Vilmorin & Cie sales down 6.9% in Q3 2018

• Sales at the end of the third quarter 2017-2018 down 2.6% on a like-for-like basis

• Objectives for 2017-2018 readjusted: slight growth of sales and lowering of the current operating margin rate

Closing on March 31, sales at the end of the third quarter for fiscal year 2017-2018, corresponding to revenue from ordinary activities, came to 988 million euros, down by 7.7% with current data and 2.6% on a like-for like basis compared with March 31 of the previous fiscal year.


Consolidated financial information is established in compliance with the IFRS reference (International Financial Reporting Standards), as adopted by the European Union on March 31, 2018.

Evolution of the data for fiscal year 2017-2018 is analyzed using current data and on a like-for-like basis. Like-for-like data concern data that are restated for constant scope and currency exchange rates. Accordingly the average exchange rate for fiscal year 2017-2018, and any changes in consolidation scope, are applied to financial data for 2016-2017, in order to be comparable with data from fiscal year 2017-2018.

       - The only change to the consolidation scope is the stake of 49% in the capital stock of Prime Seed Co (Zimbabwe. Vegetable Seeds) purchased in April 2017.
       - The change in the scope of activity relates to the withdrawal by the Business Unit VILMORIN-MIKADO (Vegetable Seeds) from the distribution of agricultural supplies in Japan.

Sales for the third quarter 2017-2018 down 1.7% on a like-for-like basis marked by temporary difficulties in the vegetable and field seeds activities

Vegetable Seeds division

Over the course of the third quarter, the Vegetable Seeds division achieved stable sales (191 million euros. -0.1% on a like-for like basis). Following on from the second quarter, business remained affected by globally high inventory levels at distributors, particularly in North America. Moreover sales were also hit by problems concerning the management of seed procurement in certain countries (in particular phytosanitary regulations and delays in seed availability), and by the temporary contraction observed on several markets.

Looking beyond these different one-off difficulties, temporarily affecting the Vegetable Seeds business, performances remained dynamic in several regions with high potential, particularly in Asia, the Middle East and South America.

At the same time, the programmed withdrawal by the Business Unit VILMORIN-MIKADO from the distribution of agricultural supplies in Japan was continued over the quarter.

Consequently, aggregate sales for the Vegetable Seeds division on March 31, 2018 came to 439.5 million euros, down by 11.9%. Restated on a like-for-like basis, the decrease was 3.5%.

The fact that this fiscal year is more difficult for the Vegetable Seeds division, which in recent years has regularly posted strong business growth, is directly linked to a more contrasted vegetable seed market context this year in certain major regions of the world.

This performance in no way calls into question the market fundamentals nor the global growth trend of Vilmorin & Cie’s Vegetable Seeds division, which clearly remains number 2 worldwide; nevertheless it does mean that Vilmorin & Cie is revising its Vegetable Seeds sales growth objective for fiscal year 2017-2018 at +2% on a like-for-like basis, as opposed to +4% previously set.

Field Seeds division

Sales achieved by the Field Seeds division over the third quarter (314.3 million euros, -2.1% on a like-for-like basis) were down in a market context still hit by the low level of prices for agricultural raw materials.

• In Europe, sales for the quarter for Field Seeds were down slightly (298 million euros, -0.8% on a like-for-like basis), in a globally sluggish market environment. Spring campaigns were this year marked by delays in sowing because of the difficult weather conditions in several countries in Western Europe (especially France, Germany and the United Kingdom). Situations vary depending on crops and countries:
   

1.  -Orders for corn seeds are stable, in spite of the expected reduction in cultivated acreage in most European countries, while sunflower seed sales grew well, both in terms of volume and value. By the end of this fiscal year, Vilmorin & Cie should thus have strengthened its competitive positions in Europe, particularly for corn.
2.  - Whereas the market in Western Europe remains bearish, Ukraine, Russia and Turkey are posting high quality performances.
    

• In South America, the third quarter, which is devoted to the sales campaign for safrinha corn (14.1 million euros), posted a strong drop in business, contrary to fiscal year 2016-2017 which benefitted from a very dynamic market. However the market context has shown itself to be particularly difficult this year, with an impact from the significant reduction in acreage devoted to corn, and also strong competitive pressure on pricing policies and the decision by Brazilian farmers to opt for varieties with lower added value.
   
• Concerning the other development zones, business in South Africa was considerably affected by persistent drought, whereas in Asia performance varied over the third quarter depending on the country.

As a consequence of this third quarter, aggregate sales for the Field Seeds division on March 31, 2018 came to 512.2 million euros, down 3.6% compared with the same period for the previous fiscal year; on a like-for-like basis the decrease was 1.3%.

On the basis of these figures, and bearing in mind the accentuated decline of the South American markets resulting from an unfavorable market environment in the region this year, Vilmorin & Cie is resetting its sales objective for Field Seeds for fiscal year 2017-2018 at the same business level on a like-for-like basis as the previous fiscal year, as opposed to a previously set increase of 4%.

Finally, with regard to associated companies:

• On the North American market, business for the third quarter was stable on a like-for-like basis. Marketed corn seed volumes are expected to drop, in line with anticipated cultivated acreages for this crop; nevertheless, AgReliant has held up well compared to its competitors. As for soybeans, there was a significant increase in sales volumes, whereas acreage devoted to this crop should drop slightly.
• On the African market, Seed Co this year once again posted strong business development, and is continuing its expansion into markets in Southern and East Africa.