Seed firm Vilmorin cautious on Ukraine, Russia for spring sales
French seed maker Vilmorin expects political tensions and currency weakness in Ukraine and Russia to limit its spring sales in the two major grain-exporting countries, it said on Wednesday.
Vilmorin, the world's fourth-biggest seed maker by sales, is a leading supplier of sunflower seed in Ukraine and Russia and is also trying to expand in the fast-growing maize (corn) market in the former Soviet states.
A political crisis in Ukraine has escalated since Tuesday with at least 26 people killed in the worst violence in nearly three months of anti-government protests, prompting EU leaders to raise the threat of sanctions.
The upheaval has created uncertainty about whether financing could become more difficult for grain producers, while a slide in Ukraine's hryvnia currency would make Vilmorin's imported supply more expensive for clients, the company said.
"We don't want to sell to clients who present a major risk in terms of payment," Chief Executive Emmanuel Rougier told reporters. "It's not potential order levels that are a problem, because these are showing a strong increase."
Vilmorin, which generated crop-seed sales of about 70 million euros in Ukraine and Russia in its 2012/13 financial year to June 30, said it was trying to bring forward payment deadlines to move away from common local practice of waiting for payment until after harvesting.
Russia, meanwhile, had also seen its currency decline sharply in recent months and could be affected by financial instability in its neighbour, Vilmorin said.
The group, which was presenting results for its July-December first half, did not break down sales by country for that period or give full-year forecasts for Ukraine and Russia.
But it said a broad fall in emerging-market currencies, along with a drop in the yen and the dollar against the euro, could trim its full-year sales by around 70 million euros.
Vilmorin reported after the market close on Tuesday first-half sales of 443.1 million euros, up 4.2 percent compared with the same period a year earlier, on a like-for-like basis.
It raised its guidance for full-year organic sales growth to above 6 percent, from a previous target of more than 5 percent, due to strong vegetable seed sales.
Its crop seeds business saw like-for-like sales fall 1.6 percent in the first half, hit by a slow start to orders of spring crops, but the group maintained its target of full-year organic growth of at least 5 percent for the division. (Reporting by Gus Trompiz; Editing by Pravin Char)