% 15.4% FREE FLOAT 6% 4 Market capitalization March 31, 2018 March 31, 2017 in million 2,085 1,920 5 Earnings per share March 31, 2018 March 31, 2017 in 18,76 19,40 6 Daily price fluctuation (avg.) 9M 2017/2018 6M 2017/2018 in % of closing price 2,4% 2.0% 40

41 Review Year net sales performance KWS Group Net sales development in million Net sales development by region in million Rapeseed, Sugarbeet 2015/ / Sugarbeet +1.0% +3.0% Corn +12.2% China, North Africa -14.9% 12/13 13/14 14/15 15/16 16/17 Germany Europe (excl. GER) North and South America Rest of world NET SALES KWS GROUP SOUTH AMERICA EUROPE REST OF WORLD 3.7% Net sales in Brazil > 100 million Strong rapeseed and sugarbeet seed business Chinese corn acreage decreased 41

42 Review Year net sales and EBIT performance segments Corn Sugarbeet Cereals Corporate South America +3.8% Europe Functional costs -8.5% % 455 Special effects, Sales growth +27.2% Europe -7.4% 109 Weather impacts, Licence +14.4% 9 Germany +17.1% Functional costs -21.0% Net sales EBIT Net sales EBIT Net sales EBIT Net sales EBIT 2015/ /2017 Reconciliation (in million) Segments Reconciliation KWS Group Net sales 1, ,075.2 EBIT

43 Review KWS Track Record according to management approach 1 Net sales development 1 in million EBIT development 1 in million /13 13/14 14/15 15/16 16/17 12/13 13/14 14/15 15/16 16/17 1 Including net sales and earnings contributed by our equity-accounted joint ventures and associated companies. 43

44 Sources Slide: Information on competitiors turnover, Europe and global Annual Reports ot the companies, own estimates. * Estimated sales for calendar year 2016, McDougall ; own estimates 1 BASF, 2017/10/13 and 2018/04/26 Bayer: Fiscal year 2016 (1.1. to ); Seeds w/o flowers and vegetables. Monsanto: Fiscal year 2015/2016 (1.9. to 31.8.; 1,11 USD/EUR); Seeds & Genomics w/o vegetables. Dow: Fiscal year 2016 (1.1. to ; 1,11 USD/EUR); Agriculture-Seeds. DuPont: Fiscal year 2016 (1.1. to ; 1,11 USD/EUR); Agricultural Sciences-Seeds. Syngenta: Fiscal year 2016 (1.1. to ; 1,11 USD/EUR); Seeds w/o Vegetables and Lawn and Garden. KWS: Fiscal year 2016/2017 (1.7. to 30.6.); incl. 50:50-JV. Vilmorin: Fiscal year 2016/2017 (1.7. to 30.6.); Field Seeds ; incl. 50:50-JV. 44

45 Disclaimer These materials are not an offer for sale of Subscription rights or Securities in the United States. Subscription rights and Securities may not be offered or sold in the United States without registration or an exemption from registration under the U.S Securities Act of 1993, as amended. does not intend to register any portion of the offering in the United States or to conduct a public offering in the United States or to conduct a public offering of Subscription rights or Securities in the United States. This document contains certain forward-looking statements relating to the business, financial performance and results of and/or its subsidiaries and/or the industry in which and its subsidiaries operate. These forward-looking statements are based on KWS current plans, estimates, projections and expectations. These statements are based on certain assumptions that, although reasonable at this time, may prove to be erroneous. Prospective investors should not place undue reliance on these forward-looking statements. If certain risks and uncertainties materialize, or if certain underlying assumptions prove incorrect, events described in this document as anticipated, believed, estimated or expected may not occur, and may not be able to achieve its financial targets and strategic objectives. This presentation should not be viewed as definitive legal, tax, or other advice regarding investment. All interested investors should seek independent third party legal, tax, and other advice. does not intend, and does not assume any obligations, to update industry information or forward-looking statements set forth in this document. KWS SAAT SE assumes no responsibility or liability in regard to the completeness of the contents and the accuracy of opinions, estimates, prognoses, calculations, or other information contained in this presentation. This presentation may contain confidential information. Neither the presentation nor any of its contents may be reproduced or otherwise made available to third parties. 45