Deutsche Saatveredelung AG exceeds growth targets

Date:12-17-2019

Deutsche Saatveredelung AG (DSV) is delighted with its result for fiscal year 2018/2019. The company clearly exceeded its targets. At the Annual General Meeting in December, DSV Executive Board Members Dr. Eike Hupe and Clive Krückemeyer proudly reported that DSV achieved a record result along with an excellent sales increase in Germany. The meeting therefore adopted the payment of a dividend of €0.08 per share.

In fiscal year 2018/2019, the group was able to increase its revenues to €208 million (previous year: €174 million). Earnings before interest and tax increased to €11 million (previous year: €7.8 million). This excellent result – the DSV Group’s best so far – was achieved thanks to a 22.5 % increase in commodity sales. DSV sales in Germany totalled €183.7 million (previous year: €157.9 million), corresponding to a 16.4 % increase. “The fiscal year started rather modestly”, Clive Krückemeyer commented, “but during the course of the spring, the tide turned all over Europe. Not only were farmers in Germany compelled to remove damage in grassland and turf areas, but the global markets in which DSV operates also saw huge demand for grass mixtures. All in all, exceptional circumstances contributed significantly to this extraordinary result.”

The sales growth achieved in Germany was mainly due to a 19.2 % increase in commodity sales by €26.7 million to €166.0 million (previous year: €139.4 million). A major part of this growth was attributable to the grasses and organic commodity groups. The sales figures for grasses increased by €20.1 million to €80.2 million, and organic commodities saw a 54 % increase to €12.9 million. In contrast to these positive developments, oilseed rape sales declined, which came as no surprise in view of the extremely dry summer. The turnover dropped by 4 % to €44.3 million compared to the previous year.

In the last fiscal year, DSV invested €5.8 million, increasing its investments by €2.7 million versus prior year. The focus was on expanding the capacity of its production sites in Germany.

Environment

The drought, which took its toll on crops almost all over Europe in the summer of 2018, affected forage crops and damaged grassland. According to DSV, this resulted in very high demand for grass seed in order to compensate for forage shortages. DSV was able to significantly increase sales of its COUNTRY forage brand programme. Furthermore, DSV can report that this situation also boosted cover crop sales, and especially those from its TerraLife® brand programme.

The DSV turf business has seen continuous growth year after year. This growth was mainly generated by the existing customer base, the company states. The excellent breeding material from DSV’s own facilities lays the groundwork for the company’s success.

The ongoing drought adversely affected the oilseed rape sowing process in all major European countries, resulting in a considerable reduction in the cultivated area. Significant price pressure on the oilseed rape market also contributed towards reinforcing this trend. Rapool-Ring GmbH, of which DSV is an associate, successfully maintained its market share in Germany despite these challenging general conditions.

In the field of cereals, the DSV sales force successfully managed to launch new varieties on the German market in particular.

Prospects

“Biodiversity and sustainability – these are the two key topics for which our industry must provide compelling answers both in Europe and worldwide”, Dr. Hupe emphasized. “We consider this as an opportunity – and even more so because DSV in Germany is an expert in the practice-oriented development of diverse cultivation systems. For many decades, DSV has focused on both the breeding of successful varieties and the design of smart cultivation concepts taking the fertility of soils into consideration. This is why we can already provide our customers with future-oriented, highly efficient biodiversity solutions today which have been proven in the field. And this will also help us to take a strong position in global markets.”

According to DSV, the first 2019 crop results in Germany and close neighbouring states are above expectations across all the different cultures. The reduction in cultivation areas for the autumn 2018 sowing season – along with revenue losses caused by challenging vegetation conditions – are the most dramatic factors affecting winter oilseed rape crops. Since a further reduction in oilseed rape cultivation areas in Germany is on the horizon for the next fiscal year, DSV expects reductions in both sales and profit as a result. However, DSV has good reason for optimism in the field of hybrid oilseed rape when looking at the official 2019 test results, because the varieties found to be most productive originated from DSV breeding facilities. LUDGER, SMARAGD and ALBIT are even superior to the very good varieties in our current portfolio and have proven to also provide the best crop results under the challenging 2019 weather conditions.

For cereals, which have already been sold by DSV’s own sales force in Germany for several years now, the company expects to obtain interesting new registrations for 6 row winter barley and winter wheat.

Furthermore, DSV claims to be one of Europe’s leading grass breeding companies. In both turf and forage cultivation, the company registers new premium quality varieties integrated into top-quality mixtures every year. This means that DSV grass mixtures ensure continuous breeding progress.

As far as maize is concerned, DSV builds on a specially selected portfolio which fulfils all farmers’ requirements. In this area also, the company is certain that its prior accomplishments, including for example its efforts to improve forage quality, will pay off in future.

“All in all, we can have an optimistic outlook for the future, because our company is adaptive and agile. Its strong brand programmes focusing on grasses and cover crops – along with promising variety developments for various commodities – lay the foundation for us to enter new markets and drive the globalisation of DSV”, Clive Krückemeyer emphasized.

About Deutsche Saatveredelung AG (DSV)
DSV, with its headquarters in Lippstadt, Germany, is a plant breeding company which looks back on a rich tradition. Research, breeding, production and the distribution of various crops are the business objectives of the company, whose roots go back almost 100 years. The company has a workforce of approximately 480 employees in Germany. The corporate group employs approximately 600 people.