KWS SAAT SE & Co. KGaA

Ladies and gentlemen, welcome to the KWS that quarterly reports nine months 2025-2026. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Jorn Andreas, Chief Financial Officer of KWS.

Thank you, and a warm welcome, everyone. This is Jorn Andreas, CEO of KWS. Thank you, everyone, for joining us today for our nine months, 25, 26 update. Before I take you through our financial results, let me start with the big picture. As you agriculture remains a challenging environment, ongoing political tensions, fluctuating commodity prices, and pressure on acreage and farm economics have reduced visibility only for our farmers, but also by extension for our industry. And yet, this is exactly where we as KDS prove our strength. In a challenging environment, we delivered a resilient top line, solid earnings, and a strong operational And this is not a coincidence. It affects three things, our diversified portfolio, our consistent execution, and our innovation-driven business model. Even in areas under pressure, such as the sugar beet acreage, we navigated the environment effectively. And importantly, our strong financial position and our leverage give us the flexibility to invest organically and also where it fits via M&A. From that perspective, let's move into the numbers. And as always, at this point, a quick reminder, some of the statements we will be making today are forward-looking and subject to risks and uncertainties. As always, please refer to slide two for the full disclaimer. Let me now walk you through the key figures. So, net sales reached 1.35 billion euros, slightly above prior year. On an organic basis, this translates into a 2.6% growth. And this was partly offset by currently of minus 1.8% and the portfolio effect of minus 0.5%. Every increase to 386.8 million from 360.8 million. And I'll come back to the drivers including the special items in a moment. Net income from continued operations rose to 220 million euros from 202.8 million, mainly driven by the improved EVDA and the better financial results. CapEx decreased to 56 million from 73.6 million last year, reflecting a normalization of our elevated prior year level across segments. Free cash flow was at minus 52.4 million compared to minus 3.9 million last year. The main drivers were a lower operating cash flow due to higher receivables backlog, partially offset by a payment related to the divestment of our North American corn business in Q1. The debt remained essentially stable at 179 million, and our trailing 12-month leverage improved 2.4 times APTA, down from 0.5 times. Overall, we are pleased with the result. In a nutshell, we see a resilient demand, strong APTA development, and an expected seasonality in our free cash flow. Now, turning to sales in more detail. Organic growth of 2.6% reflects a solid underlying demand across segments. However, our quarterly performance was also influenced by pull forward effects from Q4 into Q3 in certain regions, most notably in corn and to some extent also in sugar beet. Current effects mainly by the Turkish lira and the US dollar amounted to a minus 1.8% translation impact. And the portfolio effect of minus .5% primarily relates to the absence of R&D services invoiced to our former joint venture client. Now on profitability, EBITDA improved to 386.8 million and includes several special effects. So, let me strip this out for you. First, EBITDA includes a 29 million positive contribution from the sale of license rights in the North American corn business. Second, an 8 million effect relates to the reversal of the VAT provision in the sugar beet segment in the prior year comparison context. And finally, a currency effect of approximately $15 million, again, mainly driven by the Turkish lira and US dollar. Most of it was translational. Importantly, when adjusting for these special items, the PTA increased from $353 million to $357 million, supported by active cost mitigation measures. So, while special items supported the reported figures, the underlying profitability improved slightly. And this reflects the continent's discipline of cost and execution, which has been a key priority for us this year. Let's now turn to the segment review, starting with sugar beet. Sales increased to 703.8 million, including negative currency effects of 2.7%. Organic sales growth was plus 4.2%, reflecting both good forward effects and a higher share of innovation-led offerings. Specifically, our leading innovations, such as Convisio's Smart and Clear Plus, accounted for 62% of sales, up from 57% last year. So the mix shift was differentiated. Premium price product is continuum. And this success speaks again to the strength of our portfolio, as the global acreage in 2026 is estimated to shrink about to roughly 4.3 million hectares for sugar beet worldwide. So we continue to generate more value per hectare. And going forward, we expect an estimate that this negative trend in the global acreage has somewhat bottomed out, with stable or slightly growing acres expected in the next season. Considering the prior year positive one-off related to the reversal of AVAT provision and also some negative currency effects in the current period, we were able to defend our strong profitability in this segment despite the changes I already described in the sugar beet market. Moving to corn, sales were 349.4 million below the prior year, but a 1.3% organic growth. We saw clear pull-forward dynamics that shifted part of the volume into Q3. Our sunflower business, which is also consolidated in the BU corn, for which we expect potential growth in the years to come, delivered encouraging double-digit growth supported by our renewed variety portfolio. Our APTA performance in corn improved significantly and includes the 29 million one-off effect from the disposal of the license rights in North America. In addition, we incurred also lower R&D expenses due to the absence of charges by our former KV agroline. Next, cereals. Sales were stable at 243.4 million. Organic growth was 0.7%. Oil seed rate performed strongly with sales up 21% driven by high performance portfolio. This was partially offset by hybrid rye which declined 14% impacted by comparatively low rye market prices. Weed remained broadly at the prior year level. FEDA was clearly below prior year mainly due to increased R&D efforts as well as a provision for a legal risk in the mid-single-digit million-euro range. And finally, vegetables sales increased to 46.5 million. Organic growth was 2% supported by higher bean seed sales and a stable demand in spinach. was more negative year-on-year, which is in line with our plans as we are investing in the expansion of our vegetable breeding capacity. Let me now turn to cash flow. Operating cash flow was lower primarily because net working capital increased mainly by higher trade receivables, and this is a typical seasonal pattern and also reflects the sales phasing I discussed earlier. Investing cash flow includes a partial payment of the purchase price related to the North American corn business. And as mentioned at the beginning, capex increased to 56 million below the prior year across segments. Free cash flow came in at around 52.7 million, down from minus 3.9 million last year. For the full year, however, we are confident to exceed the free cash flow figure of 123 million for last year, driven by both better operating and investing cash flow. On net debt leverage, the debt stands at 179 million a year, and the bridge reflects a strong WTA contribution offset by working capital seasonality, capex, as a dividend payment, which was at 41.3 million this year, compared with 33 million last year. Our trading 12-month net debt WTA ratio improved 2.4 times, down from 0.5 times. And we continue to expect net debt to be significantly lower at year end driven by the usual seasonal unwind in ranking capital. Coming to our forecast for full year 25-26, which we are confirming today based on the nine-month performance and our current visibility. While current volatility and regional order patterns remain factors to watch, our underlying business performance and cost discipline support the outlook. Looking further out, while uncertainties remain, the underlying trend gives us confidence. Before we move to Q&A, I'd like to share a quick save-the-date with all of you. We are planning to host a KGS Vegetative Investor Analyst Seminar at the end of September, on 29th September, 26th, in Andijk, the Netherlands. And we will be very pleased if you could join us. We know that our business continues to attract a lot of questions, and rightly so, and this webinar provides a fantastic opportunity to take a closer look at how far we have already come and where we are heading next. So, being on site, you will be able to experience our reading activities, meet the teams, of course, that drives the progress. and engage in discussions around strategy execution in vegetatives. So, I have no doubt that this direct look behind the scenes will give you a much clearer sense of the progress and also the momentum that we have built in this business. So, we very much hope to see many of you there. And with that, I would like to close my prepared remarks. Thank you again for your attention and for joining us, and I now look forward to your questions together with my colleague Peter Vogt, head of IR.

Ladies and gentlemen, if you would like to ask a question, please press star, nine, and pound key on your telephone keypad. If you would like to cancel your question, please press star, three, and the pound key. You can also use the dial-in function in the webcast if you would like to ask a question by phone and raise your hand to ask a question. So the first question is from Mr. Christian Feitz from Kepler Schulz. Please go ahead, the floor is yours.

Yes, thank you. Can you hear me? Hello? Go ahead. Yes, okay, so you can hear me, I assume. Thanks very much. So couple of questions, please. First of all, you had pull-forward effects apparently in both corn as well as in sugar beet, as you mentioned. Can you give us an idea of the magnitude, i.e., what would then be missing in your Q4? Second, in your corn segment, sunflower seeds grew quite nicely, I believe. Can you give us an idea how prominent sunflower seeds are within your corn segment in the meantime? And my third question pertains to the sale of the license rights, i.e., the $29 million proceeds. Is this stemming from the 2015 agreement with Sinteta, i.e., the Acris-Urbiterra trade? Can you confirm that? Thanks very much.

Perfect. Thank you very much, Erik, for that. So first on your question on the forward effect, Yes, so we have seen that orders with the Q3 from Q4 and that, as you know, has always something to do with all the better conditions and the different, you know, regions that operate. So, roughly, you can say that the pull-forward effect of organic growth was roughly 30 million euros. So, which means that if you, say, cancel, let's say, these pull-forward effects, the growth was more or less flat, which is then also an item . And what you can also say is that the two-thirds of the pull-forward effects were roughly in the corn business unit, or one-third in the sugar business unit. I think that gives you a good indication. Sunflower, yes, so we are really, you know, thrilled with, you know, how the sunflower business develops. I mean, we discussed this also in our capital markets day that, you know, we are now launching our own varieties. We have really some on the R&D side with some capabilities that we have to accelerate capabilities or pipeline. So, we've been able to increase our sunflower sales and we are now having a revenue of around about 15 million in our sunflower business. So, I think that's really nice growth from where we've been and there's also more to come in the years, of course, and we indicated that we want to achieve 100 million, you know, revenue with sunflower by the end of the decade. And last, a question on the license. So this is related to the license that we provide for our germplasm to AgriLiant in the past. So this has been part of the overall AgriLiant deal last year, meaning that we've not only, of course, sold our assets, our subsidiaries, our shareholding in our AgriLiant business, but we also gave, you know, the buyer, GDM, also the rights. for the varieties which were held, let's say, by our operations in Europe. And for this license right, we, you know, recognize the gain of 29 million in the first quarter, 25, 26.

Okay, great. Thanks very much, Jan. Just a quick follow-up. If you say 15 million year-to-date for the sunflowers, or was it 15? Fifteen, one-five. One-five, yeah, great. Thanks very much, and congrats on the results. Thank you.

Thank you. The next question is from Mr. Michael Schaefer from . Your line is open now.

The floor is yours. Yeah, thanks for taking my question. Good morning, everyone. I have two on the sugar beet to start with. Well, the first one is, if I'm looking at your profitability, and you reported that 325 million EVTA, so really 46% margin. If you compare this with last year and strip out the 8 million one-off gain, so I come to the slightly higher 46.6% EVTA margin. The question is, despite the 4.2 organic sales growth and despite the very strong, at least from my perspective, very strong mix effect you have reported. So why have we seen on an operating basis margin walking backwards? This would be my first question. And the second one is you indicated that probably on the sugar beet acreage side we have seen the bottom in terms of, let's say, total acreage. Can you elaborate what do you expect into the next season across the different regions in your production planning for next year? And then one final question on the serial segment, this kind of legal risk provision which you have put in place there, mid-single digits. So what is this all about? Thanks.

Perfect. Good question. So that's all on the margins. That's all we are actually quite pleased of, that we are able to keep the operating margins in the sugar speed at a continuously high level, so with a continuation margin of around 66%. That's actually the level of last year, and if you can imagine that we are operating in an environment where we have pressure on acreage, being able to keep, let's say, that profitability on that pretty high level is, I think, also a testament of the pricing power that we have in our markets. So, in terms of the changes, this really primarily led to the regional sales mix that we have. So, we have communicated that we have a significant translational, negative translational effect about 15 million in our and a big part comes from US dollar. And from our regional mix perspective, our U.S. business is, say, margin-incretive with this, say, sugar beet, and this has been a mixed effect on our overall profitability in the EU. So, meaning on the country level, the region level, there's no real change. It's really more a mixed effect than anything else. And as you rightly said, So, with the shift or more innovative varieties, Conviso and NCR+, that really effectively counterbalance other, let's say, challenges that we face, of course, in this macro, let's say, environment. The second question was, I think, on acreage and acreage development. So, yes, we have seen, of course, in this season, a pretty strong reduction in acreage to 4.3 million hectares. That's a minus 6%. And what we see, I mean, it's early days, to be quite honest. Our customers, how they also plan for next year, early, early days. But we feel, as I already said earlier, things have bottomed out in our scenario right now is that we are either stable on current levels or see a slight increase, but that's something we will probably give you more visibility further down in the year, yeah. And I think the last question was on the legal risk in serious business. Yeah, so in serious, we recognize the provision for an ongoing antitrust investigation in France, for which we have made a provision in the mid-singles, which is million euro amount. And I ask for your understanding that, of course, given the ongoing proceedings, we, or I cannot comment really any further on the details, but what we can say is that we are defending our position and we're not going for a settlement, so that's why it's an ongoing case. Okay, thank you.

Okay, thank you. And the next question is from Mr. Leo Mühlenbuch from MWB Research. The floor is yours.

Hello, can you hear me? Hello, I have a question to the EBIT margins. Your target is 19 to 21%. Do you see potential in the next years for even more than 21% or is it Can we imagine that's the limit?

Well, I mean, of course, we are ambitious and we always strive to increase our profitability, but we actually feel quite good with the 19% to 20% range at this time. So I mentioned at the beginning, we are in, I would say, volatile times also in agriculture with you know, farmers having had quite significant pressure also on the margins over the last 10, 12 to 18 months. And of course, you know, the increase in input costs for the farmers that have had much But as we all know, things like fertilizer, et cetera, have been already contracted most of it last year. So, there's ways of cost. And of course, inflation for the farmers, I think there's pressure. And we also have to see how much, let's say, leeway we have in our pricing activities. And at the same time, what we really want to do, of course, is to continue to reinvest our profit also in R&D. So, that's really a priority for us. So, I mean, if we would have the opportunity to gain additional profitability, we'll probably reinvest this in R&D and stay within the corridor that we have communicated.

Okay. And under the challenging environment, do you believe that the vegetable cement will already be a meaningful contributor for the growth in the near term, or is it more in the long term?

So what is really exciting, that's why we have decided to have this investor seminar next September or coming September in Andai, is that we have a really pivotal milestone for us next year, next year, 2026, 2027, because in the next year, 2026, 2027, we will be launching all FUDI, what we call the FUDI crops. Our varieties that we have invested quite a lot of, as you all know, the last years, tomato, pepper, cucumber, melon, watermelon, all of these varieties will see market launches next year. Of course, for some of it will be a couple of varieties on a proper portfolio, so we start small. The contribution will be, I would say, mid-single-digit million-euro revenue next year, start with, but it's really the first time that we are really out on the market. I could be selling, let's say, all varieties, and the goal is to grow our business to 100 million by the end of the decade from roughly 70 million where we are today. That's why there is this growth that we've built into our plan, and that's why we are also excited to really invite you to see the team, see also the pipeline that is ahead of us, and that gives you all the confidence that we really have a nice growth engine that we have built over the last years.

Perfect. Okay. Thank you.

Okay. There, at the moment, there seem to be no further questions.

All right. So I'm pretty sure that we will have, you know, plenty of opportunity today and over the next days to follow up on a few things. We will be also on the road. So thank you again for your interest in joining us this morning. And I mentioned it already, we look forward to seeing you, of course, if not on the road, then latest at our vegetables investor day in Andijk. And with that, thank you and have a good day.