Ladies and gentlemen, welcome to KWS SAAT SE publication of full year results 2025/ 2026. The conference will be recorded. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Dr. Jörn Andreas.
Good morning, everyone. Thank you for joining us today for our full year 2025/2026 results call. Before we dive into the numbers, let me start with a brief perspective on the year. 2025/2026 was certainly a challenging year for the agriculture sector. We have seen lower acreage in several crops, cautious farmer sentiment, and also adverse currency developments that created quite some headwinds across many of our markets. Against this backdrop, we delivered a very resilient performance. While sales were affected by market conditions, we maintained a strong profitability, we generated excellent cash flow, and further strengthened our balance sheet. At the same time, we continued investing in innovation and in executing our strategic priorities, and we are very happy about that. In short, the year once again demonstrated the resilience of the KWS business model and the strength of our diversified portfolio.
Before we dive into more details, as always, please note that some statements made today are forward-looking and are therefore subject to risks and uncertainties. Please refer to the disclaimer on slide two. Let us start with the group highlights. Sales reached EUR 1.63 billion. Organic sales declined by only 1%, despite significant acreage reductions in sugar beet and corn. In addition, currencies and portfolio effects each reduced reported sales by roughly 1 percentage point. EBITDA came in at EUR 343 million and remained at a strong level despite softer market environment. Net income increased by more than 13% to EUR 158 million, supported by a significantly improved financial result. Free cash flow remained strong at approximately EUR 123 million and was virtually unchanged from last year.
As a consequence, net debt dropped, declined further to less than EUR 9 million, leaving us with an exceptionally strong balance sheet. While market conditions affected growth, profitability, cash generation, and financial strength remained very solid for us. Let me now put this result into the perspective against the targets that we set at the beginning of the year. Looking at our guidance, sales development was clearly more challenging than anticipated at the beginning of the year. We initially expected around 3% organic growth and later adjusted our outlook to roughly flat development. The result of - 1% reflects weaker than expected acreage development throughout the year that we, to a large extent, mitigated by our portfolio strength. At the same time, we continued to focus on what is in our control. We implemented efficiency measures that contributed roughly EUR 25 million in savings in fiscal year 2025/2026.
In addition, we also actively managed account development, generating efficiency gains that will also continue to support profitability going forward. As a result, despite weaker than expected acreage development and also adverse currency effects that were also significantly impacting our EBITDA, we successfully delivered an adjusted EBITDA margin within our guide range of 19%-21%. In addition, the disposal of our North American corn license rights, with that we have successfully completed the strategic alignment of our corn segment that contributed another EUR 29 million to our EBITDA, also in line with our expectation. Finally, we intend to increase the dividend to EUR 1.30 per share, reflecting our ambition to deliver stable or rising dividends every year. Taken together, we delivered three out of four targets in a challenging environment. Turning to sales. Looking at the bridge, three factors explain the reported sales decline.
First, lower acreage reduced organic sales by 1%. Second, currencies. They created another percentage points of headwind, mainly the U.S. dollar, the Turkish lira and the Ukrainian Hryvnia. Third, portfolio effects accounted for the remaining decline and were largely related to the absence of R&D service revenues from our former AgReliant joint venture. The key message is here that the decline in reported sales was not driven by our portfolio. Rather, it reflects a combination of acreage reductions, currency effects, and portfolio-related changes. Turning to profitability. As in the last years, we recorded a few one-time items, as shown on the slide. Current year benefited from a EUR 29 million gain related to the disposal of our North American corn license rights, while the prior year included the reversal of a VAT provision.
The largest year-on-year improvement came from the financial results, mainly supported by positive effects from the sale of our participation in AgReliant against the corresponding negative effect in the previous year. Including those effects, net income and earnings per share, as previously mentioned, increased by 13%. Let's now dive into the segments and start with sugar beet, our largest product segment. 2025/2026 was another year in which our innovation-driven strategy clearly paid off. Global sugar beet acreage declined by roughly 10%, as high sugar inventories prompted producers to contract lower beet volumes, especially in Europe. This reduction was higher than we anticipated at the beginning of the season last year and reduced our ability to achieve growth in the last financial year.
Nevertheless, against this backdrop and against this market contraction, the organic sales decline of just 0.6% for the sugar beet segment provides a compelling evidence of the resilience of our world-leading sugar beet business. Here, innovation remains the key driver. CONVISO SMART and CR+ continued to gain traction and now account for 63% of segment sales. This ongoing shift towards more differentiated, higher-value solutions remains one of the most important drivers of long-term value creation in the segment. Profitability also remained exceptional, so even after this reduction in acreage, sugar beet delivered an EBITDA margin of almost 42%.
Looking ahead, high sugar prices and expected lower sugar yields in most of our sugar beet regions this year should support a stable or even growing acreage in the upcoming season, which would allow us to generate top and bottom-line growth in the sugar beet segment again, and that makes us confident for the current fiscal year. Turning to our corn segment. The headline sales decline primarily reflects lower acreage across markets as well as portfolio effects stemming from the AgReliant transaction. However, looking beneath the surface, the development was actually encouraging. Excluding Russia, comparable sales growth reached 2% and more importantly, we continue to gain market share both in grain and silage across Europe, which confirms the competitiveness of our portfolio. Another highlight was clearly sunflower, where sales increased 35%.
While still a relatively small business today, this development confirms our conviction that sunflower can become an increasingly important growth area for the years ahead. Remember, our ambition is to deliver EUR 100 million revenues by the end of the decade. Profitability improved also significantly in corn. Reported EBITDA benefited from the disposal of license rights. But even if you take this out, even excluding this one-time effect, the segment delivered meaningful improvement in operating profitability. That is important because it demonstrates the quality of the remaining portfolio and also the decision behind the recent portfolio changes. Turning to cereals. Sales remained broadly stable despite continuing pressure on several crop markets. Rapeseed was once again the clear standout performer, so sales increased 24% in oilseed rape. Our market share continued to rise and further strengthen our position as one of the leading players in Europe.
I would say this coming season, we will be the leading player in Europe. By contrast, rye, wheat, and barley continued to face weaker market conditions, largely reflecting lower commodity prices last year ahead of the harvest. Profitability was additionally impacted by a provision that we already reflect after the nine months results related to an antitrust investigation in France. Excluding this effect, the underlying earnings development remained broadly in line with past levels. Overall, cereals once again demonstrated the value of its diversified crop portfolio. Lastly, vegetables. Sales were below prior year's levels, mainly reflecting developments in spinach and timing effects in certain markets. Our focus remains unchanged. It remains firmly on long-term value creation, and we continued investing heavily in breeding capabilities, infrastructure, and new crops while further extending our innovation pipeline.
This rationale remains fully intact, and we are all looking forward to providing more insights during next week's vegetable investor and analyst seminar in Andijk in the Netherlands. Let me now turn to cash flow. Despite lower sales volumes and a more challenging market environment, we once again generated free cash flow of approximately EUR 123 million. The composition of the cash flow differs, however, from last year. Operating cash flow was lower, reflecting both declines in the EBITDA and higher working capital requirements. At the same time, investing cash flow improved by the same amount, which is due to two reasons. First, the payment of the first tranche in the context of the AgReliant divestiture. Second, somewhat lower capital expenditures, mainly due to project phasing. Even in a year characterized by lower acreage and adverse currency developments, KWS continued to convert earnings in cash very effectively.
And that has, of course, positive implications. Our balance sheet improved further during the financial year and remains one of the key strengths of KWS. Net debt declined significantly to less than EUR 9 million at year-end. I think few companies in our industry operate with a balance sheet as strong as ours today. As a result, we enter the financial year with exceptional financial flexibility. This gives us considerable scope to continue investing in R&D to support the growth of our existing businesses and pursue attractive opportunities if they create long-term value for our shareholders. Our balance sheet is stronger than ever, and it provides a very solid foundation for the growth of KWS. We remain committed to predictable and sustainable dividend growth.
Based on the results achieved, we propose to increase the dividend to EUR 1.30 per share. This represents another year of dividend growth and results in a payout ratio of approximately 29%, which is fully in line with our dividend policy. Since the financial year 2019/2020, our dividend has actually increased from EUR 0.70 to the proposed EUR 1.30 per share, which represents a compounded annual growth rate of approximately 11%. I think that's a very strong commitment to creating sustainable value for our shareholders over time, and we will continue on this path. Let me conclude with outlook. For 2026/2027, we expect organic sales growth of around 3% in the assumption of better market conditions, which is what we currently see. Commodity prices have recovered substantially over the last weeks, driven by various factors.
Current levels bode well for better acreage development and improved farm profitability in the upcoming season. In combination with our diversified portfolio and our strong market positions, we feel well-prepared to return to stronger flows next year. For profitability, we expect an EBITDA margin between 19%-20%. This also remains fully in line with our midterm ambition and continues to include also substantial investments in R&D. Overall, we enter the financial year with good confidence in profitable growth. Before moving to Q&A, let me briefly remind you on our Vegetables Investor and Analyst Seminar in Andijk next week. We have fantastic participation, and we really look forward to discussing the development and long-term potential of the business in much greater detail. You will see this on-site.
You will get to taste and feel our products, and that will be, I think, a very great event. Looking forward to it. For now, let me close with three takeaways. First, we delivered a resilient profitability despite significant market headwinds. Second, we generated strong cash flow and further strengthened our already very healthy balance sheet. Third, we continue to invest. We continue to invest in innovation, in future growth while maintaining financial discipline. Taken together, I think these achievements leave us well-positioned for the year ahead, and that makes us really confident. Thank you very much for your attention, and Peter and I are now happy to answer all your questions.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star nine and pound key on your telephone keypad. If you would like to revoke your question, press star three and pound key. You can also use the dial-in function in the webcast and raise your hand if you would like to ask a question by phone. The first question is from Michael Schäfer from ODDO BHF. Please go ahead. The floor is yours.
Yeah. Good morning, gentlemen. Thanks for taking my questions. The first one would be on your sugar beet segment outlook. Jörn, you mentioned the 10% decline in global acreage in the past season, and obviously, we have seen sugar prices that are in a rather strong recovery in recent months. So I wonder what you have baked into your slight organic sales growth outlook on the top line. Shall we think about some more price pressure, or for me, it looks like a rather conservative statement on that one. This will be my first question. The second one is on cereals, on rapeseed. You said that you gained market share and you may overtake the number one position in the next season. Can you just give us a bit of color? What's the delta in terms of market share to the number one in the segment?
Last not least, on Russia. Obviously, there was some setbacks in corn. On a more, let's say, general or more broader terms, how should we think about your Russian business in general? Is there also a risk to the sugar beet segment? What's your view on the region, and how is it affecting the respective segments? This would be my three questions for the beginning. Thanks.
Questions. First of all, yes, sugar beet outlook. That's our best estimate on the acreage reduction last year that we mentioned. Exactly because of, let's say, this, we were a bit more cautious, to be honest. You might label it conservative. We say more cautious, let's say, on when we put together the outlook, let's say, yeah. Our current data that we have, let's say, is more positive. That's what you also said. That's true. We saw a strong increase in sugar prices, also reflecting on some El Niño effects in India and Thailand. So we have here not a great harvest, which is, yeah. Putting more bullish, let's say, factors, let's say, on the prices. We see also not good or not great yields in Europe.
I am talking about the heat waves in certain parts of Southern Europe, or the southern part of Germany, that leaves also clearly a mark on the supply. That bodes well for us. A big driver of the acreage reduction last year was the supply and demand balance, because we came from two years of very good harvest. We believe that actually this year, Europe will be completely balanced out its inventory, will also be a net importer because they not have enough own produced sugar supply. This means we have rebalanced, let's say, supply and demand situation after this season. That provides us with a good starting point for the upcoming growing season. We have been a bit more conservative and said, okay, in our outlook, we work with a stable acreage.
That means, we have not put in, I would say, very optimistic assumptions in our outlook in order to be here on the more safe side. If that trend continues, and if we see in October really the results of the harvest that we see already today in the trial harvest that are already positioning, then I think that this gives us also some opportunities, because we will also continue to further increase the penetration of CONVISO and CR+, which anyway will also then help us on the goal side. Oilseed rape, that is a fantastic situation for us. You know that this is basically the first quarter of our fiscal year is most important quarter for oilseed rape. That is when all the planting happens, let's say, for the current season. We had a fantastic start, I have to say, to the new fiscal year.
Strong growth in oilseed rape. When we say we want to become the leader, let's say, in Europe now in the upcoming growing season, I have to say it actually happened. We are now number one. We have gained market shares in all key markets and that is for us really a situation where stars align because oilseed rape prices are, of course, very high. Commodity prices are high, so there is literally incentive for the farmer to move into oilseed rape if, let's say, the computation allows and lets it say, okay, a market or a portfolio where we have the best product in the market. That helps us really good and we had a good start. Russia is, of course, still a moving target, if you want, in that situation.
It is largely unchanged, I would say, compared to all the previous calls when we were discussing the situation. It remains for us still a revenue contributor, but less than 10%, let's say, to the overall KWS portfolio. That has also not changed, let's say. For our sugar beet business, I told you already that for cereals and corn, that is anyway any more an opportunistic business, let's say. That is anyway very low, let's say, in terms of revenue contribution, if at all. Sugar beet is the remaining key business that we have. We do not see, let's say, that any local production will be able to match the performance requirements necessary in order to supply the demand, let's say, in the domestic demand. We do not see that. Currently it is operating, so it is pretty stable. But of course, no one now can predict the future.
But so far, so good.
Thank you very much.
Much. The next question is from Christian Faitz from Kepler Cheuvreux. The floor is yours.
Yes, thanks. Good morning, Jörn, Peter, and team. Couple of questions remaining, please. I will ask my veg sheet questions next week. First of all, you talked about, obviously, the oilseed rape business, which seems to be going well into the new season. Can you talk a bit about your cereals business, such as, for example, winter wheat, how that is going, also given higher wheat prices into the seeding season? And second, just a minor question, but can you please elucidate a bit the antitrust investigation you seem to be facing in France? Thanks very much.
Yeah. Very good. Looking forward to your veg sheet questions next week. Thanks then. For cereals in general, I would say that we have a very diversified portfolio in cereals, and in all crops that we operate in cereals, we are the leader in Europe. In oilseed rape we've now gained number one position. In hybrid rye anyway we by far number one, and same for wheat and for barley as well. It's a really good position to be in. For the other winter crops, last year was a bit, I would say, more challenging because of the lower commodity prices last year. Farmers were more to plant saved seed, so that our revenue was more or less stable. We were not able really to increase, let's say, revenue in this situation.
For the coming year, we are more confident because at some point in time, the farmer needs also to purchase fresh new seeds in order to catch up also with the yield expectation. On that side we are also, I would say, confident, but I would say overall, if you look at the crop rotation, the winter cereals business, of course, a residual loser, let's say, if you look at the overall agricultural crop rotation. Because sugar prices are going up, and anyway, if the farmer would be, let's say, completely unconstrained, would plant as much sugar as possible. Oily rape's very good, so that would be also very strong drive to plant more oilseed rape. Corn prices have increased, so that might also help also to move some acreage to corn.
I would say overall, let's say the other winter fields are the residual loser, let's say. But within this market, which we would deem will be stable, maybe slightly increasing, we hope that we can gain more share by our business coming from this more stronger farm-saved seed situation last year. That's I think how I would describe the situation. That's also how we see at the start of the year, the rise is pretty stable after the decline last year. It really stabilized and also it can slightly growing, and that's what we see for the others as well. Overall, I think a good start. Yeah. I will take the next question.
Okay.
Antitrust. That is basically unchanged to what we also discussed after nine months. There is a situation that for the cereals business, in France there's a certain mechanism that is also transparent and it's public. Everyone can see it on the website, where prices for royalties and the basic seeds are set. That is also done in conjunction also with French authorities. There is a question whether this mechanism, let's say, is compliant and future-oriented or not. In order to be prudent, we took a provision of EUR 5 million, but we as well as all other market participants reject this claim because it's a practice since 30 years. It's been looked at many times. It's public. But it is what it is.
It is now on our balance sheet as a provision, and then we will see how it develops, but we are defending, of course, our position and reject this claim.
Okay, great. Thanks very much, Jörn. If I may, one last question. You talked about Russia, but how is the business going for you in Ukraine at this point in time?
Look, Ukraine is actually going well, I have to say. I think this with some tonality, let's say, because we are very in close contact with our people in Ukraine. Last week, a board member basically was also in Ukraine visiting the teams and the site, which of course was an important one for us. I can tell you, the pressure on the teams locally is significant. We are just very grateful and a lot of respect for our teams that within these conditions, we again increased our revenue in Ukraine in a significant, I would say, single-digit amount.
Business is valid, is growing and of course we have also a portfolio which helps us a lot also in these days in Ukraine, if you think about oilseed rape, if you think about corn, et cetera, if you think about sunflower, where also the growth is coming from that area. It is actually going well, despite, of course, very challenging conditions.
Thank you very much. See you next week.
See you next week, Christian.
Before we move on to the next question, I would like to repeat, if you would like to ask a question, please press star nine and pound key on your telephone keypad, or use the dial-in function on the webcast and raise your hand. Next question is from Leon Mühlenbruch from mwb research. Please go ahead.
Hello, everyone. Thank you for taking my question, though you already answered my question on the market environment and the drivers of your expected recovery. My follow-up on this would be, as you mentioned, the potential impact of El Niño and the potential improvements in sugar. Could a strong El Niño event also negatively affect your business overall, though especially the other segments? My second question would be to the margins. Your current margin target is 19%-20%. What could be a driver to move above the 20% in the long term?
Very good question. Yeah. El Niño, of course, you all read this in the news. We had a very pronounced El Niño this year that already affected some of the important growing regions in Asia, in particular India and Thailand. Those are also the key regions for us that influence our global sugar prices. That has already a mark on the commodity prices, because the harvest is not going as expected, because you have a lot of the drought, you miss the rainfall, and that has an impact, let's say, on the harvest. You have then the counter effect, basically Latin America, where you have the heavy rainfall parts of Brazil, you have also heavy rainfall in Argentina. For some of the areas, it could be then also beneficial, let's say. Usually Argentina is the winner from El Niño and Brazil can be both directions.
We also have also very different growing regions in Brazil. I would say for sugar, it's a positive, let's say, driver and that's already materializing. For the other crops, you cannot really say. You really expect that there could be one or the other direction because losses in one side of the, let's say, globe could be compensated theoretically on other sides, which then is dependent really on conditions. If you have super heavy rainfall, then you can also not harvest better yields, for example. I would say on the other part, it's really more balanced, I would say, the effect. We don't expect any big, let's say, movement. That's also experience that we have looking in the past, because we have this El Niño effect, of course, every few years. That's also the experience that we've made in previous situations.
On the other ones, we are more, let's say, neutral, I would say. In terms of margin, yes. We continue to invest in our business. We said, okay, we want to keep the margin expectation between 19% and 20% for the time being. But of course, if we are benefiting from better acreage, that this will have a significant operating leverage in our business. That will help us clearly to move also margin above 20% and our midterm target is between 19% and 21%, so means midpoint is 20%, and that's nothing that we want to achieve in the far future, but this was something that we want to achieve every year. That's why, we are maybe cautious more at the beginning of the year, but we feel confident that, with what we have in our hands, we will be able to get there.
Okay, perfect. Thank you. See you next week.
Thank you.
Thank you very much. At the moment, there seems to be no further questions. I repeat again, if you would like to ask a question, please press star nine and pound key on your telephone keypad or just use the dial-in function and raise your hand. We have Michael Schäfer from ODDO BHF on the line. Please go ahead.
Thanks for taking my follow-up. Coming back to vegetables, and I do not want to preempt here on your next week's CMD. However, on the numbers, looking into, obviously, your reported - 6.8% decline organically on the sales side. But looking into the details, I realized that you cut back significantly on the marketing spend, even on a relative basis compared to, let's say, historical levels. I wonder whether you can give a bit more color, let's say, how challenging 2025/ 2026 was for the segment and maybe on those kind of metrics, how we should think about going into 2026/ 2027.
No, absolutely. To per se, we had an organic decline last year, but although this is also against very high comparable across the previous year where it grown 16%, so over two years it is the highest single digit growth. We were having, I would say two, or I would say three that happened. First was that we had a lower market demand in the North America food service segment was a bit lower in terms of demand. We had an order phasing, which was simply order phasing because an order slipped from June into July. So that also made an impact because, okay, this is not as big as then not fully, I would say, unaffected by this order phasing effects. Then we also had these high comparables that I mentioned in the previous year.
I think in that context, it's an okay result, and we definitely plan to come back to growth this year also in that segment. That's very clear. On your question, selling expenses, it's a bit of an artifact, Michael, because we actually increased also the selling expenses. However, last year, we had this one-off write off of the Pop Vriend brand. This basically was a EUR 10 million write off coming from purchase price allocation, and that is a bit, say, polluting the figures here. If you take out, there's this EUR 10 million one-time write off, brand write off last year, then it's actually a slight increase in selling expenses, which means very consistent continuing to the infrastructure both on the R&D side as well as on the go-to-market side.
Okay, that's well understood. Thank you very much. Thanks.
Yeah.
Thank you very much. There seems to be no further questions. I thank everyone for your participation, and with that, I would like to hand over to your host, Mr. Andreas, for the closing remarks.
Right. Thanks again. No, just thank you again for your interest and time for joining us this morning. As already mentioned by you several times, looking forward to seeing you next week at our Vegetables Investor Day in Andijk. Looking forward to spending some time with you. With that, thank you and have a good day.