Good afternoon to everybody joining this KWS conference call on the publication of our 2021/2022 financial statements. My name is Eva Kienle, and I'm a member of the executive board and the CFO of KWS Group. 2022 has been a very special year that sent the world into an absolutely unexpected and unimaginable scenario end of February, when Russia invaded Ukraine. KWS issued an ad hoc profit warning beginning of March, when our first simulations and estimations on the disruption of agriculture in both countries showed us a serious reduction in sales and profitability. Alas, the outcome was unbelievably contrary to what our expectations were. I will come to that in a minute. In the end, we closed another highly successful fiscal year for KWS. Our sales increased significantly by more than 17%, and we were also able to significantly improve our key operating earnings figures.
With net income at previous year level, we intend to pay a constant dividend of EUR 0.80 per share, which is in line with our long-term dividend policy. If we look ahead to the new financial year, we are optimistic that despite the current challenges, we will be able to grow our business strongly. Looking further ahead, we also envision growth potential in the long term. Over the past year, we have intensively observed the global mega trends in our industry. Sustainability will be the determining issue for the agricultural sector for the years to come, and we would like to reflect today how we intend to leverage this development into growth for KWS. Let me come back to the issue that still deeply moves and worries most of us, and that is the ongoing war in Ukraine. KWS has a long and diverse history with this country.
It should be emphasized that in 1900 we opened our first ever foreign branch in Vinnytsia in western Ukraine, and even today we are still active at this and three other locations with around 170 employees. Since the outbreak of the war, our greatest focus has been on the safety of our employees and their families. We have provided extensive assistance as a company, but also with a lot of private help and support from our employees. Since around 85% of the usual acreage was cultivated in the past growing season, we pay the greatest respect to Ukrainian farmers and of course to our local colleagues. Agricultural production is vital for Ukraine's survival and is also of great importance for food security in other mostly poor regions of the world.
We at KWS will therefore continue to make our contribution and expand our commitment to Ukrainian agriculture in the form of investments and support programs. Let's now turn to the financial figures of the past fiscal year. As already mentioned, we achieved an outstanding sales growth of 17.5%. Overall, currency effects played only a minor role. Some positive foreign currency effects, for example, from the U.S. dollar, were largely offset by negative effects, for example, from the Turkish lira. As already discussed in our Q3 conference call, our cost of goods sold ratio increased due to cost increases and portfolio mix effects. Nevertheless, we achieved significant growth in EBIT at a final margin of above 10%, exactly 10.1%. As you know it from KWS, research and development is of high importance to us.
Although the R&D ratio declined slightly compared to the previous year, in absolute figures, we spent more than EUR 30 million on top on future innovations and product development. Financial result was significantly lower than the previous year, and two effects are responsible for this. On the one hand, we recorded lower earnings contributions from our joint ventures, and on the other hand, we moved the profit impact of foreign currency developments on internal financing instruments to below the EBIT line. As in the previous year, we benefited from positive special effects at our income taxes so that our tax rate was again at a low 22%. We closed the financial year with net income and earnings per share slightly below the previous year's figures. Let's now briefly turn to the development of our different business units.
In the final quarter, we were able to accelerate our growth rate stronger than expected and recorded high growth, especially in corn and in sugar beet. As a result, double-digit growth rates are recorded in all product areas except in our vegetables segment. While EBIT in our corn segment declined mainly due to lower earnings contributions from the joint ventures, significantly higher cost of goods, and negative effects from the Ukraine war, sugar beet and cereals again delivered excellent results. In the fourth quarter, we benefited from very strong demand for our Cercospora-resistant varieties, especially in the U.S. sugar beet market. With total sales of around EUR 70 million, our new Cercospora plus varieties have contributed significantly to the segment sales just in their second year of market introduction.
Together with CONVISO SMART, which also performed very well with growth of over 40% or EUR 30 million more than the prior year, we have now two highly innovative growth drivers in our sugarbeet portfolio. In the case of vegetables, we made great progress in expanding our breeding activities last year. For various reasons, though, we were not able to really recover in our top-line operating business. Several factors played a role here, but we are confident that we will return to the growth path in the new financial year. All in all, I think it's a very positive picture in our product areas, characterized by growth and innovation. To enable growth also in the future, we continue to invest in our infrastructure. We completed the comprehensive modernization and expansion of our central production plant for sugarbeet seeds in Einbeck in Germany last year.
Current starting projects include a new building at the Einbeck site for the processing and storage of our elite breeding material, a core component of our product development. The project is to be completed by 2024. Another example is the significant expansion of our production capacities in Brazil to meet the expected strong demand in this market. Both projects are characterized by a special focus on sustainability and energy efficiency, and thus make a direct contribution to improving our ecological footprint. Against the background of a more restricted monetary policy of the central banks and the associated rise in capital market interest rates, I would like to briefly discuss our debt situation. On this slide, you can see the maturity profile of our financial liabilities over the next 10 years.
The next major refinancing is due in the financial year 2024-2025, that is in two years from now. With the current net debt to EBITDA ratio of around 2.25, we feel very comfortably positioned and far below our covenant thresholds. Due to predominantly long-term fixed interest rates, our current exposure to interest rate increases is comparatively low. In the case of short-term financing measures, such as commercial papers, we are already seeing interest rates rising, but still at a low level. Let me now comment on our outlook for the new financial year. We forecast sales growth of 7%-9% on a like-for-like basis and expect significant growth in all product segments. On this basis, we forecast an EBIT margin in the range of 10%-11%.
At the same time, we will continue to maintain our R&D investments at a high level in a range of 18%-20% of sales. Talking about opportunities, we're seeing tailwind from the price development for agricultural products, which gives us scope for price increases depending on the competitive situation. In addition, we expect the acreages to increase overall due to the attractive commodity prices. As those prices are currently very much in flux, it will be difficult for farmers to predict which type of crops is best to grow. With our broad seed portfolio, we are in a good position to outbalance those fluctuations. On the risk side, we are also affected by inflation as everyone else. Moreover, some of our seed multiplication contracts are directly linked to commodity prices, so that significant increases are also expected here.
In addition, the topic of availability of fossil fuels plays a role for us. In the recent months, we have been preparing for possible gas shortages and see our risk in this regard as manageable. All in all, we are cautiously optimistic about the new financial year and want to build on last year's successes. I would now like to talk a little more in detail about KWS sustainable business model and the intrinsic long-term prospects. These perspectives are directly linked to the ever-present ambition to support a sustainable agriculture. On the next slide, I would like to explain to you how we at KWS directly translate sustainability in agriculture into growth. If we first look at the defining issues in agriculture of the coming decades, then certainly it is coping with climate change, changing consumer demands and insecure global food supply.
Ukrainian war has put this risk in the spotlight of global worries. Counteracting climate change, reducing greenhouse gas emissions, and at the same time ensuring food supply is the most important task for our agricultural operations. Agriculture does not only face a general expectation of sustainable practices, but is also exposed to changed political framework conditions. First and foremost, the European Union's Farm to Fork strategy, which has laid down concrete and binding goals until 2030. These goals include a 50% reduction in the use of plant protection products, a 20% reduction in fertilizers, the expansion of acreages used for organic farming for 25%, and the cultivation of 10% of acreages under biodiversity features.
Right after the release of those very specific goals in the EU in the Farm to Fork policy, we have formulated our own KWS sustainability ambition and put concrete actions and target KPIs behind our main undertakings. With product impact targets, we like to stress all activities that are at the heart of our business model ever since, improving plants to cope with unfavorable environmental conditions while still increasing yield output. Safeguarding food production, minimizing input required, enhancing biodiversity, and supporting sustainable diets are the main activity clusters for KWS going forward. Under corporate responsibility, you find the usual targets of CO₂ reduction and social undertakings that also a lot of other companies do also address. It is not only the political framework conditions that are changing.
Climate change also requires an adaptation of agricultural practices to secure the food supply even under changing climatic conditions. Extreme weather, such as long-lasting dry periods, have now become a sad reality. The associated yield losses increase the cost pressure in agricultural production. The change in consumer nutritional habits requires a reorientation of agriculture. Plant-based protein alternatives and the pursuit of a healthy diet are no longer marginal phenomena, but reflect a growing desire in our society. This market segment is expected to experience a strong uptake in the coming years. Finally, digitalization is increasingly finding its way into agriculture. On the one hand, this is about automation, but also the use of digital services to optimize emissions, to save resources, and to achieve ecological improvements. In connection with digitalization, direct digital sales channels are becoming highly relevant.
Based on these mega trends in agriculture, we at KWS have identified the following four focus areas under which we'll group our activities in the coming years, sustainable agricultural practices, Connected Seeds, nutritional food ingredients, and future sales models. From our point of view, innovative seeds will play a decisive role in overcoming the challenges in agriculture, and this in a very diverse way. This includes, first and foremost, the breeding of varieties that maintain yields even when minimized resources. Also the breeding of resistances to diseases and pests, which allow farmers to avoid or significantly reduce chemical plant protection. There are also other approaches in this context, such as the breeding of varieties that are more suitable for feeding livestock. We also see potential in the development of mechanical weed control methods or so-called mixed cultivation systems and crop rotation.
Concrete examples that show the potential of innovative KWS varieties in this regard already exist today. In the area of sugarbeet, I would like to mention the varieties with Cercospora tolerance. Cercospora is one of the most common leaf diseases in sugarbeet cultivation, which leads to significant yield losses. With this innovative breeding of a disease resistance, we give the farmer the opportunity to avoid chemical fungicides while at the same time maintaining yields. For corn, where we have developed drought-tolerant varieties that require significantly less water, especially for our markets in South East Europe. The breeding of catch crops, which allow the accumulation of nitrogen in the soil and thus contribute to soil health and enable yield stability within suitable crop rotation plans. Just three examples showing how innovative seeds enable and support farmers in terms of sustainable ag practices.
In the field of plant-based nutrition, we will pursue two general approaches. On the one hand, we will expand our portfolio of varieties to provide farmers with new and better solutions. At the same time, there is a great need in the food industry to optimize the existing plant raw materials, for example, in terms of texture, taste, and processability. With our deep knowledge of plant genetics, we see ourselves as a competent partner of the food industry with whom we want to jointly develop solutions for better food. Another important area will be the expansion of our digital services for farmers. KWS already offers a variety of applications on our digital platform, myKWS. These applications are tailored and linked to our variety portfolio and are designed to help farmers optimize their cultivation and help them make the right decisions.
myKWS is free of charge for the farmer who buys our seeds. For the time being, our digital services cover around 1.7 million hectares of acreage, and we want to significantly increase this number to over 6 million hectares by 2030. The rise of digitalization agriculture will also have an impact on our future sales models. Our goal is to offer our customers a comprehensive range of support, whether through consultants, digital services, and other tools. In addition to these already established options, we also plan to establish web shops to give farmers the opportunity to order directly from KWS. This brings along completely new internal processes and organizational requirements for us. First web shops are currently being tested in some of our markets already. We are convinced that the value propositions of innovative seeds will change significantly in the future.
Traditionally, the seed value used to be linked to a processed grain product, mainly reflecting yield parameters. In the future, innovative seeds in conjunction with digital services and measurable agronomic advantages will enable farmers to achieve higher added value, combining several different factors. Some of the factors I already mentioned, others, such as incentives for sequestrating or saving greenhouse gases, is no longer just a theory as first projects in North America show. Clearly, we as an innovator will claim a fair share of this added value. This provides us with considerable growth potential in the future. We are very much convinced that overcoming the challenges in agriculture will only happen together. Our sustainability ambition sums this up very well and in my opinion, illustrates very impressively the need for global sustainable action.
Based on innovations, KWS will continue to make its contribution to sustainability in agriculture and thus remain a reliable partner of farmers worldwide. With this, I would like to conclude my presentation. I thank you for your attention and I now look forward to your questions. Thank you, Simon, for taking those forward.
Thank you very much, ma'am. Ladies and gentlemen, if you would like to ask a question over the phone at this time, please signal by pressing star one on your telephone keypad. Please note, if you're using a speakerphone, just to make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is star one to queue for a question, star two to remove yourself from the queue if you wish, and we'll pause for just a moment to give everyone an opportunity to signal for questions. We'll now move to our first question over the phone, which comes from Andreas Heine from Stifel. Please go ahead. Your line is open.
Thanks for having the opportunity to ask a question. I would like to get more details on corn. On the sales side, you have given a split on what the growth was in U.S., in Europe, and in Latin America. Could you at least, in qualitative terms, highlight how this in earnings was? AgReliant we know is down. Europe is 7% sales growth, I would assume to be more or less flat. That would mean that despite the strong growth in Brazil, there was actually an earnings decline. Could you clarify the split? Going forward, of course, when do you expect after seeing a number of years of very strong growth in Latin America, when do you expect this to be reflected in the earnings? Thanks.
Okay, thank you, Mr. Heine. You have depicted about right the profit contribution of the different regions. Clearly, AgReliant is visible in the financial result, and you mentioned the drop in result that we have seen here. It's not to our expectation, and it has reduced by what I mentioned, EUR 9 million earlier on. In Brazil, we do see a nice and increasing profitability already. There is not very much longer to wait to see profitability raising here. The issue is more on the cash conversion cycle in those strong growth countries and working capital financing. Clearly, Brazil and also Argentina is returning nicely and showing increased profitability.
Not yet showing double-digit EBIT return on sales, but reaching or moving towards that target. Of course, in Europe, we are slowly but still increasing the margins, depending on the product mix that we do have here in corn. Again, there is more innovative products with INITIO Bird, for example, also with drought tolerance, where we managed to increase the margin slightly, but definitely not in the way as we're doing in South America. Profitability growth in the corn segment would come from Brazil as the uptake here or the sort of the mix in the overall corn portfolio, which would show a larger contribution from Brazil.
Europe was. I didn't get that. Is Europe down then in profits or
No, it's not.
No, okay.
It's definitely not down. It's slightly up.
Basically, all the decline was North America?
Yes.
Okay. Going forward, I would expect North America will stay difficult, but in Europe and Latin America, you would expect, given what you have outlined as sales growth, that they again contribute to an earnings growth in the current fiscal year?
Yes.
Okay. Thanks. These were my questions.
Thank you very much. As a reminder, ladies and gentlemen, it is star one on your telephone keypad, if you would like to ask a question on today's call. We'll now move back to Andreas Heine from Stifel for a follow-up. Please go ahead. Your line is open.
I try another one, which is on sugarbeet. That was really outstanding performance you have shown in North America, especially. Could you share what the penetration of the CR+ trait is in the U.S. and whether there is more upside and what you expect? I think you mentioned that CONVISO Smart penetration is already 19% in Europe. How do you expect that to progress? Maybe not only in this current year, but also in the coming two to three years, let's say.
With regard to CR+, the share in the U.S. is still minor. It was introduced just in 2021, 2022. Problem being we're sold out.
Mm-hmm.
We might have reached a higher share of wallet, so to say, but we could not deliver more. We were sold out at a very low single-digit % of the whole turnover.
Mm-hmm.
in the U.S. Clearly, we are foreseeing this for this year and providing for larger availability for the U.S. market. CONVISO penetration in Europe is still high and increasing, geared more towards Eastern Europe, because that's now the third and fourth or second, third, fourth year already in the market and really showing strong performance here. We just introduced in Germany, in France, so not long a time ago. Of course, that will also start now with the big markets under CONVISO availability that will start increasing here also the proportions of share, also due to the approval in Germany just recently.
How fast can that be? You had 19% and as you just mentioned, mainly in Eastern Europe, as it was accepted very fast in those areas. What do you expect from Germany and France regarding the uptake?
That's extremely difficult to predict. The application method and, let's say, the allowances is different with regard to CONVISO. The proportion you are allowed to use is much lower in Germany and a little bit lower in France than in Eastern Europe. Still showing already a large input effect on input reduction on the farm side. I would expect here also same uptake like we saw in Eastern Europe. Very fast and very slow within the next two to three years.
Thanks for that. That's all from my side.
We'll now move to our next question over the phone, which comes from Christian Faitz from Kepler Cheuvreux. Please go ahead. Your line is open.
Yes, sir. Good afternoon. Everybody, good afternoon, especially Mrs. Kienle. Just one question, please, on the vegetable seeds business. Obviously, the spinach business is still a little bit in trouble as we know, as we discussed. Are you observing the general trend that you know, given a potential recession, given less income for the general household, that people are actually spending less on vegetables? Hence, is this affecting your overall vegetable seeds business at this point? Thank you.
No, we are not assuming anything like this, that potential consumer restrictions or consumption restrictions would target our vegetables business. This is not something we have considered. No, clearly there is not a risk that we have put into our assumptions here.
Okay. Thank you very much.
Mrs. Kienle, there appears to be no further questions queued over the phone at this time, ma'am.
Okay then. Thank you very much for participating. Hope we could give you a short but broad picture on our last year and our expectations going forward. Thank you very much for your interest in KWS and wishing you all a good rest of the day.