Vilmorin & Cie - Annual report 2017-2018

1 ANNUAL REPORT Vilmorin & Cie 27 2017-2018 In corn seeds, Vilmorin & Cie posted an increase in sales. This increase was strong in Eastern Europe (particularly in Ukraine and Russia), while in Western Europe, Vilmorin & Cie managed to maintain stable sales volumes, despite the decline in cultivated acreage (-3% in the EU-28 and -5% in greater Europe. Internal source) . By the close of this past fiscal year, Vilmorin & Cie had gained market share and confirmed its position as No. 4 in Europe for corn seeds. In straw cereals (wheat and barley), certified seed sales for the long distribution channel decreased, as they were directly affected by the low price of agricultural production, leading farmers to opt for farm seeds rather than commercial seeds. This drop in the market for commercial seeds concerned France in particular. Delegation of straw seed varieties (the so-called short channel) posted a slight drop in comparison to the previous year; it contributed to generating 31.5 million euros in royalties*. In sunflower, Vilmorin & Cie achieved a very high-quality campaign, winning new market shares once again this year. The performance was particularly solid in Ukraine and Russia, two key countries for growing sunflower – Ukraine and Russia represent more than half the cultivated acreage in the world for this crop. This business growth was built on a very good match of germplasm to these markets, a quality product portfolio, and a highly efficient distribution network. In oilseed rape, the sales campaign for 2017-2018 once again ended with excellent growth. Benefitting from a globally positive market trend as hybrid* seeds continue to be adopted, this strong growth is also supported by a portfolio of technically high-performance products. Growth was particularly marked in Central Europe, France and the United Kingdom, Vilmorin & Cie is winning significant market shares, thus confirming its position as a top rate European player. In addition, during fiscal year 2017-2018, Vilmorin & Cie deployed the reorientation of its European research set-up. The objective of this reorganization of research sites is to optimize existing infrastructures and rebalance the siting of research centers. The aim is to have a research organization that is better adapted to the evolution of field crop markets in Europe, by optimizing the set-up in Western Europe and developing it in Eastern Europe. In addition, in the long term, the creation of centers of expertise will make it possible to take full advantage of opportunities for synergies between the different crops. Competitive position In Europe, Vilmorin & Cie holds top rate competitive positions for its main crops. 1.4.2.2. Corn seeds in North America (1) AgReliant, a 50/50 joint venture set up in July 2000 with the German seed group KWS, develops, produces and sells corn and soybean seeds in the United States and Canada. These are the two main crops grown in North America. The original aim in creating this company was to unite the research and marketing investments of the two companies and to climb into the rankings of the top local seed companies. Research, production, distribution and administration are all today fully pooled. AgReliant has managed to win market shares regularly since it was first set up, and is now the third largest player on the corn market in the United States, the largest world market in terms of value. A key advantage: a specific market approach High value-added seeds AgReliant offers North American farmers high-quality germplasm, which, when combined with technological options, enables adapting seeds to their most specific needs. In particular, these options include traits*, giving the plant the characteristic sought after. These resistance genes incorporated into the plant’s genome* enable it to resist certain destructive insects (corn-borer and rootworm) and herbicides. The genetically modified varieties combine several resistance genes, using the stacking* technique, now considered by farmers to be a standard offer. (1) Bearing in mind the application of the standard IFRS 11, AgReliant has been recorded in the accounts using the equity method since fiscal year 2014-2015. Straw cereals (1) Corn (2) Sunflower (2) No. 1 RAGT Corteva Agriscience Syngenta-Chemchina No. 2 KWS Bayer-Monsanto Corteva Agriscience No. 3 Vilmorin & Cie KWS Vilmorin & Cie No. 4 Syngenta-Chemchina Vilmorin & Cie Euralis (1) Wheat and barley (main countries in which Vilmorin & Cie operates). (2) Greater Europe. Source: internal estimates. Competitive panorama in Europe 1.4. Activities PRESENTATION of Vilmorin & Cie