KWS SAAT AG raises annual forecast after good Q3 figures

(Einbeck, May 28, 2009/No. 20/gf) – KWS SAAT AG (ISIN: DE 0007074007), one of the leading international seed companies, has again reported growth in net sales for the third quarter of its 2008/2009 fiscal year, which ends on June 30. Sales revenues increased by 18% at the end of March to €572.3 (previous year: 483.6)* million. Following completion of most of the spring sowing season, KWS expects to grow net sales in fiscal 2008/2009 by more than 15% (€599.1 million) and record a slight improvement in operating income (€70.1 million).

“All our segments contributed to this gratifying growth,” said Hagen Duenbostel, KWS SAAT AG’s Chief Financial Officer, about his company’s performance. “The increase in net sales at our corn segment even surpassed our expectations, and the decline in sugar beet cultivation seems to have bottomed out following completion of the reform of the European Sugar Market Regime. For the first time, the breeding & services segment includes the potato joint venture we launched at the beginning of the fiscal year.”

Corn exceeds expectations

The corn segment grew net sales by 17% to €298.7 (255.7) million. It was again able to expand its excellent market position in Germany. In North America, on the other hand, corn cultivation areas shrank. Nevertheless, net sales in the region grew sharply as a result of higher-quality products. Moreover, the stronger U.S. dollar outweighed the negative exchange rate influences from the Southeastern and Eastern European markets.

Net sales from sugarbeet seed again on the upswing

KWS is the world market leader in sugarbeet seed. After several years of declining revenue - due primarily to the reform of the European Sugar Market Regime - net sales in this segment increased again in the first nine months to €177.1 (€159.8) million. According to KWS’ estimates, worldwide cultivation areas will remain roughly constant, while the company expects a slight increase in the EU 27. In the U.S., the overwhelming acceptance of KWS’ herbicide-tolerant Roundup Ready^® sugarbeet is continuing. The effects of the financial crisis are reflected in the segment’s income. Counterparty defaults, especially in Eastern and Southeastern Europe due to liquidity bottlenecks on the part of our customers, and exchange rate developments in these countries had a negative impact on the segment’s income.

New potato activities help grow net sales

For the first time, the breeding & services segment is reporting revenue from the new potato joint venture. Net sales at March 31 were €17.1 (6.1) million. The segment’s income improved largely as a result of higher royalty fees due to the good performance of all product segments and additional technology licenses from the sale of Roundup Ready sugarbeet in America.

Net sales at the cereals segment rose to €79.4 (62.0) million. Most of this revenue was achieved in the fall from the good sales of winter cereal varieties. Amortization of goodwill brought pressure to bear on income, which was nevertheless up over the previous year.

Overall, the operating income of the KWS Group in the first nine months improved sharply to €105.8 (93.8) million. However, this net income for the period will weaken significantly by the end of the fiscal year for seasonal reasons coupled with low net sales and unreduced costs. Net financial income/expenses were characterized by higher interest expense, lower interest income and allowances on interest rate hedging instruments. Net financial income/expenses in the previous year also included the profit from the sale of the company’s former potato activities. Overall, the net income for the period was €70.7 (76.7) million.

Outlook: Annual forecast raised

“We expect that the KWS Group will grow net sales by over 15% and record a slight improvement in operating income for the fiscal year as a whole,” said Duenbostel in correcting the previous forecast. “However, the net income for the year will be slightly lower due to the fact that there will be no tax-free income as in the previous year.”

* The figures in parentheses are those for the previous year.

Overview of the nine-month figures for the KWS Group at March 31, 2009:

Contact:
Georg Folttmann
Head of Investor Relations
Phone: +49 (0)5561 / 311-640
g.folttmann@kws.com