Kws Kleinwanzlebener Saat

Good morning, everyone, and welcome to our analyst and investor call for the fiscal year 2024-25. I'm very pleased to share how KWS has delivered in a changing agricultural environment with a robust operational performance and a number of deliberate strategic choices that set us up well for the future. Before we begin, as always, a brief reminder. Today's remarks include forward-looking statements that are subject to risks and uncertainties, and you will find the full disclaimer on this slide. And with that, let me take you through the highlights. Over the past year, we navigated a weaker agricultural market condition with resilience, and we delivered our full-year targets in line with the latest guidance. Two signals stand out. a strong increase in free cash flow, and a low net debt position. Both underline KWS earnings power and balance sheet strength. We also sharpened our focus. We streamlined the portfolio. We repositioned the corn segment as we also anticipated and communicated earlier and set a new financial framework designed to drive sustainable, profitable growth. As a leading seed specialist, this means targeted long-term investments in growth areas and in our innovation pipeline and continue to help to address the real challenges facing agriculture. At the same time, we want our shareholders to participate in the company's long-term success. We are aiming for a higher payout ratio while maintaining a strong commitment on dividend continuity. And looking ahead to 2025-2026, we are confident and the resilience and the trajectory of our market-leading businesses. So even if market headwinds unfortunately won't disappear overnight, we expect to stay on our growth path and create sustainable value for all our stakeholders. Let's now take a look at our key performance indicators for the last 50 years. So the figures presented on that slide relate to the continuing operations of KDOS following the sale of our South American activities that we closed the first quarter of last fiscal year. Net sales of 1.68 billion euros were at previous year's level, including a slight negative currency effect. On a comparable basis, so on a constant exchange rate basis and without portfolio effects, organic growth was plus 1%. So overall, I find this quite remarkable as an outcome given the declining acreage that we've seen in our global ag markets, in particular in our core European markets. EBITDA was 351 million euros, down 13.4%. This reflects special items and operating developments. Keep in mind that previous year included a positive one-time effect of 28 million from divestment of our Chinese corn business. We also had higher costs on the industry side, increased R&D and also selling expenses. Net income declined to 140 million euros, mainly due to lower EBIT and a higher tax rate. The financial result, however, improved significantly, driven by higher interest income after we materially reduced our net. A very nice result is our increased gross margin, which grew slightly to 63.1%, benefiting from positive . This really demonstrates our pricing power, even in times of challenging commodity markets and the premium innovation for our . Free cash flow from continuing operations improved substantially to 123 million euros, mainly due to higher cash from operating activities and lower capex. As a consequence, our net debt fell significantly from 385 million euros to 62 million or 0.2 times the VDA. So all in all, this is a very solid picture against the industry backdrop. A quick walkthrough of the sales bridge. We achieved a slight organic growth despite the continued headwinds and lower acreage, organic growth of plus 1%. mainly driven by sugar beet and verpes. With this, we slightly exceeded our latest sales outlook, where we guided around a 0% growth. On the other hand, FX effects had a negative effect of approximately 1%, primarily related to the Turkish lira. Overall, this underscores our ability and our resilience to deliver stable sales under challenging conditions. Our two differentiators, the economic value of our varieties and the broad portfolio that balances opportunities and risks. To illustrate, in the last fiscal year, 24-25, we generated two-thirds of our sales with new varieties, which is a strong indicator of our innovation power, and also a clear evidence of our R&D effectiveness. We also achieved a new record, 584 new varieties approved in the last year, the last reporting year. That's an increase of more than 4% versus the previous year, which means with this, we are also laying the foundation for future growth. Our income statement reflects both robust underlying business performance, but also several one-off items. So, let me walk you quickly through the special items that impacted our results. First, prior years included a positive one-time gain of 28 million euros from the sale of our Chinese corn business. This year, we benefited from the reversal of the VAT provision amounting to 7.7 million in our . So this provision was established in the previous fiscal year related to a claim which we successfully funded off. Another one of the 3.7 million write down related to the divestment of our North American joint venture, Equiline, that we completed in June 2025. Despite these effects, we maintained a strong profitability of an adjusted EBITDA margin of 20.4% while continuing our high level of RD investment that are crucial for our long-term competitive advantage. Net income from continuing operations reached 140 million or €4.24 per share. And taking into account the extraordinary gain of 96 million euros from the sale of our corn and sorghum business in South America, earnings per share increased sharply to 7.16 euros per share. Let's now turn to our segments, and we're starting with sugar beet. Sugar beet net sales rose to €172 million on an organic basis, plus 2.2%, even though acreage declined by roughly 3%. The context matters here. So European producers reduced contracted areas from last season's very high base, moving essentially back toward normal levels. Growth was driven merrily by Northern, Western, and Eastern Europe, and also, to a lesser extent, from North America. Our sustainable product innovations, Conviso, Smart, and CR+, continue to lead. Together, they account now for 61% of our segment sales, which is up from 56% last year. We also launched unique combination varieties, so a combination of Conviso and CR+, across several countries, which will also support the future growth. EVTA increased 5%, including the 7.7 in one-time provision reversal. EVTA margin rose to 45.5%, so overall profitability improved, supported by portfolio mix and sustained pricing power. Moving on to corn, I mentioned earlier corn saw a fundamental strategic change, which I addressed Later, market-wise, Europe moved lower with reduced acreage. In our continuum corn operations, which includes the Porata contribution of Equilind, sales declined 2.7% to 683 million euros. Adjusted again for FX and portfolio, the decline was minus 1.6%. So Europe held stable, and the decline came mainly from North America, reflecting FX, but also volumes in a pretty competitive market. EBITDA was at 53 million euros below prior years, 82 million euros, which had included, however, the 28 million one-time gain that I mentioned. The EVDA margin was 0.8% accordingly below last year. Let's now turn to Sirius. In Sirius, net sales declined as expected by about 4.6% to €263 million, driven by bigger commodity markets and a declining business and stock, where we benefited from one-time sales in the previous fiscal year. Our largest crops, hybrid rye and oilseed rape, were slightly down versus last year, while wheat was stable. EVDA declined to 40%. 3 million euros reflecting the software top line and continued high R&D investments, in particular with regards to our hybridization efforts in cereals. On the other hand, vegetables continue to perform very well. It was our fastest growing business unit in last fiscal year, top line 16.2% to 72 million euros. And this increase was primarily driven by spinach seeds, which accounts now for two-thirds of the segment sales. We added sales activities across key European markets. We improved our go-to-market, which supported the dynamic sales growth and also strengthened our global leadership in spinach seeds. The bean business was flat in a slightly softer market, so over here we were able to gain market share. EVDA was at minus 22 million euros below last year due to the planned step-up in expenses for breeding and sales expansion. These are, as you know, deliberate investments to build a significant long-term position in the vegetable seed market. Operating cash flow increased significantly to 228 million euros, mainly because cash outflows for inventory and receivables were lower. Cash also from investing activities was at 105 million euros slightly above last year. However, last year included roughly 40 million proceeds from the sales of Chinese corn activities, so that is important for comparison purposes. Investment focused on production R&D capacity, including the completion of our lead seed storage in Einbeck and the opening of an R&D center for vegetable seeds in the Netherlands. So overall, free cash flow improved substantially to 123 million euros. As a consequence, our net debt position improved substantially from 385 million to 62 million or 0.2 times EBITDA. In practice, that puts us close to a net debt-free position. Two main drivers. First, our annual EBITDA of 350 million euros already covered a large share of the starting debt. and our M&A proceeds of 277 million euros from our divestments further in debt. Networking capital did build through the year, but it remained significantly below the prior year period, supporting free cash flow. Our capital structure is now fundamentally stronger, giving us flexibility to invest in growth, advance our strategy, and of course also selectively pursue M&A from a position of strength. I'm pleased to report that beyond the operational delivery, we reached key strategic milestones in our positioning. Most notably, we realigned our corn segment, streamlining the portfolio with divestments in North and South America and in the prior year in China, of course. The result, higher profitability and a much stronger financial position. Going forward, KDFS will focus on the profitable European corn business, where we already today hold a market leadership position. So, we're deliberately exiting sales outside Europe in exchange for higher margins, in exchange for reduced currency and market risk, and also lower capital intensity. So, by exiting the corn GMO markets, we've also reduced our dependence on external IP and can concentrate on our own proprietary breeding technologies. This focus supports our goal of sustainable profitable growth. It supports our goal of entrepreneurial independence, and it also fits very well to the growth opportunities we see in Europe, in particular in grain corn. With the portfolio adjustments behind us, We are now entering a new phase of corporate development, and that's why we have refreshed our strategic framework and we set new medium-term financial targets. And our priorities rest on three pillars. First, expand our market leadership in established crops. We want to scale activities where we see additional value potential, such as vegetable seeds. And, of course, we want to continually push innovation in plant breeding. And these three drivers, lead, build, advance, they form a clear framework for our profitable, sustainable growth in the future. And over the next three years, so over the mid-term period, we're targeting a 3% to 5% organic net sales growth and EBITDA margin of 19% to 21%, alongside our 2030 sustainability ambition. And in this context, we have also updated our dividend policy, KGOS values continuity, and we are committed to stable and increasing dividends. We are now aiming for a higher payout ratio of 25 to 30% of earnings adjusted for portfolio and other one-time effects. And for last fiscal year, 2045, the Executive Board and Supervisory Board will propose a dividend of €1.25 per share, up 20% year over year. So that implies a 26% payout of adjusted earnings after taxes. In other ways, we will balance dividends with investments in organic growth and potentially M&A. That balance is important to us. Let's now turn to the outlook for current fiscal year. In line with our midterm visions, we expect a comparable net sales to grow by approximately 3% year over year in 25-26. So despite a subdued, still subdued agricultural backdrop and an expected decline in Russia due to import restrictions and localization of seeds. And I think that's a strong statement. We also expect an EBITDA margin of 19 to 21%, so consistent with our midterm target range. This includes a positive special effect of around 30 million euros from the sale of our license rights as part of the divestment of our North American corn activities that we will recognize in the first quarter, 25, 26. Yeah, with that, and before I close, I would like to invite you to our Capital Markets Day on 18th of November 2025 in Einbeck. So my fellow board colleagues and I will share deeper insights into our goals, into our growth ambitions. And while we offer the participation, I will be delighted to see many of you in person. So you can really expect a full day of presentations, Q&A with deep dive on strategy, on business, on financials, and also on pipeline and innovation, plus on-site insights into our innovation capabilities. We'll talk about genome editing. We'll talk about hybridization. And of course, you will have to look also at our sugar beet production backbone. So there will be ample of opportunities to have direct conversations, and I look forward to welcoming you on 18th November in INAG. That concludes my prepared remarks. Thank you for your attention, and I look forward to the Q&A together with our Head of Investor Relations, Peter Vogt.

Thank you very much. And first up is Oliver Schwarz from Barbox Research. Over to you.

Good morning, gentlemen. Thank you for taking my questions and congrats on the past results. I've got two questions here on the results. Firstly, I saw that earnings were boosted by a reversal of provisions to the amount of 7.8 million. Could you elaborate on that one? Secondly, I saw that or realized that the outlook is now basically performed on when it comes to earnings on the EBITDA level, no longer on the EBIT level, but still you tend to report the EBIT as the prime earnings figure in the segmental overview. Is that going to change in the future? And what's the rationale in regard to switching from an EBIT guidance to an EBITDA guidance? That would be my questions. Thank you.

Mm-hmm. Thank you for your question. So yes, correct. So on the VAT provision, we have the reverse VAT provision in the amount of 7.7 million euros that we took very earlier in the previous fiscal year. It relates to a dispute in Russia with the applicability of a certain VAT rate, and we took this off in front of the court, so that put us in a position to reverse And that had a positive one-time effect that we recognized in the sugar beet segment. On the EBITDA, correct, yes. So we are switching essentially from EBIT to EBITDA. And that is mainly driven by two factors. First is we had a longer discussion in the first half of this year market perception study where we talked to many people in the financial community. the preference and the rest also to be more comparable also to our peers in our industry and that's why we switched from EVIL to EVDA and also internally that provides us with a much cleaner view on our operating performance because it strips out you know accounting effects in particular with regards to the purchase price allocation also in our vegetable segment So that, you know, we want to make sure that we are consistently also reporting internally and externally with a true view for operating, underlying operating performance. And this will be also the guidance going forward both on the group level as well as on the business unit or segment level. Thank you.

The next question comes from Christian Seitz from Kepler Shriver.

And thanks for taking my question. I just have a question on your relatively cautious outlook for this current fiscal year. Is that because farmer probability in your relevant markets continues to be low? Or what's the background to essentially a flat development minus obviously the 3% in research to organic sales growth?

That's a good question. So exactly as you're saying, so we are still in a period of, I would say, subdued agricultural commodity prices. So when you look at the, you know, price development, then we are essentially on 2020 commodity price levels, which has, of course, an impact on the producer margin. So there is not so much, of course, incentive of our customers to increase production, to increase acreage under these, let's say, price commodity price conditions, and that has also an effect on our guidance. We still believe with 3% we are actually making also a strong statement because we believe the market will be more in the area of 1% to 2% growth for the current 50 years. So we believe with this outlook actually we will be able to grow faster than the relevant markets. And of course, what we also took also into consideration in our outlook and mentioned this is that, you know, we will have also a lower or small pressure also going forward based on, you know, the current activities to increase the localization of production and the reduction of the import quota. So that has an effect that has been built also in our guidance, but still this is very much also with what we guide for mid-term, so we actually feel good with that. Yes, thanks very much and see you later.

And next up is Michael Schaffer from .

Thanks for taking my questions. The first one is on your outlook statement for sugar beet. I mean you're looking for a slight organic growth. This is, if I understand, despite what you're expecting maybe from Russia, maybe some clarification to what extent you expect the Russian business or how this to evolve in sugar beet primarily and then also related to the sugar beet business. You are forecasting basically a lower margin in the sugar beet segment for the current fiscal year. This is on the back of the special effects, so the VAT recovery, basically, which you accounted for. However, if I strip this out, I'm getting to something like 44.6 percent margin for last year. So the question is, how do you see, basically, this on a more comparable basis, the margin to evolve on sugar beet? This would be my first question. The second one is on the vegetable side. If I read this correctly, you provided some undersorted sort of profitability target of a number of around 20% margin for the vegetables business on that one. So if I strip this out compared to your reported negative number, so I'm getting to something like an like 36, 35 million of extra OPEX which are basically year marking for investing into further growth. I wonder how this number is evolving in the years to come on what's baked into the midterm guidance for the segment or for the group in general, how this is evolving. So this would be my two questions.

Very good, Michael, very professional. So first on sugar beet, so as you said, so we believe that the market, of course, the sugar market is still under pressure. I mentioned already the very weak commodity price situation still. Of course, as a seed producer, we are only indirectly affected by these commodity price movements. However, we believe on the acreage basis for sugar beet in our relevant markets is really more stagnating in the current fiscal year. We initially had a more optimistic outlook, but I would say right now what we see in front of us, it's rather stagnating. However, what we've also demonstrated in the past, and that's really important, is that even under those conditions, we grow, and we also increase our profitability thanks to our innovative core portfolio. So these pricing calls that we have, portfolio effects of our innovative varieties, or unique new combination varieties always puts us in a position to be able to grow and also deliver value even under adverse market conditions. That means also that we are confident that we will be able to maintain also the profitability. You actually said we had in the last fiscal year reverse of the provision, which is a positive one. In fact, we do not, of course, have that in the current fiscal year. So, to our guidance, we still have a profitability well above 40%. So, with that, I believe we are well positioned also to, you know, navigate also this more changing environment that we see. I mentioned Russia, so for Russia I would say our oil is stable. So for us, you know, sugar beet remains a valid business for us. Also in the current fiscal year for the other crops, it's more an opportunistic business because here localization of, you know, the activities in Russia have already progressed quite a bit, and that's also baked into our guidance that in particular when it comes to corn, for example, we have a much lower you know, forecast for all business. And this is more on the opportunistic side. But so far, I would say the situation in Russia is neutral. It hasn't worsened. It hasn't improved. And that's also how we react to this market picture. Vegetables, yes, so we are really happy also with the operative profitability. You can imagine with the 16% we're able to also turn this into a very nice operating package for our underlying business, so spinach and beans. So that's really on the positive side. But at the same time, we need to build our go-to-market structure. We need to build our breeding infrastructure. We are roughly halfway through the innovation cycle of what we call our foodie crops, so tomato, pepper, cucumber, melon, and watermelon. So you will see also, I would say, until the 2020s, an additional buildup of expenses in order to build that structure. But our goal is over the midterm, the next three years, to launch basically products, launch varieties in each of the foodie crops So that you see also now traction when it comes to years. So that's what you can expect. So further build up of structure in the next years, but also a range of, you know, key varieties that will be the driver of all future growth in the years to come. Can I have a follow up on vegetables, please?

I mean, you reported a strong organic sales growth in the past fiscal 15% plus, but guiding for flat. organic sales growth for the ongoing fiscal year. So, what's holding back?

Well, it's more a comparable topic. So, of course, we are now comparing ourselves again. And we've been able to really good market share, particularly Italy, other parts of Europe. We also saw nice growth, also North America. So that's why we've been a bit on the cautious side and saying, okay, based on that, you know, high comparable level, I think would be for us already a good result if we can sustain this. Also given, of course, the pressure that also consumers have when they, you know, when they choose these products. So I can, you know, from my side, I mean, I would not be surprised if we can put a little bit on top of that, but we said, okay, based on very good, let's say, lending of last year, that is basically what we see in front of us. Okay, cool. Great, yeah, thanks.

At the moment, there are no further questions. So if you have any additional questions, please press 9 and start now. 9 and start for any additional questions, please. There are no further questions.

All right. There are no further questions. And, again, thank you very much for your interest in KWS. And, as I said earlier, please, you know, have a look at your inbox to see the invitation to our Capital Markets Day. So we look forward to welcoming you in Einberg, continuing the dialogue on site, and, of course, also over the coming weeks and months together with our Investor Relations team. So thank you, and all the best until then.