It is only now that the stock market is taking stock of Vilmorin’s exposure to Russia and Ukraine. While the seed company lowered last night, on the occasion of the publication of its half-year accounts, its profit forecasts for the current financial year (2021-2022, which will be closed at the end of June), its shares plunged 19% this Wednesday, at 37.9 euros, unheard of in the stock market history of the long company of nearly thirty years. On this movement of panic selling (in trading volumes much larger than usual), nearly two years of increases have been erased. Last week, Vilmorin suffered only a limited decline on the stock market (-4.8%).
The company, controlled by the Auvergne cooperative group Limagrain (70% of the capital), which claims the rank of world number one for vegetable seeds and number six for field seeds (corn, wheat, rapeseed, etc.), owns two subsidiaries in Ukraine and two also in Russia, employing around 100 people in each country.
The operating margin target reduced to 7.5%
Vilmorin achieves 140 million euros in sales in Russia and Ukraine, i.e. slightly less than 10% of the total, with “little local production to cover exchange rate variations”, worried the financial analysis firm Portzamparc yesterday, in an overview of all the companies in its coverage universe with exposure to the war in Ukraine. The seed company’s exposure is mainly through its field seeds division, which accounts for about half of the activity.
All activities on Ukrainian territory are currently stopped, the company said. Vilmorin set up a crisis unit on Thursday February 24, the date of the start of the Russian invasion of Ukraine. The company is established in Kiev and Rohy (center) in Ukraine and in Krasnodar and Moscow in Russia, via administrative sites or research stations. The seed market is becoming increasingly technological. Production incorporating GMO traits represented nearly 52% of the world market in 2020 (including 80% of corn and more than 90% of soybeans grown in the United States). Plant biotechnologies, moreover, make it possible to accelerate the process of varietal creation.
The company, worried about the consequences of the conflict “on seed supply chains”at “chosen to partially review its objectives” for the end of the 2021-2022 fiscal year. The group’s current operating margin target has been reduced to 7.5%, against 8.5% previously, while the forecast of growth of at least 6% in the field seeds activity has been confirmed. At the end of the first half, the division’s billings were up 17.5% on a current basis (+15.7% on a like-for-like basis), including growth of 12.5% in the second quarter. In Europe, the seed campaign is described as “very satisfying”with market share gains in rapeseed, consolidating its leading position in this species, and a volume/price effect “well oriented” for wheat and barley.