Vilmorin & Cie - Annual report 2017-2018

1 ANNUAL REPORT Vilmorin & Cie 49 2017-2018 1.6.5. Objectives for 2018-2019 Fiscal year 2018-2019 should allow Vilmorin & Cie to continue to strengthen its competitive positions in market conditions that will probably remain tense in the field seeds sector, and characterized by an ongoing partial lack of visibility in vegetable seeds. Vilmorin & Cie will continue to strengthen, in a reasoned approach, its investments in research and development, particularly in upstream technology, while remaining on the look-out for any external growth opportunity that fits in with its strategic orientations. For fiscal year 2018-2019, Vilmorin & Cie aims to achieve an increase in its consolidated sales of 2% to 3% on a like-for-like basis. Moreover, Vilmorin & Cie has set the objective of achieving a current operating margin rate with a slight increase, estimated to be between 0.5 and 1 percentage points compared with fiscal year 2017-2018. This margin will take into account research investment that should be above 250 million euros, intended to promote growth both for Vegetable Seeds and for Field Seeds. 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 2017-2018. 1.6.5.1. Vegetable Seeds In Vegetable Seeds, after a tough fiscal year 2017-2018 marked by temporary difficulties, Vilmorin & Cie’s objective is to achieve sales growth of 2% to 3% on a like-for-like basis in 2018-2019. Vilmorin & Cie’s ambition is to reinforce its world leadership in vegetable seeds. In order to do so, the Company will continue to rely on a specific market approach, characterized by very close proximity to customers, in a context where the main competitors are reorganizing their businesses following major consolidation operations. Vilmorin & Cie will also accentuate its development investments in Asia (China, Southeast Asia, Japan, etc.), in order to accelerate expansion in this region with very strong potential. 1.6.5.2. Field Seeds In a market context that lacks stability and which will probably remain tense, Vilmorin & Cie is approaching fiscal year 2018-2019 with the ambition of strengthening its positions in the regions where it has set up business, considerably broadened in recent years, both for corn seeds (South America, Asia and Africa) and wheat seeds (North and South America). Vilmorin & Cie is aiming for an increase of its sales of between 2% and 3% on a like-for-like basis for this activity. This objective relies on the continued deployment of the strategic plan for Field Seeds, which aims to confirm an indisputable position as a global player, with a worldwide dimension for its two strategic crops; corn and wheat. In particular this will involve: continuing to gain market shares in Western Europe, in a context that remains difficult, confirming strong business development in Eastern Europe (Ukraine and Russia), returning to dynamic business growth in South America, consolidating AgReliant's (1) competitive positions in North America, during a fiscal year that will be marked by the finalization of the company's new commercial strategy, with reorganization of its brands so as to benefit from two strong brands with a national vocation. The fiscal year will also be devoted to deploying Vilmorin & Cie’s partnerships and strategic alliances. In this respect, Vilmorin & Cie will continue to operate the agreements signed with Syngenta in October 2015 on GMO* corn traits*. 1.6.5.3. Garden Products In 2018-2019, Vilmorin & Cie will continue to diversify its commercial line-up for home gardeners, around its flagship brand Vilmorin. In a context where the seed packet sales segment is continuing to decline, this diversification will strengthen Vilmorin & Cie's presence in all the solutions offered to home gardeners and meet their latest expectations. This will be achieved by launching innovations, both in terms of products and services. In this respect, the launch of a Vilmorin application and its sensor, planned for the fall, aims to recruit new home gardeners and to reconnect with all consumer profiles, including the youngest and most novice. The fiscal year will also focus on the integration of Graines Gondian, acquired in July 2018, in order to consolidate Vilmorin & Cie's positions in its historical seed packets segment. (1) 50/50 joint venture created in July 2000 with the German seed group KWS. 1.6. Strategy and perspectives PRESENTATION of Vilmorin & Cie