KWS successfully completes fiscal year 2020/2021 and increases dividend

The KWS Group achieved net sales growth of approximately 2% to €1.31 billion in fiscal year 2020/2021. The key figures EBIT and EBITDA were at the level of the previous year; net income and earnings per share recorded a significant increase.

"Our business figures again developed very pleasingly last year, enabling us to increase our dividend significantly," commented Eva Kienle, Chief Financial Officer of KWS. "With our focus on innovative seed, we are scoring in established and new markets and thus growing steadily and sustainably. At the same time, we are systematically expanding our digital farming offerings and thus providing additional service to our customers. In the new fiscal year, we will continue on this successful path and grow further."

Net sales increased by 2.2% to €1,310.2 million (€1,282.6 million) in fiscal 2020/2021. On a comparable basis (excluding currency effects), net sales rose by 8.8%. The KWS Group's operating income before depreciation and amortization (EBITDA) improved by 2.4% to €230.9 (225.5) million. Operating income (EBIT) was on a par with the previous year at €137.0 (137.4) million, despite planned higher expenditure on research & development and significant currency burdens.

The financial result improved significantly to € 5.2 (-7.8) million compared with the previous year. In addition to improved net interest expense of € -12.2 (-18.6) million, this was due to higher net income from equity-accounted companies amounting to € 17.4 (10.8) million. Taxes on income amounted to € -31.6 (-34.3) million. This resulted in net income of € 110.6 (95.2) million and earnings per share of € 3.35 (2.89).

Free cash flow improved significantly in the reporting period to €84.2 million (previous year: €31.5 million excluding the acquisition of Pop Vriend Seeds), mainly as a result of strict working capital management and a more cautious investment policy in light of the COVID-19 pandemic.

Overview of the key figures

Business performance of the segments

In the year under review, the Corn Segment generated net sales of €774.0 million, on a par with the previous year (€775.7 million); adjusted for exchange rate effects, the segment recorded an increase of 8.3%. The main contributors to the currency-adjusted growth were the South American markets of Argentina and Brazil and the Europe region. In Europe, the high-performance hybrid varieties for grain corn launched in recent years performed particularly well, enabling us to significantly strengthen our market position in this area. In Brazil, the successful commercialization of high-performance hybrid corn varieties led to a significant expansion in business volume and market share gains. In North America, sales of the AgReliant joint venture declined slightly in a challenging competitive environment. Currency effects from the devaluation of the U.S. dollar against the euro also had a significant negative impact. Segment earnings rose by 6.3% to €71.3 (67.1) million. This was due in particular to increased earnings contributions in North America and Brazil. The EBIT margin for the segment increased slightly from 8.6% to 9.2%.

Net sales in the Sugarbeet Segment rose by 6.6% to €524.3 (491.8) million as a result of the growing success of innovative KWS varieties. Demand for CONVISO^® SMART continued in the year under review, with the corresponding varieties now available in 25 countries. In addition, initial sales were generated with newly launched varieties based on a new Cercospora tolerance (CR+). Re-seeding due to winter weather conditions in spring 2021 had a positive impact on sales development, particularly in France, Germany and the USA. Currency effects, mainly from the translation of the U.S. dollar and the Turkish lira, impacted sales by -6.4%; adjusted for currency effects, the segment recorded an increase of 13.0%. Segment profit increased to €174.7 million (€170.1 million), while the EBIT margin was slightly below the previous year's level at 33.3% (34.6%).

In the Cereals Segment, net sales remained at the previous year's level of €191.2 million (€191.2 million); adjusted for exchange rate effects, net sales rose by around 3%. While business with barley seed declined slightly by 5%, mainly due to weather conditions, sales of rapeseed increased (10%) as a result of higher prices. Wheat seed business also increased by around 10%. Sales of hybrid rye seed declined slightly due to lower cultivation areas in the EU and adverse currency effects. Segment profit declined to €21.3 million (€26.4 million), mainly due to higher research and development expenses. The EBIT margin was 11.1%, down on the previous year (13.8%).

Sales in the Vegetables Segment, which includes the business activities of the acquired vegetable seed company Pop Vriend Seeds, came to €58.2 million, significantly below the previous year's figure (€83.5 million). The decline was largely due to lower sales of spinach seed as a result of the COVID-19 pandemic and to adverse currency effects. By contrast, the bean seed business recorded an increase of around 13%. Segment profit (adjusted for effects relating to the purchase price allocation for the acquisition of Pop Vriend Seeds) reached €7.9 million. Taking into account non-cash effects from the purchase price allocation of inventories measured at fair value (€-4.1 million) and amortization of acquired intangible assets (€-21.9 million), the segment result was €-18.1 million.

Net sales at the Corporate Segment were €6.0 (4.6) million. These are mainly generated by KWS farms in Germany, France and Poland. In addition, all overarching costs for the KWS Group's central functions and basic research expenses are reflected in the Corporate segment, which is why the segment's income is regularly negative. The segment's income improved significantly to €-92.0 million (€-104.6 million), mainly due to positive currency effects from financing instruments and pandemic-related cost savings.

The difference from the KWS Group’s statement of comprehensive income and segment reporting is due to the requirements of the International Financial Reporting Standards (IFRSs) and is summarized for the key indicators of net sales and EBIT in the reconciliation table below:

Reconciliation table

1 Excluding the shares of the equity-accounted companies AGRELIANT GENETICS LLC., AGRELIANT GENETICS INC. and KENFENG – KWS SEEDS CO., LTD.

Capital spending

Against the backdrop of the COVID-19 pandemic, the KWS Group pursued a cautious investment policy in fiscal 2020/2021, as a result of which capital expenditure fell to €81.3 (108.0) million. Investment activity in the year under review followed the long-term growth plans with a focus on establishing and expanding production and research & development capacities.

Planned appropriation of profits: Significant increase in dividend

In view of the company’s pleasing operating performance, the Executive Board and Supervisory Board will propose to the Annual Shareholders' Meeting on December 2, 2021, that a dividend of €0.80 (0.70) per share would be distributed for fiscal 2020/2021. This means that €26.4 (23.1) million would be distributed to the shareholders of KWS SAAT SE & Co. KGaA. That would correspond to a payout ratio of 23.9% (24.3%), once again in line with the KWS Group’s earnings-oriented policy of paying a dividend of 20% to 25% of its net income.

Forecast for the 2021/2022 fiscal year: Further growth expected

In view of a brightening agricultural environment with price increases for agricultural raw materials, the Executive Board expects demand for seed to rise in fiscal 2021/2022. The KWS Group expects to achieve net sales growth of 5 to 7%. The EBIT margin is expected to be around 10% and, adjusted for non-cash effects from purchase price allocations as part of company acquisitions, in a range between 11% and 12%. The research & development ratio is expected to be in the range of 18% to 20%.