KWS SAAT SE & Co. KGaA

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.