Investorpresentation KWS SAAT SE
Content About KWS Update Q1 2017/2018 Forecast 2017/2018 Review 2016/2017 Appendix 2
About KWS 3
KWS at a glance Company highlights Strong market positions in the global agricultural crop market. Market leader in sugarbeets and hybrid rye Diverse gene pool with proprietary varieties Sustainable business model with strong fundamental pillars (global demand for food and feed) Strategy and management with long-term orientation, enabled by family shareholders Key financials of the KWS Group in million 2016/2017 2015/2016 + / Net sales 1,075.2 1,036.8 +3.7% R&D expenses 190.3 182.5 +4.3% EBIT 131.6 112.8 +16.7% EBIT margin (%) 12.2 10.9 Net sales by region Rest of world 6 % North and South America 30 % 2016/2017 1,075 million Germany 21 % Europe (excl. Germany) 43 % 10-year sales development 1 2007/2008 2016/2017 1 Incl. our at equity-accounted joint ventures and associated companies 4
Global importance of agricultural crops Global acreage and production Area harvested (in ha million) Production (in t million) Minor strategic potential for KWS 1.038 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. 741 729 International Development Research Center 185 163 220 19 382 118 307 144 140 74 49 27 36 45 69 2541 4 36 5 10 Corn Rice Wheat Potato 1 Soybeans Barley Sugarcane Rapeseed Sorghum Sunflower Sugarbeet Rye Source: fao.org, zuckerverbaende.de; 1 No commercial business for KWS, but target of strategic research and development The KWS portfolio consists of a broad, diversified, proprietary genepool for the development of agricultural crops 5
Plant breeding serves fundamental demands Population growth Harvest losses Food demand is expected to rise by 60 % through 2050 High harvest losses due to insects (15%), weeds (13%), fungal diseases (13%), damage in storage (10%) Climate change Resource efficiency Change in abiotic stress requires new variety characteristics Modern varieties need less input from limited resources like fertilizer, plant protection and fresh water Steadily increasing demand for improved varieties 6
Essential business processes of KWS Further development of yield characteristics Seed quality Capable consulting KWS is specialized in developing, producing and distributing high-quality crop varieties for agriculture 7
The key to success: efficient variety development Marketing approvals for new varieties Plant breeding requires cutting edge technology 397 357 Phenotyping Genetic variation Genomics & marker Breeding competence Cell & tissue culture New breeding technologies GM traits Bioinformatics Global breeding activities of KWS 15/16 16/17 R&D expenditure: 17.7% of net sales Ø yield progress: 1% to 2% per year 8
Success via innovation tailor made for all needs Capital expenditures High yielding varieties 160 years Expertise in seed Breeding & research Continuous innovation Top class advisory service Solutions for farmers Long-term orientated & independent Unique profile 9
KWS long-term performance 10-year development of net sales, EBIT and share price (Index, July 1, 2007 = 100%, incl. at equity consolidated companies) Net sales EBIT Share price CAGR 10.3% CAGR 10.0% CAGR 9.5% +167% +159% +149% 0.96 Correlation sales & share price 0.90 Correlation EBIT & share price 07.07 07.08 07.09 07.10 07.11 07.12 07.13 07.14 07.15 07.16 07.17 July 1, 2007 June 30, 2017 Corporate performance in accordance with share price development 10
TOP 5 Global agricultural seed companies Net sales of agricultural crops Global net sales in billion Net sales in Europe in billion Bayer Monsanto 1.0-8.3 Dow + DuPont 0.1 1.0 Dow + DuPont 1.4 6.0 Bayer Monsanto 0.1 0.6 ChemChina Syngenta 1.8 0.7 1.4 ChemChina Syngenta 0.5 Vilmorin 0.9 + Vilmorin 0.5 BASF 0.8 Sources: Companies Annual Reports, Phillips McDougall consultants; own estimates, BASF on October 13, 2017. For Europe: estimated sales for 2016, McDougall ; own estimates Bayer: FY 2016 (1/1 to 12/31); Seeds w/o flowers and vegetables. Monsanto: FY 2015/2016 (9/1 to 8/31; 1.11 USD/EUR); Seeds & Genomics w/o vegetables. Dow: FY 2016 (1/1 to 12/31; 1.11 USD/EUR); Agriculture-Seeds. DuPont: FY 2016 (1/1 to 12/31; 1.11 USD/EUR); Agricultural Sciences-Seeds. Syngenta: FY 2016 (1/1 to 12/31; 1.11 USD/EUR); Seeds w/o Vegetables and Lawn and Garden. KWS: FY 2016/2017 (7/1. to 6/30); incl. at equity consolidated companies. Vilmorin: FY 2016/2017 (7/1. to 6/30); incl. at equity consolidated companies. 11
Intensifying cooperation Cross dependency Trait Event Event name Monsanto Syngenta MON88017 YieldGard VT Rootworm DuPont/ Pioneer DOW KWS D X X MIR604 Agrisure RW D X X Subterranean insect pests 5307 59122 Agrisure Duracade Hercules RW, AcerMax RW D X X D D X X MON87411 RNAi+Cry3Bb1 D X X MON810 YieldGard D X X Aerial insect pests Bt11 TC1507 MON89034 Agrisure TL, Agrisure CB/LL Herculex I, Herculex CB YieldGard VT (Double) Pro D X X D D X D X X X MIR162 Agrisure Viptera X D X X GA21 Agrisure GT D X NK603 Roundup Ready 2 D X X X Herbicide tolerance T25 Liberty Link X X X X X DAS-4Ø278-9 Enlist X D H7-1 VCO-Ø1981-5 Roundup Ready (SB) D X D D D = Developer (2 D per row = joint development) X= Licensee 12
Update Q1 2017/2018 Net sales +2.0% EBIT 34.7% Good winter oilseed rape business Net sales in South America declined sligthly Sales and EBIT outlook confirmed 13
Earnings of the KWS Group Q1 2017/2018 July 1, 2017 September 30, 2017 vs. previous period Abridged income statement in millions Q1 2017/2018 Q1 2016/2017 +/ Net sales 136.0 133.3 2.0% Operating income (EBIT) 38.8 28.8 34.7% Net financial income/expenses 18.2 19.5 6.7% Result of ordinary activities 57.0 48.3 18.0% Income taxes 18.5 13.5 37.0% Net income for the period 38.5 34.8 10.6% Earnings per share (in ) 5.78 5.22 10.6% Other figures KWS Group Q1 2017/2018 Employees Total assets Capex September 30, 2017 4,909 ( 2.5%) 1,472 mill. (+4.1%) 11.8 mill. ( 36.2%) 14
Earnings of the KWS Group Q1 2017/2018 July 1, 2017 September 30, 2017 vs. previous period Net sales development Q1 in million Net sales development Q1 by region in % Q1 2016/2017 Q1 2017/2018 CAGR 8.6% 98 105 117 133 136 Winterrapeseed Hybrid rye +14.7% Winterrapeseed Hybrid rye Currency Corn & Soybean business +16.8% 18.8% 5.4% 13/14 14/15 15/16 16/17 17/18 Germany Europe (excl. GER) North and South America Rest of World Due to the strongly seasonal nature of our business, the first quarter contributes between 10% and 15% of our total net sales for the fiscal year. Only our winter cereals and winter rapeseed business is largely over by the end of the quarter. 15
Earnings of the Segments Q1 2017/2018 July 1, 2017 September 30, 2017 vs. previous period Corn Sugarbeet Cereals Corporate 45.0% 71 39 64.9% 19.5% 13 10 32.8% +76.2% 50 88 +134.5% 12 28 35.7% 1 1 24.3% 24 40 13 17 20 25 Q1 2016/2017 Q1 2017/2018 Reconciliation (in million) Segments Reconciliation KWS Group Sales 138.6 2.6 136.0 EBIT 55.0 16.2 38.8 16
Capital Expenditures July 1, 2017 September 30, 2017 Capital expenditures by region Total capital expenditures 11.8 million Rest of World 1.8% 47.1% Germany North and South 30.0% 0 21.1% Europe (excl. GER) Capital expenditures by segments Total capital expenditures 11.8 million Corporate 32.6% 33.7% Corn Cereals 9.2% 0 24.5% Sugarbeet Capital Expenditures 2017/2018 (e) > 100 million 17
Forecast 2017/2018 after the Q1 18
Forecast for fiscal 2017/2018 KWS Group Forecast according to IFRS 11 KWS Group Net sales growth EBIT margin R&D intensity 2017/2018 Slight increase Double-digit EBIT margin below previous year Slight increase 19
Forecast for fiscal 2017/2018 Segments 1 Sugarbeet Corn 2017/2018 2016/2017 Net sales above previous year 825 million EBIT margin 2017/2018 2016/2017 Net sales below previous year 455 million EBIT margin Cereals slightly below previous year 33.2% slightly below previous year 7.1% 2017/2018 2016/2017 Net sales 20% 109 million EBIT margin previous year 9.4% Corporate Organizational changes 2017/2018 Rapeseed business Rapeseed business will be pooled and transferred in the cereals segment. Affected segments Corn Cereals + Estimated effects Net sales around 20 millions. EBIT around 2 millions. 2017/2018 2016/2017 Net sales previous year 4.8 million EBIT 65 to 75 million 60.6 million 1 Including our equity-accounted joint ventures. 20
Review Business performance of the KWS Group Net sales +3.7% EBIT +16.7% Net sales in South America increased Strong sugarbeet business Successful oilseed business Cereals net sales decreased slightly 21
Annual Financial Statement KWS Group Earnings Net sales Net sales development in million Net sales development by region in million CAGR 5.2% +3.0% 2015/2016 2016/2017 924 986 1.037 1.075 +12.2% +1.0% -14.9% 13/14 14/15 15/16 16/17 Germany Europe (excl. GER) North and South America Rest of world Net sales South America Europe Rest of world +3.7% Brazilian net sales > 100 million Strong rape seed and sugarbeet business Chinese corn acreage decreased 22
Annual Financial Statement KWS Group Earnings EBIT EBIT development by segments (at equity) in million * +32 +1 132 113 11 4 i.a. license business China Driven by sales growth and special effects Cost of sales Increase in the course of ordinary business activites EBIT 2015/2016 Corn Sugarbeet Cereals Corporate EBIT 2016/2017 * = there may be rounding differences EBIT increased by 16.7 %. EBIT margin at 12.2 (10.9) % 23
Annual Financial Statement KWS Group Earnings Highlights of the P&L Net financial income/expenses 16.6 million (+12.2%) Net income of the year 97.7 million (+14.5%) EBT 148.2 million (+16.1%) Tax rate 34.1% (previous year: 33.1%) EPS 14.78 (12.92) Closing price 6/30 344.45 (297.80) PER 6/30 23.3 (23.0) 24
Annual Financial Statement KWS Group Financial Situation Cash flow, cash & capital expenditures Capital expenditure 63.3 (99.6) million 36% Free Cash flow 57.6 (33.7) million +71% Cash flow from operating activities 122.4 (125.9) million 4% Cash and cash equivalants 191.4 (163.9) million +17% 25
Assets of the KWS Group Balance sheet structure Assets in million 704 769 815 633 668 680 14/15 15/16 16/17 Noncurrent assets Current assets Balance sheet structure Equity and Liabilities in million 282 317 275 394 739 768 299 359 837 14/15 15/16 16/17 Equity Noncurrent liabilities Current liabilities Working Capital Trade receivables 302.6 million (+3.0%) Moderate increase in inventories 194.9 million (+4.9%) Stable Net-Working-Capital 289.7 (284.8) million Liabilities Decrease in liabilities 658.3 ( 1.6%) Commercial Papers were issued Equity Increase in equity 836.9 (767.9) million Equity ratio 56.0% (53.5%) Fixed assets coverage 133% (123%) 26
Segment reports 27
KWS track record according to management approach 1 Net sales developement 1 in million EBIT developement 1 in million CAGR 5.0% 1.147 1.178 1.260 1.357 1.394 152 138 138 141 159 12/13 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. 28
Segment overview Corn Sugarbeet Cereals Corporate +3.8% 795 825 +3.4% 440 455 8.5% 64 58 +27.2% 7.4% 151 119 118 109 +14.4% +17.1% 9 10 4 5 50 61 21% 2015/2016 2016/2017 Reconciliation (in million) Segments Reconciliation KWS Group Net sales 1,394.0 318.8 1,075.2 EBIT 158.8 27.2 131.6 29
Corn Segment Net sales 825 mill. (+3.8%) EBIT 58 mill. ( 8.5%) Capex 25 mill. ( 79.0%) ROCE (avg.) 8.0% 30
Corn, EU Net sales development and market share Net sales 1 in million Market share 2 2016/2017 EU acreage 2017: 12.8 million ha ( 1%) CAGR 0.7% Others 25% 18% KWS 314 324 321 307 305 Syngenta 6% 22% Pioneer Vilmorin 13% 12/13 13/14 14/15 15/16 16/17 16% Monsanto 1 Including net sales from oilseeds & catch crops. 2 Source: Kleffmann, own estimates. 31
Corn, North Amerika Net sales development and market share Net sales 1,2 in million Market share 3 2016/2017 US acreage 2017: 36.8 million ha ( 3%) CAGR 4.1% Others 19% 6% AgReliant 263 249 272 312 309 Dow 4% Syngenta 5% 35% Monsanto Pioneer 30% 12/13 13/14 14/15 15/16 16/17 1 KWS Share. 2 Including net sales from oilseeds & catch crops. 3 Source: own estimates. 32 50:50-JV with Vilmorin, France
Corn, other regions Net sales development Net sales 1 in million Sales breakdown 1 2016/2017 Asia/Africa 15% 124 141 CAGR 14.2% 161 176 211 20% European non EU states 65% South/Middle America 12/13 13/14 14/15 15/16 16/17 1 Including net sales from oilseeds & catch crops. 33
Sugarbeet Segment Net sales 455 mill. (+3.4%) EBIT 151 mill. (+27.2%) Capex 17 mill. ( 2.3%) ROCE (avg.) 58.0% 34
Sugarbeet worldwide Net sales development and market share Net sales 1 in million Global acreage 2017: 4.9 million ha (+10%) 298 319 CAGR 11.1% 364 412 454 Market share 1 2016/2017 Syngenta 8% Strube 11% Lion Seeds 1% Maribo 3% 1% Others Desprez 6% 28% KWS Crystal 8% 18% Betaseed 12/13 13/14 14/15 15/16 16/17 SESVanderHave 16% 1 Sugarbeet w/o potato. 1 Sugarbeet w/o potato. Own data KWS, 2017. The sugarbeet activities of Syngenta (including Maribo) have been acquired by DLF. Since October 2017 the activities are managed under the brand MariboHilleshög. 35
Sugarbeet, EU Net sales development and market share Net sales 1 in million Market share 1 2016/2017 EU acreage 2017: 1.8 million ha (+17%) CAGR 9.2% Lion Seeds 1% Maribo 2% 2% Others Desprez 5% Syngenta 6% Betaseed 9% 40% KWS 182 128 137 136 150 Strube 16% 12/13 13/14 14/15 15/16 16/17 19% SESVanderHave 1 Sugarbeet w/o potato. 1 Sugarbeet w/o potato. Own data KWS, 2017. The sugarbeet activities of Syngenta (including Maribo) have been acquired by DLF. Since October 2017 the activities are managed under the brand MariboHilleshög. 36
EU sugar market reform 2017 Changes resulting from EU sugar market reform by September 30, 2017 Annual EU sugar production quota Minimum beet price 16% sugar content Annual EU isoglucose production quota WTO export limit Current developments Expected sugar yield for campaign 2017/2018 at record high, for the first time over 12 t/ha in the EU Expected increase of exports on the level of 3 million tonnes Stable acreage in the EU for 2018 expected Opportunities Risks +17% in 2017 Increasing acreage The competition in sugar production requires high performing varieties Increased competition Volatile prices & volumes 37
What is CONVISO SMART? CONVISO SMART is an innovative weed control system in sugarbeet naturally developed jointly by KWS and Bayer CropScience consisting of two key components: KWS Modern sugarbeet varieties with CONVISO SMART technology 1 Bayer Dedicated herbicide 1 CONVISO based on ALS inhibitors 1 Conventionally bred varieties tolerant to Conviso Draft seedbox 1 Broad efficacy against all major weeds Draft herbicide can CONVISO SMART will play an important role in many sugarbeet markets: Returning competitive advantages in areas with hard to fight weeds For Eastern Europe, where weeds are a limiting factor for yield due to the large expanse of fields Successive product launch in initial countries in 2017/2018 38
Cereals segment Net sales 109 mill. ( 7.4%) EBIT 10 mill. (+14.4%) Capex 5 mill. ( 45.7%) ROCE (avg.) 9.0% 39
Cereals Net sales development and net sales breakdown by product group Net sales in million Net sales breakdown 2016/2017 Others 10% CAGR 0.7% Rapeseed 9% Barley 19% Segment net sales 2016/2017 109 million 41% Rye 112 107 111 118 109 12/13 13/14 14/15 15/16 16/17 Wheat 21% Clear market leader in hybrid rye 40
Appendix 41
KWS Executive Board Dr. Hagen Duenbostel (1970) CEO/Member of the Executive Board since 2003 Responsibility: Corn, Development & Communication, Compliance Degree in Business Administration; Dr. rer. pol. Dr. Léon Broers (1960) Member of the Executive Board since 2007 Responsibility: Research, Breeding Ph.D. in Plant Breeding; Master of Business Administration Dr. Peter Hofmann (1960) Member of the Executive Board since 2014 Responsibility: Sugarbeet, Cereals, Marketing Degree in Agronomy; Ph.D. in Seed Physiology Eva Kienle (1967) Member of the Executive Board since 2013 Responsibility: Finance, Law, Procurement, Controlling, IT, HR, Global Services, Investor Relations Degree in Business Administration 42
Key figures for the KWS share September 30, 2017 1 General data Shareholder structure ISIN Number of shares Type 2 Closing price September, 30 2017 September, 30 2016 3 Daily trading volume (avg.) Q1 2017/2018 Q1 2016/2017 4 Market capitalization September, 30 2017 September, 30 2016 5 Earnings per share September, 30 2017 September, 30 2016 6 Daily price fluctuation (avg.) Q1 2017/2018 Q1 2016/2017 DE0007074007 6,600,000 No-par value shares in 368.27 300.99 in shares/day 1,495 1,910 in million 2,431 1,967 in 5.78 5.22 in % of closing price 1.7 % 1.8 % 54.5% Families Büchting, Arend Oetker 30.1% Free float 15.4% Tessner Beteiligungs GmbH 43
Financial calendar and IR contact Financial calender Date November 23, 2017 Quarterly Report Q1 2017/2018 December 14, 2017 Annual Shareholders Meeting in Einbeck February 27, 2018 Semiannual Report 2017/2018 May 17, 2018 Quarterly Report 9M 2017/2018 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 12, 2018 Annual Shareholders Meeting in Einbeck Wolf-Gebhard von der Wense Head of Investor Relations +49 (0) 5561 311-968 investor.relations@kws.com KWS SAAT SE Grimsehlstr. 31 37574 Einbeck Tatjana Kasper Investor Relations Manager +49 (0) 5561 311-14 84 investor.relations@kws.com KWS SAAT SE Grimsehlstr. 31 37574 Einbeck 44
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. KWS SAAT SE 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 KWS SAAT SE and/or its subsidiaries and/or the industry in which KWS SAAT SE 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 KWS SAAT SE 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. KWS SAAT SE 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