Iran, Turkey cloud outlook for seed maker Vilmorin

U.S. sanctions against Iran and a slide in Turkey’s currency are contributing to an uncertain short-term outlook for seed maker Vilmorin as it seeks to recover from a disappointing past year, the French company said.

Corn is seen at a farmers' cooperative in Maennolsheim, near Strasbourg, France, September 28, 2018. REUTERS/Vincent Kessler/File Photo

Vilmorin, one of the world’s largest suppliers of seeds for grain and vegetable crops, saw its shares tumble as much as 13.5 percent in Paris on Thursday after reporting weaker-than-expected profits for its financial year to June 30.

A slide in emerging market currencies was among factors that weighed on its 2017/18 results and Chief Executive Daniel Jacquemond said continuing geopolitical and economic turbulence was making Vilmorin cautious about growth in the year ahead.

In Iran, the French group had annual sales of about 10 million euros ($11.49 million) by exporting vegetable seeds, and was unsure to what extent it would be able to pursue shipments given upcoming U.S. sanctions, Jacquemond told reporters.

European firms fear falling foul of U.S. restrictions on dollar-denominated trade with Iran, leading the European Union to propose a barter system.

A steep decline in the Turkish lira could also dent demand for the vegetable seeds that Vilmorin exports there, although this would not affect its locally-produced maize and sunflower supplies, Jacquemond said.

“We have a real lack of visibility on the vegetable seed side,” he said.

The French group also fears that a deepening trade dispute between Washington and Beijing could curb growth in the Chinese market where it is trying to expand, he said.

Vilmorin is targeting a 2-3 percent rise in like-for-like sales and a 0.5-1 point increase in its operating margin in 2018/19, after seeing comparable sales fall marginally and its operating margin lose 2 points to 7.2 percent last year.

The firm, which has been hit by high inventory levels among vegetable seed distributors and a decline in maize (corn) planting in North and South America, said it remained confident of long-term growth prospects for agricultural seed.

It also announced an agreement with the Broad Institute in the United States to have access to CRISPR-Cpf1 technology, which is among so-called gene-editing methods being explored to accelerate development of sturdier crops.

Like other seed firms, Vilmorin sees gene-editing as a valuable tool and Jacquemond criticized an EU court ruling this year that such technology should fall under regulations for genetically modified crops, which remain controversial in Europe.