Higher sales prices, among other things, brought good business to the seed manufacturer KWS SAAT in the past financial year. The SDAX company exceeded analysts’ expectations in terms of both sales and operating results. The outlook was also a little better than expected.
In the financial year that ran until the end of June, the company increased its sales by 18 percent to 1.82 billion euros, as it announced on Wednesday in Einbeck. In its largest segment, corn, KWS SAAT benefited from higher sales prices in the core markets of Brazil and Europe. The increase was even greater in the sugar beet and grain business, which is also important.
Earnings before interest and taxes (EBIT) climbed by 44 percent to almost 223 million euros, which corresponds to an operating margin of 12.2 percent. Sales and operating results exceeded both our own forecast and the analysts’ expectations. The bottom line is that 127 million euros remained as profit, of which KWS SAAT plans to pay its shareholders a dividend of 90 cents. In the previous year, KWS SAAT paid out 80 cents per share.
In the current 2023/24 financial year, the company expects a comparable sales increase of three to five percent. The company is targeting an operating margin of between 11 and 13 percent. The margin forecast is therefore in line with analyst expectations; When it comes to sales, the average estimate of the experts surveyed by Bloomberg is at the lower end of the company’s outlook.
The numbers and outlook are convincing
Positively received business figures and a positive company outlook halted the recent decline in KWS SAAT shares on Wednesday. The seed manufacturer’s papers suddenly wiped out almost an entire month’s worth of losses, with an ultimately 5.47 percent increase to 55.90 euros, where they were back at the level of the beginning of September. This means that they also jumped over the 21- and 50-day lines for the short-term and medium-term trends.
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Things went well in all segments of the SDAX company in the past financial year. Industry expert Charlie Bentley from the analysis company Jefferies was correspondingly positive: The seed manufacturer recorded a smaller operating loss than feared in the seasonally unimportant final quarter of the current financial year. In addition, the sales growth targeted for the new financial year is above its forecast, which is reassuring given the increasing concerns about the agricultural sales markets.
Warburg expert Oliver Schwarz explained that the operating profit margin had increased significantly and was even slightly better than KWS SAAT itself forecast. The expert also highlighted the increase in cash. The outlook for the new financial year even appears to be conservative.
KWS SAAT is thus providing a counterweight in the agricultural sector to the biopower manufacturer VERBIO, which was disappointing with its profit outlook on Tuesday. High energy and raw material costs as well as lower sales prices placed a heavy burden on the company in the past financial year.
KWS SAAT, on the other hand, has been consistently positive about its business development in recent months and has even increased its annual forecast twice. The price decline this year could hardly be stopped – since the beginning of 2023, investors are currently sitting on a loss of around twelve percent, while the SDAX has gained at least a good five percent since the beginning of 2023.
The price loss is even more significant from the previous record high in May 2021: the shares have fallen by almost a third from the almost 81 euros reached at that time. But anyone who took advantage of the massive drop in prices due to the Corona crash on the stock market in March 2020, down to around 39 euros, is currently still sitting on a plus of almost 45 percent.
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EINBECK/NEW YORK (dpa-AFX)
Image source: KWS Saat