Vilmorin & Cie - Annual report 2017-2018

PRESENTATION of Vilmorin & Cie 1 ANNUAL REPORT Vilmorin & Cie 24 2017-2018 In this context, as illustrated by the increase in its sales of carrot seeds, Vilmorin & Cie has nevertheless demonstrated operational agility in the face of increasingly complex plant health regulations. Moreover, the programmed withdrawal from the distribution of agricultural supplies in Japan by the Business Unit Vilmorin-Mikado was deployed swiftly during the year and had a total negative impact on sales of more than 22 million euros over 2017-2018. The residual impact on revenue will be in the order of 7 million euros for fiscal year 2018-2019. 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, particularly in Asia (China and India) and South America (Brazil and Argentina). Vegetable Seeds also performed well in several regional crops, such as witloof chicory and corn salad, for which it has developed leading positions. Vilmorin & Cie can thus confirm its world leadership in the vegetable seeds market. 1.4.1.3. Highlights in 2017-2018 Targeted operation to consolidate competitive positions Acquisitions and new facilities established in recent years in key geographical areas (Tunisia, India, South Korea, etc.) and strategic crops (hot pepper, cucumber, etc.) have shown themselves to be pertinent and represent active relays for growth. In this respect, the acquisition in February 2016 of the American company Genica Research, specialized in research, breeding*, production and distribution – by delegation – of hybrid* vegetable seeds, is a fine illustration. Integration of the company, provided Vilmorin & Cie with access to complementary proprietary genetic resources* of high quality, and to a pipeline of very rich products, while strengthening its different approaches to distribution. In coming years Vilmorin & Cie will therefore be able to pursue the consolidation of its positions in major crops – sweet pepper, hot pepper, cucumber, summer squash, along with tomato, eggplant, melon and watermelon. In line with this targeted external growth policy, at the beginning of fiscal year 2018-2019, Vilmorin & Cie finalized the acquisition of the Danish company AdvanSeed, which specializes in the breeding*, production and distribution of hybrid* spinach seeds and leafy vegetables. Founded in 2005, AdvanSeed has, for several years, achieved very strong development of its business activity. Present commercially in 23 countries (mainly in Asia, the Middle East, South America and Europe), in 2017-2018 the company posted sales of about 3 million euros. Through this acquisition, Vilmorin & Cie has complemented its product portfolio, with a new business position for spinach, a crop which it has not worked on until now, and has thus strengthened its global presence in leafy vegetables. Moreover, this operation will allow Vilmorin & Cie to capitalize on the genetic resources* of AdvanSeed, exploiting them in the main commercial basins, particularly in California, Europe, China and Japan. Accelerating innovation and proximity to markets In order to maintain growth in coming years, research programs have been developed, while investment in research tools and resources devoted to sales and marketing development have been consolidated as sales have increased. Fiscal year 2017-2018 was marked by ongoing investments in research facilities. During the fiscal year, the Business Unit Hazera inaugurated its research center based in Warmenhuizen (Netherlands). Dedicated to research on brassica and radish, this new center, which replaces the one located in Tuitjenhorn (Netherlands), is equipped with the latest technological tools. Hazera is thus completing the modernization of its research and development infrastructures. Similarly, in France, the Business Unit Vilmorin-Mikado opened a pathology laboratory this year in La Ménitré, while the Business Unit HM.CLAUSE opened a new laboratory dedicated to cell biology at its site in Maninet. Finally, a research center was created during the fiscal year in Thailand; HM.CLAUSE inaugurated this facility based in Khon Kaen, in the northeast of the country, in January 2018. It is particularly dedicated to breeding* tomato, pepper, cucumber, watermelon and melon for markets in hot and humid climates. Benefitting from state-of-the-art equipment for greenhouse production, it aims to provide high-quality vegetable seeds, perfectly adapted to the markets of Southeast Asia and more specifically to Thailand. As HM.CLAUSE's main research center for Southeast Asia, it also reflects Vilmorin & Cie's strong ambition in all of Asia. These new state-of-the-art research sites contribute to consolidating Vilmorin & Cie's capacity for innovation. In addition, Vilmorin & Cie is continuing to optimize its organization to ensure maximum proximity to its markets: thus, the commercial organization in China is evolving, with the Vilmorin-Mikado and HM.CLAUSE sales teams joining forces in order to address this major market more effectively, while Hazera has launched the reorganization of its research management, in particular to benefit from global management of breeding* activities for each crop. 1.4. Activities