VILMORIN & CIE REDUCTION IN SALES FOR THE FIRST SEMESTER, RESULtiNG IN A DECREASE IN THE OPERATING INCOME
SLIGHT IMPROVEMENT OF THE NET INCOME FOR THE 1ST SEMESTER 2017-2018
OUTLOOK FOR 2017-2018:
objectiVE FOR BUSINESS GROWTH REadjusted AT 4%*
objectiVE FOR THE CURRENT OPERATING MARGIN RATE MAINTAINeD
* On a like-for-like basis
On average, sales for the first semester globally represent around only one third of the annual sales for Vilmorin & Cie. Because of this highly seasonal pattern, the consolidated financial statements for the first semester traditionally show very negative income.
| In millions of euros | 2016-2017 | 2017-2018 | Variation with current data |
| Sales Vegetable Seeds Field Seeds Garden Products and Holdings | 286.9 201.6 14.5 | 248.7 197.9 13.5 | -13.3% -1.8% -7.4% |
| Sales for the first semester | 503.0 | 460.1 | -8.5% |
| EBITDA | 75.5 | 55.7 | -19.8 |
| Operating income | -18.5 | -42.4 | -23.9 |
| Income from associated companies | -24.9 | -26.6 | -1.7 |
| Financial income | -6.8 | -16.7 | -9.9 |
| Income taxes | +10.5 | +47.6 | +37.1 |
| Net income of which group share | -39.7 -38.8 | -38.1 -37.3 | +1.6 +1.5 |
The consolidated financial statements for the first semester 2017-2018, closed on December 31, 2017, were approved at the Vilmorin & Cie Board meeting of February 27, 2018. The Statutory Auditors have carried out a limited audit of the financial information for the first semester; in their conclusions they have not indicated any reservations or particular remarks.
Consolidated financial information is established in compliance with the IFRS referential (International Financial Reporting Standards) as endorsed by the European Union on December 31, 2017.
The accounting methods and principles adopted in the condensed consolidated financial statements for the first semester on December 31, 2017 are identical to those used in the consolidated financial statements for the fiscal year closing on June 30, 2017. Thus, no change in accounting methods or estimates with any impact on Vilmorin & Cie's consolidated financial statements was applied by Vilmorin & Cie over the course of the semester.
SALES FOR THE FIRST SEMESTER LOWER (BY 3.5% ON A LIKE-FOR-LIKE BASIS), IN SPITE OF THE REBOUND TRIGGERED IN VEGETABLE SEEDS
Vilmorin & Cie's consolidated sales for the first semester 2017-2018, closed on December 31, 2017, came to 460.1 million euros, a decrease of 8.5% with current data, and 3.5% on a like-for-like basis, including the change in the scope of activity related to the withdrawal by the Vegetable Seeds Business Unit Vilmorin-Mikado from the distribution of agricultural supplies in Japan.
Vegetable Seeds division: a regain in activity over the 2nd quarter
Sales for the Vegetable Seeds division for the first semester came to 248.7 million euros, a drop of 13.3% with current data compared with the first semester for 2016-2017. It should be emphasized that during the course of the second quarter, the withdrawal by the Business Unit VILMORIN-MIKADO from the distribution of agricultural supplies in Japan once again accelerated and has proven to be faster than planned.
On a like-for-like basis, the decrease was 6%.
During the second quarter, business began to grow again (+2.9% on a like-for-like basis), after a first quarter recording a marked drop in sales.
The upswing in the sales of seeds concerns the three Business Units: HM.CLAUSE, Hazera and Vilmorin-Mikado, with particularly fine performances in Asia, and a number of countries in the Mediterranean basin, especially Turkey. Nevertheless business was affected by distributor inventory levels that have been globally high, particularly in North America, and also by problems importing seeds into certain countries.
When looking at this semester overall, the growth trend for the business of selling seeds, Vilmorin & Cie's core business, has not been called into question, in particular when considering the very promising order portfolio for the coming months. Consequently, besides the acceleration of the withdrawal from the distribution of agricultural supplies in Japan, for fiscal year 2017-2018, Vilmorin & Cie is aiming for 4% growth in sales of Vegetable Seeds on a like-for-like comparison with 2016-2017.
Field Seeds division: contrasting business over the semester, in a market context that remains tense
Sales for the Field Seeds division for the first semester came to 197.9 million euros, down by 1.8% compared with the first semester for 2016-2017. Restated on a like-for-like basis, activity was stable.
During the course of the second quarter, the Field Seeds division recorded sales down by 5.2% on a like-for-like basis.
In Europe, the commercial campaign for rapeseed once again this year achieved excellent growth, particularly in France, in the United Kingdom and in Central and Eastern Europe. This excellent performance reflects market share gains, allowing Vilmorin & Cie to reinforce its position as a top-ranking European player.
The first part of the straw cereal seed campaign (wheat, barley) posted a drop in sales, in a market context where the use of commercial seeds has fallen, particularly in France.
In a market environment still heavily influenced by the low level of prices for agricultural production, orders for corn are looking satisfactory, whereas the cultivated acreage for this crop should be reduced. Finally, orders for the sunflower seeds campaign, for which a number of deliveries have been delayed until the third quarter, are fully in line with objectives, particularly in Eastern Europe.
In South America, sales were down at the end of December, after a fiscal year for 2016-2017 that was marked by very strong growth in business. Sales for the first corn campaign in Brazil (safra) were stable compared to the previous year, in spite of a significant drop in cultivated acreage, whereas the second corn campaign (safrinha) has started later than last year. Moreover orders for safrinha were lower than at the end of December 2016, as a result of the probable reduction in acreage devoted to this crop and the drop in the market for commercial seeds, in a context of pressure on pricing policies.
Sales of soybean seeds continued to grow steadily, reflecting Vilmorin & Cie's drive to strengthen its positions in this major crop in South America.
In the other new development zones (Asia and Africa), the level of business achieved overall during the first semester corresponds to expectations.
On these bases, and taking into account a level of business less dynamic than expected in South America, resulting from a lackluster market environment this year in this region, Vilmorin & Cie has decided to readjust its objective for the increase of its sales in Field Seeds for fiscal year 2017-2018 to 4% on a like-for-like basis compared to the previous fiscal year, as opposed to more than 5% as previously targeted.
Finally, on the North American market, the beginning of the commercial campaign for corn and soybean is running well, in the context of virtual stability predicted for corn acreage.
DECREASE IN THE OPERATING INCOME, directLY LINKED TO THE REDUCTION IN BUSINESS, AND SLIGHT IMPROVEMENT OF THE NET INCOME FOR THE SEMEsTER
After taking into account the cost of destruction and impairment of inventory, margin on the cost of sales came to 236.8 million euros, representing 51.5% of total sales, up 2.6 percentage points compared to the first semester for the previous fiscal year; it mainly benefitted from the withdrawal from the distribution of agricultural supplies in Japan, and also from the improvement of the Vegetable Seeds product mix.
Net operating charges came to 279.2 million euros, an increase of 14.7 million euros compared with the first semester for fiscal year 2016-2017, including an additional investment of 3.5 million euros in research and development.
Consequently, the operating income for the first semester shows a loss of 42.4 million euros on December 31, 2017, an increase of 23.9 million euros compared to the first semester for 2016-2017; the operating margin, traditionally negative at the end of the first semester, came to -9.2%, as opposed to -3.7% on December 31, 2016.
The income contribution from associated companies, in particular AgReliant (North America. Field Seeds) and Seed Co (Africa. Field Seeds), stood at -26.6 million euros at the end of the first semester for 2017-2018, as opposed to -24.9 million euros for the first semester of the previous fiscal year.
The financial income shows a net charge of 16.7 million euros as opposed to 6.8 million euros on December 31, 2016. In particular, this year net foreign exchange losses of 4.6 million euros were recorded, as opposed to net foreign exchange gains of 4.1 million euros the previous fiscal year.
On December 31, 2017 a net tax income of 47.6 million euros was recorded, an increase of 37.1 million euros compared to the previous year, notably owing to the adoption of lower tax rates in France and the United States.
As a result of these factors, the net result for the semester shows a loss of 38.1 million euros, including a group share loss of 37.3 million euros, a reduction of 1.6 million euros compared with the first semester for fiscal year 2016-2017.
At the end of December 2017, the balance sheet structure is naturally influenced to a large extent by the seasonal nature of the annual business cycle.
Net of cash and cash equivalents (226.3 million euros), financial indebtedness came to 986.2 million euros, including a non-current share of 891.3 million euros.
The group share of equity stood at 1,085.2 million euros and minority interests at 107.9 million euros.
OUTLOOK FOR 2017-2018: THE OBJECTIVE FOR BUSINESS GROWTH HAS BEEN REadjusted AND THE oBJECTIVE FOR THE CURRENT OPERATING MARGIN RATE IS MAINTAINED
In view of the results for the first semester, as presented above, and on the basis of information currently available, for fiscal year 2017-2018 Vilmorin & Cie is now aiming for an increase in consolidated sales of 4% on a like-for-like basis compared with fiscal year 2016-2017, as opposed to an increase of 5% as previously targeted. This objective now takes into account the full impact of the withdrawal from the distribution of agricultural supplies in Japan.
Moreover, Vilmorin & Cie is maintaining its objective of achieving a current operating margin rate at the same level as in 2016-2017, including research investment estimated at around 255 million euros.
Finally, Vilmorin & Cie is aiming for a contribution from its associated companies - mainly AgReliant (North America. Field Seeds), Seed Co (Africa. Field Seeds) and AGT (Australia. Field Seeds) at least equivalent to that of 2016-2017.
Over the second semester, reaching these objectives will nevertheless partly depend on the definitive evolution of cultivated acreage per crop and on prices for agricultural production, particularly in South America, in a context of pressure on pricing policies for the Field Seeds activity, and also, for the Vegetable Seeds activity, on the confirmation of dynamic business for the most important period of the fiscal year.
"Over the course of fiscal year 2017-2018, Vilmorin & Cie should be able to confirm the solid growth course of its activities, even though certain market trends, particularly the persistent pressure on agricultural prices, should result in a pace of growth that is not as strong as for the previous fiscal year. Strengthened by the wealth of its product portfolio and its organization model in close proximity to markets, Vilmorin & Cie enjoys full confidence in its capacity to achieve another quality fiscal year, both in terms of business and its profit level.
Operating in a competitive market characterized by major consolidation operations, Vilmorin & Cie can confirm its strategy combining organic growth and a policy of targeted acquisitions. True to its long-term vision, Vilmorin & Cie will pursue the deployment of this development and innovation strategy, with the ambition of business and margin growth higher than market trends, both in Vegetable Seeds and Field Seeds", Vilmorin & Cie's CEO, Daniel JACQUEMOND commented.
You can consult a presentation of sales and results at the end of the first semester as of 9:00 am on the home page of the website www.vilmorincie.com
COMING DISCLOSURES:
Wednesday March 7, 2018: Registration with the AMF of the update of the annual report for 2016-2017
Monday April 23, 2018(1): Sales at the end of the 3rd quarter 2017-2018
Monday August 6, 2018(1): Sales for fiscal year 2017-2018
Wednesday October 17, 2018(1): Results for fiscal year 2017-2018
(1) Dates provided as an indication only, and liable to be changed. Disclosure after trading on the Paris stock market.
FOR ANY FURTHER INFORMATION:
Vincent SUPIOT
Chief Financial Officer
vincent.supiot@vilmorincie.com
Valérie MONSÉRAT
Head of Financial Communication and Investor Relations
valerie.monserat@vilmorincie.com
Tel: + 33 (0)4 73 63 44 85
Website: www.vilmorincie.com
Vilmorin & Cie, the 4th largest seed company in the world, develops vegetable and field seeds with high added value, contributing to meeting global food requirements.
Accompanied by its reference shareholder Limagrain, an international agricultural cooperative group, Vilmorin & Cie's strategy for growth relies on sustained investments in research and international development to durably strengthen its market shares on promising world markets.
True to its vision of sustainable development, Vilmorin & Cie ensures its achievements fully respect its three founding values: progress, at the heart of its beliefs and its mission, perseverance, inherent to farming and the seeds business, and cooperation, in the fields of science, industry and commerce.
APPENDIX 1:
SaLES FOR THE FIRST SEMESTER 2017-2018
AND EVOLUTION PER QUARTER AND PER DIVISION
| In millions of euros | 2016-2017 | 2017-2018 | Variation with current data | Variation on a like-for-like basis |
| First quarter | 232.0 | 207.6 | -10.5% | -6.5%* |
| Vegetable Seeds | 138.2 | 109.3 | -20.9% | -15.4%* |
| Field Seeds | 85.4 | 90.4 | +5.9% | +7.0% |
| Garden Products and Holdings | 8.3 | 7.9 | -5.5% | -4.9% |
| Second quarter | 271.0 | 252.5 | -6.8% | -1.0% |
| Vegetable Seeds | 148.7 | 139.4 | -6.2% | +2.9% |
| Field Seeds | 116.2 | 107.5 | -7.4% | -5.2% |
| Garden Products and Holdings | 6.2 | 5.6 | -10.0% | -9.6% |
| First semester | 503.0 | 460.1 | -8.5% | -3.5% |
| Vegetable Seeds | 286.9 | 248.7 | -13.3% | -6.0% |
| Field Seeds | 201.6 | 197.9 | -1.8% | 0.0% |
| Garden Products and Holdings | 14.5 | 13.5 | -7.4% | -6.9% |
* NB: Variations on a like-for-like basis disclosed on November 6, 2017 concerning the first quarter of 2017-2018, did not include the impact of the withdrawal from the distribution of agricultural supplies in Japan.
APPENDIX 2:
CONSOLIDATED INCOME STATEMENT ON DECEMBER 31, 2017
| In millions of euros | 12.31.17 | 12.31.16 |
| 460.1 | 503.0 |
| Cost of goods sold | - 223.3 | - 257.0 |
| Marketing and sales costs | - 92.6 | - 91.8 |
| Research and development costs | - 97.1 | - 93.6 |
| Administrative and general costs | - 92.8 | - 83.2 |
| Other operating income and charges | 3.3 | 4.1 |
| - 42.4 | - 18.5 |
| Profit from associated companies | - 26.6 | - 24.9 |
| Interest costs | - 11.4 | - 10.7 |
| Other financial income and charges | - 5.3 | 3.9 |
| Income taxes | 47.6 | 10.5 |
| - 38.1 | - 39.7 |
| - | - |
| - 38.1 | - 39.7 |
| > Attributable to controlling company | - 37.3 | - 38.8 |
| > Attributable to non-controlling minority | - 0.8 | - 0.9 |
| Earnings from continuing operations per share - attributable to controlling company | - 1.79 | - 1.86 |
| Earnings from discontinued operations per share - attributable to controlling company | - | - |
| Earnings for the period per share - attributable to controlling company | - 1.79 | - 1.86 |
| Diluted earnings from continuing operations per share - attributable to controlling company | - 1.75 | - 1.74 |
| Diluted earnings from discontinued operations per share - attributable to controlling company | - | - |
| Diluted earnings for the period per share - attributable to controlling company | - 1.75 | - 1.74 |
APPENDIX 3:
DETAILS OF THE GAINS AND LOSSES
| In millions of euros | 12.31.17 | 12.31.16 |
| Income for the period | - 38.1 | - 39.7 |
| Variation in currency translation | - 42.3 | 19.6 |
| Variation in the fair value of assets for sale | - | - |
| Variation in the fair value of financial instruments | 0.7 | 0.1 |
| Change in method | - | - |
| Impact of taxes | - 0.2 | - |
| Items that might be reclassified to profit or loss | - 41.8 | 19.7 |
| Actuarial gains or losses | 2.5 | 1.5 |
| Impact of taxes | - 3.8 | - 1.4 |
| Items not to be reclassified to profit or loss | - 1.3 | 0.1 |
| Other items in the total gains and losses for the period net of taxes | - 43.1 | 19.8 |
| Total gains and losses for the period | - 81.2 | - 19.9 |
| > Of which attributable to controlling company | - 79.1 | - 16.8 |
| > Of which attributable to non-controlling minority | - 2.1 | - |
APPENDIX 4:
FINANCIAL PROGRESS REPORT
Assets
| In millions of euros | 12.31.17 | 06.30.17 |
| Goodwill | 369.8 | 377.9 |
| Other intangible fixed assets | 681.9 | 688.3 |
| Tangible fixed assets | 281.2 | 292.4 |
| Financial fixed assets | 16.2 | 15.5 |
| Equity shares | 281.4 | 312.9 |
| Deferred taxes | 51.4 | 54.1 |
| 1,681.9 | 1,741.1 |
| Inventories | 645.5 | 447.9 |
| Trade receivables and other receivables | 464.4 | 501.7 |
| Cash and cash equivalents | 226.3 | 256.3 |
| 1,336.2 | 1,205.9 |
| Total assets | 3,018.1 | 2,947.0 |
Liabilities
| In millions of euros | 12.31.17 | 06.30.17 |
| Share capital | 317.7 | 317.7 |
| Reserves and income | 767.5 | 879.0 |
| 1,085.2 | 1,196.7 |
| 107.9 | 111.8 |
| 1,193.1 | 1,308.5 |
| Provisions for employee benefits | 60.2 | 64.2 |
| Non-current financial debts | 891.3 | 749.2 |
| Deferred income taxes | 98.1 | 130.4 |
| 1,049.6 | 943.8 |
| Other current provisions | 15.5 | 16.1 |
| Accounts payable | 406.5 | 424.6 |
| Deferred income | 32.2 | 33.0 |
| Current financial debts | 321.2 | 221.0 |
| 775.4 | 694.7 |
| Total liabilities | 3,018.1 | 2,947.0 |
APPENDIX 5:
Variation IN CONSOLIDATED EQUITY
| In millions of euros | Attributable to controlling company | Attributable to non-controlling minorities | Total | ||||
| Capital | Premiums | Income and other reserves | Currency translation reserves | Total | |||
| 07.01.16 | 317.7 | 332.6 | 482.3 | 19.0 | 1,151.6 | 112.4 | 1,264.0 |
| Other items in the global income net of taxes | - | - | 8.8 | - 24.5 | - 15.7 | - 3.0 | - 18.7 |
| Net income | - | - | 86.9 | - | 86.9 | 3.2 | 90.1 |
| Global income for the fiscal year | - | - | 95.7 | - 24.5 | 71.2 | 0.2 | 71.4 |
| Variation in treasury shares | - | - | - | - | - | - | - |
| Dividends paid out | - | - | - 22.9 | - | - 22.9 | - 2.0 | - 24.9 |
| Variations in scope | - | - | - 3.6 | - | - 3.6 | 2.4 | - 1.2 |
| Effect of share purchase commitments | - | - | 1.1 | - | 1.1 | - 1.2 | - 0.1 |
| Variation in the capital stock of the parent company | - | - | - | - | - | - | - |
| Variation in the capital stock of the subsidiaries | - | - | - 0.6 | - | - 0.6 | - | - 0.6 |
| Bonds redeemable as shares | - | - | - | - | - | - | - |
| Restatement | - | - | 0.2 | - 0.2 | - | - | - |
| Others | - | - | - 0.1 | - | - 0.1 | - | - 0.1 |
| 06.30.17 | 317.7 | 332.6 | 552.1 | - 5.7 | 1,196.7 | 111.8 | 1,308.5 |
| Other items in the global income net of taxes | - | - | - 0.8 | - 41.0 | - 41.8 | - 1.3 | - 43.1 |
| Net income | - | - | - 37.3 | - | - 37.3 | - 0.8 | - 38.1 |
| Global income for the fiscal year | - | - | - 38.1 | - 41.0 | - 79.1 | - 2.1 | - 81.2 |
| Variation in treasury shares | - | - | 0.4 | - | 0.4 | - | 0.4 |
| Dividends paid out | - | - | - 33.3 | - | - 33.3 | - 1.9 | - 35.2 |
| Variations in scope | - | - | - | - | - | - | - |
| Effect of share purchase commitments | - | - | - | - | - | - | - |
| Variation in the capital stock of the parent company | - | - | - | - | - | - | - |
| Variation in the capital stock of the subsidiaries | - | - | - 0.2 | - | - 0.2 | 0.1 | - 0.1 |
| Variation in ownership interests | - | - | 0.7 | - | 0.7 | - | 0.7 |
| Bonds redeemable as shares | - | - | - | - | - | - | - |
| Restatement | - | - | - | - | - | - | - |
| Others | - | - 0.2 | 0.2 | - | - | - | - |
| 12.31.17 | 317.7 | 332.4 | 481.8 | - 46.7 | 1,085.2 | 107.9 | 1,193.1 |
APPENDIX 6:
GLOSSARY
Like-for-like data
Like-for-like data is data that is restated for constant scope and currency translation.
- Therefore financial data for 2016-2017 is restated with the average rate for fiscal year 2017-2018, and any other changes to the scope, in order to be comparable with data for fiscal year 2017-2018.
- The only change in the consolidation scope is the purchase of a stake of 49% of the capital stock in Prime Seed Co (Zimbabwe. Vegetable Seeds), in April 2017.
- The change in the scope of activity is due to the withdrawal by the Business Unit VILMORIN-MIKADO (Vegetable Seeds) from the distribution of agricultural supplies in Japan.
Current data
Current data is data expressed at the historical currency exchange rate for the period, and without adjustment for any changes in scope.
EBITDA
The EBITDA is defined as the operating result to which are added any provisions for depreciation, amortization and impairment.
Research investment
Research investment refers to gross research expenditure before recording as fixed assets any research costs and research tax relief.
Current operating margin
The current operating margin is defined as the accounting operating margin restated for any impairment and reorganization costs.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: VILMORIN & CIE via Globenewswire
