High debt, high deficit
The troubled Baywa Group writes a loss of 640 million euros
The Bavarian conglomerate Baywa, which is important for agriculture and food supply, is deep in crisis. The losses are piling up ever higher. The renovation could take years.
The Baywa Group, which has become a restructuring case, is slipping deep into the red: the net loss of the 101-year-old traditional Munich company in the first nine months of the year amounted to almost 641 million euros, as Baywa announced. That was more than six times the loss for the whole of 2023. The high deficit was not only due to poor business, but also to write-offs in the first half of the year. The board did not provide an earnings forecast for this year. The company said the renovation would take years.
Baywa is expected to recover by 2027
Baywa, which emerged from the cooperative movement, is the largest German agricultural trader and is important for agriculture and food supply, especially in the south and east of Germany. Other business areas include renewable energies and construction. The Baywa management continues to assume that a “sustainable restructuring” is possible. The target date for the group’s recovery is 2027, as can be seen in the quarterly statement. The main shareholders are the holding companies of the Volks- and Raiffeisenbanken in Bavaria and Austria.
Owners give relief loans
Sales fell by almost 12 percent to 16 billion euros from the beginning of January to the end of September. Earnings before interest and taxes (EBIT) fell from plus 215 million in the same period last year to minus 78 million euros, according to Baywa, mainly caused by high losses in the renewable energy business. The latter is managed by the subsidiary Baywa re, which has also found itself in stormy seas and in which, alongside the Munich parent company, the Swiss investment company Capital Energy Partners has a stake. The two main shareholders and the Swiss company supported Baywa with loans of 157 million euros as of September 30th.
Hope for better figures in the last quarter
The restructuring of the Baywa Group will be based on a report, the final version of which should be available in December. It is already known that the experts will recommend extensive cost-cutting measures and sales of individual business areas. For the final quarter, the Baywa board of directors, led by Michael Baur, a reorganizer brought in from management consultancy Alix Partners, expects “more stability” in the individual business areas, as it said in the quarterly statement.
Two bad news in one week
The company is groaning under billions of dollars in debt, largely the legacy of a rapid expansion financed on credit during the term of office of former CEO Klaus Josef Lutz, who left office in 2023. The very high losses in the first nine months are the second bad news this week: It was only on Monday that the financial regulator Bafin announced that it was reviewing the 2023 annual financial statements because the company was possibly embellishing its financial risks.
Over the past 12 months, Baywa shares have lost three quarters of their value, and the stock market also fell on Thursday. Baywa currently does not have a CEO: at the end of October, the previous CEO Marcus Pöllinger left the company prematurely after only one and a half years at the helm.
Renovation report unsettles Baywa customers
The Baywa crisis is exacerbated by the weak global economy. In the first nine months, both the agricultural business and renewable energies were largely poor; there was only growth in the fruit and vegetable trade and in the sale of agricultural machinery. And last but not least, the renovation as such initially increased the problems. Accordingly, the announcement of the restructuring report in the summer alone led to uncertainty among customers and suppliers. This in turn contributed to the decline in sales.
dpa
Source: Stern
