Vilmorin & Cie - Annual report 2017-2018

1 ANNUAL REPORT Vilmorin & Cie 29 2017-2018 Performances and highlights in 2017-2018 In its new development zones for field seeds, Vilmorin & Cie made sales of almost 77 million euros in 2017-2018 (1) , a decrease of 7.9% on a like-for-like basis compared with 2016-2017. These regions therefore experienced a decline in activity over the past year, after experiencing an increase of more than 50% on a like-for-like basis in the previous fiscal year. But this past fiscal year does not call into question the growth trend of Vilmorin & Cie's field seeds activities internationally since their deployment began in 2010, although revenue is still modest on a group-scale basis. Vilmorin & Cie’s facilities in its new development zones are structured for research, production and commercial development. The research and marketing functions are global today, ensuring there is worldwide coordination of these key cross-cutting functions worldwide. Similarly, a genetic resources* network has been established to optimize the management of tropical corn germplasm*. South America In South America, Vilmorin & Cie posted a 4% decline in business on a like-for-like basis on June 30, 2018. After a fiscal year 2016-2017 that saw extremely strong business growth benefitting from a very dynamic market, the market environment proved particularly difficult this year in Brazil. It was impacted by a significant reduction in the acreage dedicated to corn, significant competitive pressure on pricing policies and the choice of Brazilian farmers in favor of varieties with lower added value. In this context, however, Vilmorin & Cie succeeded in stabilizing the volumes of corn seed marketed, and consequently increased its market shares. Sales of soybean seeds have shown strong growth, reflecting Vilmorin & Cie's desire to strengthen its positions in this major crop in South America. Vilmorin & Cie has been distributing soybean seeds since fiscal year 2015-2016; this expansion of its commercial offer aims to cover all farmers' needs. At the same time, Vilmorin & Cie has continued to structure its corn research around three research centers dedicated to this crop in Brazil: located at Goiânia (state of Goiás), Sorriso (state of Mato Grosso) and Londrina (state of Paraná), they now enable Vilmorin & Cie to cover the main Brazilian breeding* environments. Looking beyond Brazil, the Business Unit Limagrain South America, responsible for the development of Field Seeds in South America, also deploys its business in Argentina, particularly for corn, wheat and sunflower research programs, and in Chile and Peru, with these two countries mainly devoted to seed production. Asia Vilmorin & Cie’s corn activities on this continent are structured around three priority zones: India, China and Southeast Asia. Their development is managed by teams in the Business Unit Limagrain Asia-Pacific, based mainly in Hyderabad (India), Beijing (China) and Bangkok (Thailand). In this region, Vilmorin & Cie’ performances were varied according to the country over the course of fiscal year 2017-2018, with business growing in India, and a disappointing campaign in Southeast Asia. In India, Vilmorin & Cie’s organization relies on Bisco Bio Sciences, one of the top Indian players in corn seed, held 100% since March 2013. Vilmorin & Cie, which today holds a market share for corn seeds of about 6% on the sub-continent, is continuing its deployment in India: it is in the process of installing a second research center devoted to corn and rice, located in the north of the country as a complement to the research center located in Yadaram (state of Telangana). Vilmorin & Cie now has its own hybrid* rice seed program and will therefore soon be in a position to offer Indian farmers this crop that is essential for the market. In Southeast Asia, Vilmorin & Cie structures its activities around the Thai company Seed Asia, acquired in March 2014 and whose commercial presence extends beyond Thailand. In China, Vilmorin & Cie’s commercial presence is ensured through the joint venture for the production and distribution of corn seeds Hengji Limagrain Seeds, in which Vilmorin & Cie holds 45% of the capital stock. In China, the participation of foreign companies in the capital stock of Chinese seed companies is currently limited by law to minority positions. Vilmorin & Cie also has three research centers in China, located according to the different corn types 16.1 6.1 54.5 Asia Africa South America Field seeds in new development zones Analysis of business on June 30, 2018 (in million of euros) (1) Excluding wheat seeds in North America. 1.4. Activities PRESENTATION of Vilmorin & Cie