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Description:
Based in Chappes, in the centre of France, Vilmorin & Cie is the world’s fourth largest producer of seeds. Founded in 1743, it has been able to evolve successfully through the centuries. Vilmorin is a pure play in the secular growth trend - food and nutrition. The company is attractively positioned as a niche player with a small number of key products. It directly manages its entire product value chain including research, development, transformation and commercialization. 

Vilmorin responds extremely well to a range of mega, secular growth trends driven by higher global population and rising wealth availability in EM , these include rising demand for quality food, rising demand for meat, and lower availability of arable land. Arable land per capita continues to decline by about 0.5% annually, and more importantly, approximately 40% to 45% of the world’s crop harvest is being damaged during the collection process and/or is of insufficient quality to be processed.

The sector’s challenge is to develop and promote seeds that provide better end results in terms of harvesting facilities and increase the yield ratio. Over the coming years, annual sales growth is forecast at 4% annually, coupled with a 7% growth in pricing over the period; for this reason, it is expected the company will engage well with the market. While the sales growth is well below the larger market average, pricing power is clearly an advantage for the company. The company achieves gross margins in excess of 44%, and this should remain fairly constant in the coming years.

Strengths and weaknesses analysis / Fundamental analysis: 
Strengths: 

• Vilmorin is a pure play in the seed market, with a number of niche products,
• Vilmorin will benefit from stronger demand for higher quality food,
• During market consolidations, the company trades at premium to the market,
• Vilmorin is a TOT

Weaknesses:

• The company’s principal risk is lower prices for crops, 
• Safety concerns around genetically modified and biotechnology products resurface continuously, potentially threatening the viability of the company’s business approach,
• Vilmorin is exposed to litigation risks as it has a number of unique products.