French seed group Vilmorin says too early to see weather, trade effects

Vilmorin & Cie SA

06/08/2018 19:12

PARIS, Aug 6 (Reuters) - France's Vilmorin, one of the
world's largest seed makers, said it was too early to tell if
drought and heatwaves that have scorched European farmland and
sent grain prices soaring would have a significant effect on its
growth in the coming year.
    Rising crop prices are generally favourable for Vilmorin as
they boost the income of its customers while higher oil prices
have also made biofuels made with crops like maize (corn) more
attractive, Chief Financial Officer Vincent Supiot said.
    "We're going to need higher prices to last a bit longer in
order for our customers to really put more crop in the soil and
increase cereal sowings, unlike this year," Supiot told a
conference call on Vilmorin's full-year sales.
    Extreme weather was supporting higher prices but could also
threaten the output of both Vilmorin and its customers, he said.
    Weather effects varied depending on the time of year and
location of crops, he said, noting that the intense heat in
France came after the mid-July period that is the most sensitive
time for maize crops there.
    Heat and drought have hurt crops in northern Europe and
other major cereal producing regions worldwide, fuelling a grain
market rally after years of depressed prices.  urn:newsml:reuters.com:*:nL5N1UT2WB
    Vilmorin supplies seeds for grain crops and vegetables, and
competes with larger rivals like Bayer  BAYGn.DE , which last
year acquired U.S. farm supplies giant Monsanto.
    It reported on Monday a slight rise in like-for-like sales
in its 2017-2018 financial year to June 30 and confirmed
guidance for a fall in its full-year operating margin compared
with 2016-2017.  urn:newsml:reuters.com:*:nFWN1UX0XM
    The French firm had not observed any significant impact so
far from tariffs imposed by the United States and China and
other economies in an escalating trade dispute, Supiot said.
    While uncertainty over trade could be unfavourable for
demand, Vilmorin's seed production was generally located close
to its end markets, including in the United States, and so was
less affected by tariffs, he said.
    However, fellow French firm Bonduelle  BOND.PA , a major
vegetable producer, said on Monday it expected trade
negotiations involving the United States and Europe would be a
negative factor in sales and earnings growth in 2018/19.
 urn:newsml:reuters.com:*:nL5N1UX5BT  urn:newsml:reuters.com:*:nFWN1UX0WC
    Regarding a European Union court decision last month that
gene editing techniques should fall under strict EU rules
covering genetically modified crops, Supiot echoed the
disappointment of other seed firms.  urn:newsml:reuters.com:*:nFWN1UX0XM  urn:newsml:reuters.com:*:nFWN1UX0XM
    Vilmorin would continue to conduct research and development
in Europe using such breeding techniques but would sell any
resulting products elsewhere in the world, he added.
    Vilmorin's majority shareholder, farmer-owned cooperative
Limagrain, earlier this year threatened to pull its research
activities out of France after opponents of gene editing
sabotaged some of its test fields.  urn:newsml:reuters.com:*:nL8N1PB5MO

 (Reporting by Gus Trompiz; Editing by Richard Lough and Adrian
Croft)
 ((gus.trompiz@thomsonreuters.com; +33 1 49 49 52 18; Reuters
Messaging: gus.trompiz.thomsonreuters.com@reuters.net))