Iran, Turkey cloud outlook for seed maker Vilmorin

Vilmorin & Cie SA

18/10/2018 16:27

PARIS, Oct 18 (Reuters) - U.S. sanctions against Iran and a
slide in Turkey's currency are contributing to an uncertain
short-term outlook for seed maker Vilmorin as it seeks to
recover from a disappointing past year, the French company said.
    Vilmorin, one of the world's largest suppliers of seeds for
grain and vegetable crops, saw its shares tumble as much as 13.5
percent in Paris on Thursday after reporting
weaker-than-expected profits for its financial year to June 30.
 urn:newsml:reuters.com:*:nFWN1WX0JF
    A slide in emerging market currencies was among factors that
weighed on its 2017/18 results and Chief Executive Daniel
Jacquemond said continuing geopolitical and economic turbulence
was making Vilmorin cautious about growth in the year ahead.
    In Iran, the French group had annual sales of about 10
million euros ($11.49 million) by exporting vegetable seeds, and
was unsure to what extent it would be able to pursue shipments
given upcoming U.S. sanctions, Jacquemond told reporters.
    European firms fear falling foul of U.S. restrictions on
dollar-denominated trade with Iran, leading the European Union
to propose a barter system.  urn:newsml:reuters.com:*:nL2N1WC1RB
    A steep decline in the Turkish lira could also dent demand
for the vegetable seeds that Vilmorin exports there, although
this would not affect its locally-produced maize and sunflower
supplies, Jacquemond said.
    "We have a real lack of visibility on the vegetable seed
side," he said.
    The French group also fears that a deepening trade dispute
between Washington and Beijing could curb growth in the Chinese
market where it is trying to expand, he said.
    Vilmorin is targeting a 2-3 percent rise in like-for-like
sales and a 0.5-1 point increase in its operating margin in
2018/19, after seeing comparable sales fall marginally and its
operating margin lose 2 points to 7.2 percent last year.
    The firm, which has been hit by high inventory levels among
vegetable seed distributors and a decline in maize (corn)
planting in North and South America, said it remained confident
of long-term growth prospects for agricultural seed.
    It also announced an agreement with the Broad Institute in
the United States to have access to CRISPR-Cpf1 technology,
which is among so-called gene-editing methods being explored to
accelerate development of sturdier crops.
    Like other seed firms, Vilmorin sees gene-editing as a
valuable tool and Jacquemond criticised an EU court ruling this
year that such technology should fall under regulations for
genetically modified crops, which remain controversial in
Europe.  urn:newsml:reuters.com:*:nL5N1UL5BN
    
    ($1 = 0.8705 euros)

 (Reporting by Gus Trompiz
Editing by Alexandra Hudson)
 ((gus.trompiz@thomsonreuters.com; +33 1 49 49 52 18; Reuters
Messaging: gus.trompiz.thomsonreuters.com@reuters.net))