KWS SAAT SE & Co. KGaA

Earnings Release • Nov 26, 2009

1st Quarter Report of the KWS Group Fiscal Year 2009/2010

July 1 to September 30, 2009

1st Quarter Report 2009/2010

Dear shareholders and friends of KWS,

In the first three months of the fiscal year, from July to September, KWS primarily sells winter cereal and winter rapeseed varieties, which are sown in the fall. It is not possible to deduce a trend for the fiscal year as a whole from the first quarter, since KWS usually generates only around ten percent of its annual net sales in this period. Corn and sugarbeet, the main contributors to net sales, are not sown until the spring.

These quarterly financial statements reflect a sharp decline in our winter cereal and winter rapeseed business. In light of the large cereal harvests worldwide in 2009 and resultant low consumer prices, it was foreseeable a number of weeks ago that we would not be able to maintain the high level of the previous year, given that our cereals segment posted all-time record net sales (+25%) and income (+33%) in fiscal 2008/2009. Our rapeseed business also set a record last year and has come under pressure this year as a result of intensifying competition and declining market volume.

Net sales in the first quarter of fiscal 2009/2010 were therefore € 65.3 (82.8)* million. Our high-margin hybrid rye and hybrid rapeseed varieties were particularly affected by this drop of around 21%. We also expanded our breeding and distribution activities as planned. Accordingly, operating income in the first three months of the current fiscal year fell to € –28.1 (–11.2) million. However, since some of our cereal sales were not made until after September 30, 2009, shifts between quarters must also be taken into account here.

Compared with the previous year, net financial income/expenses contain markedly lower interest income from the positive net cash balance at June 30, 2009, as a result of the currently low level of interest. The figure for income tax expenses was obtained by applying the effective tax rate planned for the fiscal year as a whole to the pre-tax profits for the quarter.

* The figures in parentheses are those for the previous year.

Income statement

	1st quarter
€ millions	2009/2010	Previous year
Net sales	65.3	82.8
Operating income Net financial income/expenses	–28.1 –0.9	–11.2 0.1
Result of ordinary activities	–29.0	–11.1
Income taxes	–8.3	–4.8
Net income for the period	–20.7	–6.3
of which shareholders of KWS SAAT AG	–21.4	–9.1
of which minority interest	0.7	2.8
Earnings per share (€)	–3.23	–1.38

Statement of comprehensive income

	1st quarter
€ millions	2009/2010	Previous year
Net income for the period	–20.7	–6.3
Currency translation for foreign subsidiaries	–3.6	8.5
Deferred taxes on components of other total income	0.0	0.0
Comprehensive income for the period	–24.3	2.2
of which shareholders of KWS SAAT AG	–24.9	–0.5
of which minority interest	0.6	2.7

Basis of accounting and reporting

The KWS Group is a consolidated group as defined in the International Financial Reporting Standards (IFRSs) published by the International Accounting Standards Board (IASB), London, taking into account the interpretations of the International Financial Reporting Committee (IFRIC). All disclosures on KWS are therefore disclosures on the Group within the meaning of these regulations. The quarterly financial statements of the KWS Group were prepared in accordance with IAS 34, and exactly the same accounting methods applied in the preparation of the consolidated financial statements as of June 30, 2009, were used. As a result of the first-time application of the revised version of IAS 1, the income statement is supplemented as of fiscal 2009/2010 by the changes in equity in the form of a statement of comprehensive income. The Notes appended to the annual financial statements as of June 30, 2009, apply accordingly. The income taxes were calculated on the basis of the individual country-specific income tax rates, taking account of the planning for the fiscal year as a whole.

Companies consolidated in the KWS Group

The quarterly consolidated financial statements of the KWS Group include the single-entity financial statements of KWS SAAT AG and its subsidiaries in Germany and other countries in which it directly or indirectly controls more than 50% of the voting rights. In addition, joint ventures are proportionately consolidated according to the percentage of equity held in those companies. Subsidiaries and joint ventures that are considered immaterial for the presentation and evaluation of the financial position and performance of the Group are not included.

Effective July 1, 2009, the number of companies consolidated in the KWS Group fell by one fully consolidated company with the merger of the Romanian company KWS SEMINTE S.R.L. with DUNASEM S.R.L. As a result, a total of 41 companies will be fully consolidated and twelve proportionately consolidated in 2009/2010.

Capital expenditure

In the first quarter, KWS invested € 12.7 (8.8) million in property, plant and equipment. It is therefore showing capital expenditure well above depreciation at € 5.1 (4.6) million. The biggest single investments in property, plant and equipment were for research and development at Einbeck and for drying, processing and storage capacities for corn seed in Romania and Ukraine.

Out of total capital expenditure of € 13.9 (26.7) million within the KWS Group, 38% was in the corn segment, 35% in the breeding & services segment, 19% in the sugarbeet segment and 8% in the cereals segment. Our investments last year related mainly to acquisition of our new potato activities.

	1st quarter
€ millions	2009/2010	Previous year
Net sales	65.3	82.8
Sugarbeet Corn Cereals Breeding & Services	8.7 15.6 37.9 3.1	4.8 20.4 56.1 1.5
Operating income	–28.1	–11.2
Sugarbeet Corn Cereals Breeding & Services	–4.6 –13.0 4.5 –15.0	–5.1 –8.5 14.7 –12.3
Capital expenditure	13.9	26.7
Sugarbeet Corn Cereals Breeding & Services	2.7 5.3 1.1 4.8	0.6 5.2 0.7 20.2

Segment report

The individual product segments

In this year's fall sowing season for winter cereals, farmers reacted to the desolate price situation on the market for cereals for consumption. The cereals segment experienced a significant decline in demand for certified seed that particularly impacted our hybrid rye business. European farmers are increasingly using farm saved seed in order to cut their costs. Net sales therefore fell more sharply than anticipated by around 30% to € 37.9 (56.1) million. The segment's income was also strained by higher cost of sales and was lower at € 4.5 (14.7) million.

The currently low producer prices for rapeseed have considerably increased competitive pressure in the oil seed subarea of the corn segment. In this environment, we were not able to maintain the previous year's price level for our winter rapeseed varieties. However, sales remained constant in the first three months of the current fiscal year 2009/2010, despite declining market volume, meaning that we were able to consolidate our market share of around 15% in the EU 27. The segment's net sales totaled € 15.6 (20.4) million. In addition, expansion of our distribution structures in North America resulted in a stronger than proportionate fall in the segment's income in the first quarter to € –13.0 (–8.5) million.

There has been a good start to the fiscal year regarding sales of sugarbeet seed. We generated higher net sales year-on-year, above all in regions outside Europe, such as Chile or Northern Africa. Advance sales in Europe are also at a higher level. Net sales were € 8.7 (4.8) million. The segment's income improved slightly to € –4.6 (–5.1) million.

Balance Sheet of the KWS Group

€ millions	September 30, 2009	June 30, 2009
Assets
Intangible assets Property, plant and equipment	47.9 187.6	47.9 180.7
Financial assets	1.5	3.2
Noncurrent tax assets	5.7	6.4
Deferred tax assets	17.7	16.9
Noncurrent assets	260.4	255.1
Inventories and biological assets	154.5	121.5
Trade receivables	175.3	216.9
Marketable securities	16.9	14.1
Cash and cash equivalents	57.1	111.5
Current tax assets	27.0	15.6
Other current assets	29.5	21.3
Current assets	460.3	500.9
Total assets	720.7	756.0
Subscribed capital Capital reserve Retained earnings	19.8 5.5 367.0	19.8 5.5 391.9
Minority interests	17.9	17.3
Equity	410.2	434.5
Long-term provisions	60.7	62.0
Long-term borrowings	1.8	1.9
Trade payables	5.6	6.4
Deferred tax liabilities	18.1	18.1
Other long-term liabilities	10.1	10.3
Noncurrent liabilities	96.3	98.7
Short-term provisions	66.3	112.7
Short-term borrowings	41.2	6.7
Trade payables	61.8	55.2
Current tax payables	19.1	18.3
Other liabilities	25.8	29.9
Current liabilities	214.2	222.8
Liabilities	310.5	321.5
Total equity and liabilities	720.7	756.0

The increase in inventories is due to the absorption of the new harvest in 2009. The possible risks of realization were reflected by additional adjustments. The payment morale of our customers is better than expected in view of the financial crisis. Trade receivables at June 30 were below the level of the previous year, despite the fact that net sales in fiscal 2008/09 were up by 20%. We have since received payment of more than 42% of the accounts receivable. The net financial balance as of September 30, 2009, was € 31 (7) million, after € 117 (107) million as of June 30, 2009, and reflects the continuing improvement in our financial strength year-on-year.

The reduction in current provisions was primarily due to the payment of royalties that had been outstanding as of June 30. Following the low income in the first three months of this fiscal year, we can report an almost unchanged equity ratio of 57%, compared with 58% on June 30, 2009.

	1st quarter
€ millions	2009/2010	Previous year
Net income for the period	–20.7	–6.3
Cash Earnings Funds tied up in net current assets	–19.3 –51.2	–0.8 –77.0
Net cash from operating activities	–70.5	–77.8
Net cash from investing activities	–14.4	–24.8
Net cash from financing activities	34.5	50.7
Change in cash and cash equivalents	–50.4	–51.9
Cash and cash equivalents at beginning of period Changes in cash and cash equivalents due to exchanging rate, consolidated group	125.6	112.9
and measurement changes	–1.2	3.0
Cash and cash equivalents at end of period	74.0	64.0

Cash flow statement

A lower level of funds tied up in net current assets resulted in less net cash used in operating activities. The previous year's figure for net cash from investing activities was impacted by acquisition of our new potato activities. In the current period under review, it mainly includes investments in property, plant, and equipment for R&D and processing plants.

Statements of Changes in Equity of the KWS Group

€ millions	Group interests	Minority interests	Group equity
Balance as at June 30, 2008	377.1	20.9	398.0
Dividends paid	0.0	0.0	0.0
Changes in consolidation scope	0.0	0.0	0.0
Other changes	0.0	0.0	0.0
Consolidated net income for the period	–9.1	2.8	–6.3
Other gains (losses)	8.6	–0.1	8.5
Total consolidated gains (losses)	–0.5	2.7	2.2
Balance as at September 30, 2008	376.6	23.6	400.2
Balance as at June 30, 2009	417.2	17.3	434.5
Dividends paid	0.0	0.0	0.0
Changes in consolidation scope	0.0	0.0	0.0
Other changes	0.0	0.0	0.0
Consolidated net income for the period	–21.4	0.7	–20.7
Other gains (losses)	–3.5	–0.1	–3.6
Total consolidated gains (losses)	–24.9	0.6	–24.3
Balance as at September 30, 2009	392.3	17.9	410.2

As in the previous year, the changes in equity reflect the negative profit for the quarter. No dividends were paid out in the period under review.

Employees* 1st quarter 2009/2010 Previous year Germany 1,490 1,404 Europe (excluding Germany) 824 750 America 884 865 Other countries 88 84 Total 3,286 3,103

* at quarter end

At September 30, we had 3,286 employees worldwide, with workforce growth in all regions. Plans call for this level to be increased further by the end of the fiscal year to around 3,400 or by almost 6% over the previous year's figure of 3,215.

Outlook

We assume that net sales and income will increase slightly at the sugarbeet segment by the end of fiscal 2009/2010. We expect positive boosts particularly from Eastern Europe and Turkey. In the EU 27, however, there are no signs of opportunities for large growth in sugarbeet seed business as a result of the high level of sugar production in 2009. Since the Roundup Ready® sugarbeet has achieved almost complete market penetration, it will – as expected – not be possible to completely maintain business volume in North America in the coming cultivation year.

We expect a sharp increase in sales of seed in the corn segment. Apart from Southeastern and Eastern Europe, we forecast that the largest share of volume growth will be in the U.S. However, only slight growth in net sales can be expected in North America if the US dollar continues to remain weak. As a result, net sales for the segment will probably rise by the end of the fiscal year by 5% over the previous year. Nevertheless, we expect the segment's income to be well above that of the previous year, since there are signs that the strains expected in the previous year largely due to the financial crisis will not have their full impact.

The cereals segment will not be able to follow up the exceptional 2008/2009 in this current year, but it is expected to post figures on a par with the very good level of two years ago, fiscal year 2007/2008.

As far as can be seen at present, we expect the KWS Group to grow its net sales slightly year-on-year, despite the decline in cereals business. However, this will require stabilization of current currency levels, particularly regarding the US dollar. Lower internal royalties from the product areas of cereals and rapeseed, as well as the weaker dollar, are straining income at the breeding&services segment. Nevertheless, the KWS Group's earnings strength is still high. We will continue to leverage this in the current year to expand our R&D activities significantly so as to secure our competitive position in the future. To that end, we have increased our R&D budget by more than 10%.

Our Annual Shareholders' Meeting will be held on December 17, 2009, at 11:00 a.m., as usual at the company's headquarters in Einbeck.

Einbeck, November 26, 2009

KWS SAAT AG The Executive Board

Financial calendar

December 17, 2009	Annual Shareholders' Meeting in Einbeck
February 25, 2010	Report on the 2nd quarter 2009/2010
May 28, 2010	Report on the 3rd quarter 2009/2010
October 28, 2010	Annual press conference in Hanover; Analysts' Conference in Frankfurt
December 16, 2010	Annual Shareholders' Meeting in Einbeck

KWS SAAT AG

Grimsehlstraße 31 37555 Einbeck P.O. Box 14 63 Phone: +49 5561/311-0 Fax: +49 5561/311-322 www.kws.com E-mail: info@kws.com