October 28, 2014

 

KWS increases spending on research and breeding in 2013/14

KWS SAAT AG, one of the world's leading seed companies, increased its spending on research and breeding for fiscal year 2013/14, while expanding its distribution structures at the same time.

 

R&D expenditure increased by 6.0% to US$189.1 million, or 12.6% of net sales, for that period. A total of 1,836 people were hired by R&D during the year. KWS Group has nearly 5,000 employees around the world.

 

Expenditure on product development and distribution went by up by US$28 million during, while selling expenses rose by 7.1% to US$259.3 million as a result of expanding international distribution structures.

 

Inventories were increased by US$61.6 million to US$245.3 million to ensure the ability to deliver seed.

 

For KWS' operating income (EBIT), the company generated US$176 million compared to US$193.4 million last year.

 

Net income for the year fell above-proportionately to US$102.1 million, from US$117.3 million, due to special tax effects. Meanwhile, net sales rose by 2.7% to US$1.5 billion compared to US$1.46 billion in 2013.

 

During fiscal 2013/2014, KWS invested a total of US$105 million in property, plant and equipment, a rise of 26.7%.

 

One focus of capital spending is on expanding corn production capacities, which includes construction of a new seed processing plant in Serbia.

 

In the meantime, the corn segment increased its net sales slightly by 1.9% to US$909 million. Sales markets in South America developed very dynamically, and a slight increase in net sales was also achieved in Europe. The corn segment's income (EBIT) rose by 9.4% to US$128.3 million, despite higher expenditure on product development and distribution. The figure resulted in a return on sales (EBIT margin) of 14.1% (13.1%).

 

In another development, Philip von dem Bussche, the CEO of KWS, revealed that the company obtained 336 marketing approvals for new varieties across all its crops in fiscal 2013/2014.

 

Said Eva Kienle, the CFO of KWS, on the company's future growth,"…We have to expand our seed processing capacities in North America and Eastern Europe. In addition, we'll expand our research facilities at Einbeck and continue to set up our new research center in St. Louis, Missouri, US."

 

Overall, KWS' executive board expects an increase in the group's net sales of 5% to 10% and an EBIT margin of at least 10% in fiscal 2014/2015.

 

The board also announced that KWS SAAT AG would be converted into a European stock corporation, called KWS SAAT SE. A proposed resolution to this effect will be submitted to an annual shareholders' meeting in December 2014.