Release Date: September 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KWS SAAT SE & Co KGaA (KNKZF, Financial) achieved double-digit growth in sales and earnings, driven by a strong performance in the sugarbeet business.
- The company expanded its leading position in the global sugarbeet seed market, capturing a 70% market share.
- Strategic divestments, such as selling the corn business in China and South America, have improved the company's financial position.
- The company recorded a significant increase in operating earnings, with EBITDA up by 40% and EBIT up by 55%.
- KWS SAAT SE & Co KGaA plans to increase its dividend to EUR1 per share, reflecting a 50% increase over the last five years.
Negative Points
- The financial result was negatively impacted by a loss from the AgReliant joint venture and increased interest expenses.
- Sales in the corn segment fell by 5%, with a decline in North American sales through the AgReliant joint venture.
- The vegetable segment reported a significant EBIT loss of EUR35 million, attributed to lower sales and increased amortization expenses.
- The company anticipates a significant decline in sales and earnings for the cereal segment due to import restrictions in Russia.
- The overall net income increase was limited to 3% when accounting for discontinued operations, despite strong operating performance.
Q & A Highlights
Q: Can you clarify the impact of the Brazilian corn business divestment on KWS's debt level and cash proceeds?
A: With the divestment, about EUR200 million of debt exited KWS. Additionally, EUR143 million was repaid from a promissory note. The cash proceeds from the Latin American business were between EUR200 million and EUR300 million, used to repay loans, thus reducing net debt by about EUR350 million. - Eva Kienle, Chief Financial Officer
Q: What is the outlook for the sugarbeet market given recent sugar price fluctuations?
A: Despite recent sugar price volatility, sugarbeet farming remains profitable. Acreage is stable, and new varieties like Cercospora-resistant seeds are expected to drive sales growth. The sugarbeet market is resilient, and KWS anticipates continued strong performance. - Eva Kienle, Chief Financial Officer
Q: How does KWS plan to maintain corn segment margins despite the absence of a EUR28 million one-off effect?
A: KWS expects improved performance from AgReliant and benefits from a better product mix, including sunflower seeds. These factors should offset the absence of the one-off effect, maintaining margin stability. - Eva Kienle, Chief Financial Officer
Q: What are the expectations for seed production costs given lower crop commodity prices?
A: Seed production costs are not expected to decrease significantly due to variable weather patterns affecting production outcomes across Europe, which can drive prices up. - Eva Kienle, Chief Financial Officer
Q: How will KWS's business in Russia be affected, particularly in cereals and sugarbeet?
A: KWS anticipates significant declines in cereal and corn sales due to Russian self-sufficiency and import quotas. However, sugarbeet sales are expected to decrease by less than 20% as Russia relies on imports for sugarbeet seeds. - Eva Kienle, Chief Financial Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
