Vilmorin & Cie - Annual report 2017-2018

3 Management REPORT Report of the Board of Directors to the Joint Annual General Meeting (Ordinary and Extraordinary) of December 7, 2018 ANNUAL REPORT Vilmorin & Cie 90 2017-2018 Vegetable Seeds Sales for the Vegetable Seeds division for the year ending June 30, 2018 came to 673,1 million euros, down 8.5% with current data compared with 2016-2017. Restated for currency translation the decrease was 3.6%. Restated on a like-for-like basis (currency translation combined with the withdrawal from the distribution of agricultural supplies in Japan), the decrease was 0.4%. This more difficult fiscal year was directly related to more contrasting markets this year, due to several temporary difficulties: high inventory levels among distributors, particularly in North America, logistical problems related to phytosanitary regulations, and a one-off decline in certain market segments. Moreover, it should be emphasized that the programmed withdrawal from the distribution of agricultural supplies in Japan by the Business Unit Vilmorin-Mikado, was deployed swiftly and had a total negative impact of more than 22 million euros over the full fiscal year. On vegetable markets where the fundamentals are in no way called into question, Vilmorin & Cie succeeded in gaining market share during the fiscal year. In particular, business growth was sustained in several high-potential regions, especially in Asia (China and India) and South America (Brazil and Argentina). Vilmorin & Cie can thus confirm its world leadership in the vegetable seeds market and also reaffirms its confidence in the continuation of its growth momentum in the coming years. Overall, the Vegetable Seeds activity maintained its operating margin, standing at 17.1% and posted a net contribution to the consolidated income of 80.7 million euros compared with 84.9 million euros for 2016-2017. Field Seeds Sales for the year for the Field Seeds division on June 30, 2018 came to 623.3 million euros, down 0.4 % when compared with fiscal year 2016-2017. Like-for-like sales grew by 2.3%, a fine business performance in a tense market context. In Europe, the business posted fine growth (542 million euros, i.e. +3.6% like-for-like). In a market context that remains characterized by the low prices of agricultural production, this increase shows gains in market share, both in corn and sunflower. As far as oilseed rape was concerned, the commercial campaign once again achieved excellent growth, both in volume and value. In its other development areas (South America, Asia and Africa), Vilmorin & Cie made sales of 81.4 million euros, down 5.7% on a like-for-like basis compared with the previous fiscal year. In South America, there was a 4% drop in like-for-like sales, in a particularly difficult market context this past fiscal year in Brazil, marked by a significant reduction in corn acreage and strong pressure on prices. In this context, Vilmorin & Cie nevertheless managed to stabilize volumes taken to market, and therefore increased its market shares. In Asia, performances varied according to country, with business increasing especially in India and a disappointing campaign in Southeast Asia. In spite of an increase in like-for-like business, the Field Seeds division posted an operating margin of 0.4%, down by 2.3 percentage points compared with 2016-2017, and a positive contribution to the consolidated income of 20.4 million euros, a drop of 11.5 million euros compared to the previous fiscal year. Garden Products and Holdings Sales for the Garden Products and Holdings activities came to 49.6 million euros on June 30, 2018. The operating contribution of these activities showed a total loss of 20 million euros, mainly due to costs in the holding structures; they made a negative contribution to the consolidated net income of 24.2 million euros. Vilmorin & Cie’s activity in fiscal year 2017-2018 once again covered different sectors of activity both on the professional and consumer markets, which means the nature of its business is highly seasonal, and that the high-tech products and processes used are extremely important.