Einbeck, 27^th November 2018

Rye seed business shows good performance

Net sales rise slightly in the first quarter - EBIT with slight improvement - Guidance for the KWS Group remains unchanged

Einbeck, November 27, 2018. The KWS Group (ISIN: DE0007074007) grew its net sales slightly by 4.0% to EUR141.4 million in the first quarter of fiscal 2018/2019. If exchange rates had remained constant, the increase would have been 18.6% to EUR161.3 million. KWS' net sales from rye seed in Europe rose sharply. Net sales from corn in South America declined slightly due to exchange rate effects. EBIT was EUR -34.3 (previous year: -38.8) million and is typically negative after the first quarter. KWS is sticking to its guidance for the end of the fiscal year and still anticipates an EBIT margin between 10.0% and 12.0%.

"We're pleased about our good start to the fiscal year. It seems that our drought-tolerant rye has won over many farmers against the backdrop of difficult growing conditions at the time of the fall sowing season," said Eva Kienle, Chief Financial Officer of KWS SAAT SE, about the published quarterly results. The increase in net sales was accompanied by a slight rise in function costs. EBIT totaled EUR -34.3 (-38.8) million. The company's receivables management activities contributed income, and there were positive exchange rate effects. Net income after taxes for the period declined by -1.3% to EUR -39.0 (-38.5) million. Since KWS does not generate the main part of its business until the third quarter (January to March), it is not possible to deduce a trend for its performance for the year as a whole from these quarterly results.

Segment reports: Cereals seed business expanded, exchange rate effects weigh on corn

In the first quarter of fiscal 2018/2019, the Corn Segment generated net sales of EUR34.8 (40.2) million. In South America, net sales were slightly below the figure for the previous year, and in particular the Argentinean peso fell sharply in value again. If exchange rates had remained stable at the level of the previous year, the segment's net sales would have been EUR52.8 million, an increase of 34.5%. In the core regions of Europe and North America, the first quarter sees no significant revenue from early sales of corn seed. The segment's income was EUR -41.2 (-40.4) million.

Net sales in the Sugarbeet Segment were slightly up year on year at EUR13.3 (10.3) million. Revenues at this time of the fiscal year mainly come from the sale of sugarbeet seed in the U.S., Chile, East Asia and North Africa. No significant net sales are generated in the other regions in the first quarter. The segment's income was EUR -13.4 (-17.4) million.

Net sales in the Cereals Segment in the first quarter increased by 8.2% to EUR95.3 (88.1) million. A main contributory factor to that was the successful performance of our rye seed business, which increased by 24% and benefited from the difficult weather conditions at the time of the fall sowing season, among other things. Rye varieties deliver a relatively reliable yield under dry conditions compared to other cereal crops. However, the same conditions for the sowing season hampered European winter rapeseed business, where net sales declined, while net sales from barley and wheat remained stable all in all. The segment's income rose due to the higher contribution margins from rye business and was EUR32.9 (27.9) million.

Net sales in the Corporate Segment totaled EUR1.2 (0.9) million. They are generated mainly from the company's farms. Since all cross-segment costs for the KWS Group's central functions and basic research expenditure are charged to the Corporate Segment, its income is usually negative. The costs consolidated in this segment rose slightly in the first quarter, among other things due to additional work as part of the ongoing reorganization project ONEGLOBE. The segment's income was EUR -28.1 (-25.1) million.

The difference from the KWS Group's statement of comprehensive income and segment reporting is due to the requirements of the International Financial Reporting Standards (IFRSs) and is summarized for the key indicators of net sales and EBIT in the reconciliation table below:

Reconciliation table

Forecast: Guidance unchanged
The Executive Board is sticking by the guidance published in the Annual Report (October 24, 2018). Although KWS anticipates additional administrative expenses as a result of its ongoing reorganization activities, the EBIT margin is still expected to be between 10% and 12.0%. The R&D intensity will probably increase to around 19% and capital spending will likely exceed EUR100 million. Due to the strongly seasonal nature of KWS' business as a result of the great importance of the spring sowing season and external factors that are difficult to anticipate, such as the weather, fluctuations in cultivation area and exchange rate developments, more detailed statements on the company's net sales and earnings performance cannot be made with sufficient reliability at this juncture.

The quarterly report can be downloaded on the Internet at www.kws.com/ir.

About KWS¹
KWS is one of the world's leading plant breeding companies. In fiscal 2017/2018, 3,851 employees (FTE) in 70 countries generated net sales of EUR1,068 million and earnings before interest and taxes (EBIT) of around EUR133 million. A company with a tradition of family ownership, KWS has operated independently for more than 160 years. It focuses on plant breeding and the production and sale of seed for corn, sugarbeet, cereals, rapeseed and sunflowers. KWS uses leading-edge plant breeding methods to continuously improve yield and resistance to diseases, pests and abiotic stress. To that end, the company invested EUR198 million last fiscal year in research and development, 18.5 percent of its net sales.
¹ Excluding the shares of the equity-accounted companies AGRELIANT GENETICS LLC., AGRELIANT GENETICS INC. and KENFENG - KWS SEEDS CO., LTD.

For more information: www.kws.de. Follow us on Twitter(R) at https://twitter.com/KWS_Group.


Contact:
Wolf-Gebhard von der Wense
Head of Investor Relations
Phone: +49-5561-311-968
Mobile: +49-151-18855673
[email protected]
KWS SAAT SE
www.kws.de