KWS SAAT AG has a good third quarter

(Einbeck, May 30, 2007/No.13/gf) – The KWS Group (ISIN: DE 0007074007) has performed well in the first nine months of the current fiscal year, growing its net sales by 6.5% to €428.3 (previous year: 402.2) million. This positive trend is attributable to good sugarbeet seed business and increased use of agricultural crops as a source of energy. Consolidated operating profit (EBIT) therefore rose faster than sales, by 28.5% to €91.5 (71.2) million.

“We are very satisfied with our development as of the end of the third quarter, since we have been able to profit from the dynamic situation in the agricultural sector and expand our market position overall,” said Dr. Hagen Duenbostel, Chief Financial Officer of KWS SAAT AG. “As a result, we are ahead of our forecast for the fiscal year as a whole. We currently anticipate sales of just over €520 (previous year: 505) million and an increase in operating profit of about 20% over the previous year (€46.7 million).”

Sugarbeet business better than expected
At the end of the third quarter, KWS posted sugarbeet sales of €171.7 (174.7) million. The decline in sales was 1.7%, lower than anticipated as a result of the fact that the reduction in cultivation areas was not as significant as had been forecast. “To achieve the objectives of the reform of the Sugar Market Regime, the EU will try to bring about larger reductions in area for the 2008 sowing season,” said Duenbostel.

Corn and cereals are growing
In the first three quarters, the seed breeding company recorded strong demand for corn and cereal seed. Corn sales increased by 14.6% to €203.8 million, mainly in North America and Germany. The segment now contributes 47.5% (44.2%) to the Group’s sales. In the cereals segment, KWS posted sales of €48.7 (44.0) million, a rise of 10.7%, due to growth in the hybrid rye business and the increased cultivation of barley.

Stronger increase in profit
The sugarbeet and cereals segments were the main contributors to the 28.5% increase in operating profit to €91.5 (71.2) million. Earnings throughout the company were also enhanced by successful inventory and receivables management. The earnings situation in the corn segment is still strained by the creation of sales structures in Southern and Southeast Europe. The Group’s net income rose at March 31, 2007, to €62.2 (41.9) million, a figure that includes a credit balance of around €7 million in corporate income tax.

Higher cash flow
At March 31, 2007, the KWS Group improved its net cash from operating activities to €7.9 (2.7) million. Cash and cash equivalents rose to €48.6 (38.9) million. The Group’s equity ratio is 55.0% (58.6% at June 30, 2006).

KWS invested €18.6 (17.3) million in the first nine months. As a result, capital expenditure is above depreciation, which stood at €11.3 (12.5) million. Most of this expenditure was channeled to the breeding and services segment and thus to product development. KWS invested 74% of the total in Europe, more than half of that in Germany.

Outlook
The Executive Board of KWS expects a sales volume of just over €520 (previous year: 505) million for the fiscal year 2006/2007 ending June 30 and an increase in operating profit of some 20% relative to the previous year (€46.7 million). Net income (previous year: €28.4 million) will be positively impacted by credit balances in corporate income tax in Germany.

The individual product segments:

Interim Report of the KWS Group FY 06-07 Q3.pdf

Contact:
Georg Folttmann
Phone: +49 (0)55 61 / 311-640
g.folttmann@kws.com