Vilmorin & Cie sales up 8% at the end of the third quarter in FY 2016-2017

 

Consolidated financial information is established in compliance with the IFRS reference (International Financial Reporting Standards), as adopted by the European Union on March 31, 2017.

Evolution of the data for fiscal year 2016-2017 is analyzed using current data and on a like-for-like basis.

Like-for-like data concern data that are restated as if the consolidation scope and currency exchange rates were the same; accordingly, financial data restated for fiscal year 2015-2016 take into account:

- the impact of variations in currency exchange rates, by applying the average rates of fiscal year 2016-2017,

- any change in the consolidation scope.

With regard to the latter, the activity of the company Genica Research (United States. Vegetable seeds), acquired in February 2016, has not been restated for the effect of scope for fiscal year 2016-2017, since in July 2016, the company was already integrated into the Vegetable seeds Business Units HM.CLAUSE and Vilmorin-MKS, respectively for its American business and its European business.

A third quarter 2016-2017 with significant growth, marked by the quality performances of the vegetable and field seeds activities

Vegetable seeds activity

A quarter with solid growth

Over the course of the third quarter, the Vegetable seeds division achieved a very good level of sales (212 million euros. + 5% on a like-for-like basis), bearing in mind the high reference base from fiscal year 2015-2016.

In the context of a dynamic market, which is however less buoyant at the moment in certain territories (Italy, Spain and Mexico more particularly), the three Business Units all achieved significant business growth. This growth concerns all the different geographical zones. The increase in sales was once again very strong at the end of the quarter and demonstrates that the European market is picking up, and in North America business is extremely dynamic. If crops are considered, carrot, hot and sweet pepper and summer squash have performed with the greatest success. Finally the programmed run-down of the agricultural supplies and equipment activity of the Business Unit Vilmorin-MKS in Japan was pursued over the third quarter.

As a consequence, aggregate sales for the Vegetable seeds activity on March 31, 2017 stood at 498.9 million euros, an increase of 5.9%. Restated on a like-for-like basis, sales increased by 5.1%.

This fine performance confirms Vilmorin & Cie's global dynamic growth for its Vegetable seeds activity; nevertheless, as a result, Vilmorin & Cie has decided to slightly readjust its sales growth objective for fiscal year 2016-2017 to +6% on a like-for-like basis for Vegetable seeds, as opposed to +7%, the previous target.

Field seeds activity

A confirmed upturn in business in an environment that remains difficult

In a context where markets remain globally tense, in particular affected by low level of prices for agricultural raw materials, for the third quarter this activity (330 million euros. +6.7% on a like-for-like basis) was dynamic.

In Europe, the sales for Field seeds over the third quarter (305.4 million euros) increased, in a market environment marked once again this year by considerable pressure on prices. However, the situation is very different according to each crop:

- Once again corn seed sales fell, as a direct consequence of the expected decrease in cultivated acreage, mainly in Western Europe (especially in France), in spite of a commendable increase in business in Eastern Europe where market shares gains were achieved.

- Sales of sunflower seeds increased very strongly, mainly in the key markets of Ukraine and Russia.

In South America, the second part of the sales campaign for safrinha corn (20.3 million euros) achieved extremely powerful business growth, both in terms of volume and value. Benefitting from a very dynamic market, and in the continuity of the first part of the fiscal year (safra campaign), Vilmorin & Cie gained further market shares in Brazil.

Concerning the other new development zones, business in South Africa was hit hard by a persistent drought, while in Asia, the sales performance for the third quarter attained a good level.

As a consequence, aggregate sales of the Field seeds activity for this third quarter reached 531.6 million euros on March 31, 2017 an increase of 11% compared with the same period for the previous fiscal year; the increase was 11.7% on a like-for-like basis.

This high quality performance means that Vilmorin & Cie is raising its sales growth objective for fiscal year 2016-2017 to more than 5% on a like-for-like basis for Field seeds, as opposed to an increase superior to 2% previously set as the target.

Finally, on the North American market, in an environment characterized by persistent pressure on prices, the volumes of corn seeds brought to market are down proportionately to the predicted acreage devoted to this crop. On the other hand, volumes of soybean seeds grew significantly, in the context of a probable return to a significant increase in the acreage devoted to this crop.

After a year of severe drought, Seed Co recorded a strong increase in the sales of its corn seed in Southern and Eastern Africa.

Objection for 2016-2017

Sales made over the first nine months of the fiscal year on average represent almost three quarters of Vilmorin & Cie's annual sales.

Considering the results of the first nine months for the fiscal year, as presented above, and on the basis of currently available information, for fiscal year 2016-2017, Vilmorin & Cie is now aiming for an increase in sales, on a like-for-like basis, of 6% for its Vegetable seeds activity, and more than 5% for its Field seeds activity. Globally, Vilmorin & Cie confirms its objective to reach an increase of consolidated sales of more than 5% on a like-for-like basis compared with fiscal year 2015-2016.

Moreover, Vilmorin & Cie is raising its objective concerning its current operating margin rate and intends to set it at 9%, including a research investment of more than 240 million euros. This readjustment is particularly the fruit of the implementation, as of April 2016, of an operational action plan, one of the effects being that Vilmorin & Cie has managed all its operating charges more tightly.

Finally, Vilmorin & Cie is aiming for a contribution from the companies it consolidates under the equity method - the main ones being AgReliant (North America. Field seeds), Seed Co (Africa. Field seeds) and AGT (Australia. Field seeds) at least equivalent to 2015-2016.

Reaching these different objectives fully of course depends on the confirmation, over the fourth quarter, of the strong growth of the Vegetable seeds activity, and on the definitive evolution of corn acreage (Europe and North America) and sunflower acreage (Europe), in a context that remains tense for Field seeds.

Appendix:

Sales for the third quarter 2016-2017 and evolution per quarter and per activity