BayWa AG presents figures for the first half of the year 2024: Impairment losses burden consolidated result

• After six months, BayWa posted consolidated revenues totalling €10.7 billion and offset the negative EBIT from the first quarter.
• Impairment tests in accordance with IAS 36 lead to non-cash value adjustments totalling EUR 222.2 million.
• Write-downs without negative impact on ongoing reorganisation efforts and implementation of the restructuring concept currently being developed.

Following the completion of impairment tests in accordance with IAS 36 BayWa AG presented its half-year report for the current financial year 2024 today. According to the report, the company generated revenues of EUR 10.7 billion in the first six months of this year (previous year: EUR 12.6 billion). Earnings before interest and taxes (EBIT) before impairment tests totalled EUR 0.0 million (previous year: EUR 186.9 million). The most recent impairment tests resulted in an impairment loss totalling EUR 222,2 million. All cash-generating units with their non-current assets had to undergo these impairment tests in recent weeks after BayWa's market capitalisation fell below the carrying amount of equity. These write-downs have no negative impact on the BayWa Group's ongoing reorganisation efforts and the implementation of the restructuring concept currently being developed.

An earnings forecast for the financial year 2024 is not possible on the basis of the information currently available.

Performance of the individual segments

Both the decline in the consolidated operating result and the impairment following the impairment tests are largely attributable to the Renewable Energies segment. With revenues of EUR 1.8 billion (previous year: EUR 3.0 billion), EBIT totalled EUR minus 102.8 million in the reporting period (previous year: EUR 98.4 million).

In the Renewable Energies Segment, the impairment tests in accordance with IAS 36 resulted in an impairment requirement totalling EUR 171,5 million. At EUR 114,4 million, the largest share was attributable to the non-current assets of the IPP business unit of the BayWa r.e. AG holding, i.e. the company's own wind and solar power plants for marketing the electricity generated. The write-downs are due in particular to the fact that valuation assumptions have changed compared to 31 December 2023. This mainly relates to lower electricity price curves, changes in assumptions regarding grid feed-in, rising capital costs, changes in the terms of some leases and higher financing costs. In addition, impairment losses were recognised on goodwill and non-current assets. Some of these impairments are already part of initiated and planned restructuring measures aimed at optimising BayWa r.e.'s portfolio.

The causes of the crisis were assessed and countermeasures were initiated immediately at BayWa r.e. AG. These include the appointment of a dedicated Chief Restructuring Officer and the commissioning of an in-house restructuring report. Although BayWa AG's restructuring report already makes clear that BayWa r.e. is well positioned in its core markets in the long term, a separate restructuring report has been commissioned for BayWa r.e. The company expects sales in the solar, wind and battery storage project business to pick up in the fourth quarter of 2024. As has been the case in the past, the majority of sales will take place towards the end of the year.

Business performance in the Energy Segment in the first half of 2024 was characterised by a general reluctance to buy on the part of consumers. This was due to the mild winter, the higher CO2 price since the beginning of the year and the subdued willingness to invest in new heating systems such as heat pumps or pellet heating systems. While revenues totalled EUR 1.2 billion (previous year: EUR 1.3 billion), almost on a par with the previous year, EBIT fell significantly to EUR 3.0 million (previous year: EUR 9.3 million). Impairment tests in the Energy Segment resulted in write-downs totalling EUR 4,5 million. This primarily affected intangible assets in the form of company-specific software developed at BayWa Haustechnik GmbH.

International agricultural trade in the Cefetra Group Segment fell short of the strong previous year in the first half of 2024, but recorded a solid performance overall: with revenues of EUR 2.4 billion (previous year: EUR 2.7 billion), EBIT was above the average of the past five years at EUR 25.6 million (previous year: EUR 30.3 million). Strong price fluctuations due to the weather favoured trading in commodities, particularly soya. However, the speciality business was weaker than in the previous year. The impairment tests in the Cefetra Group Segment resulted in an impairment requirement of EUR 13,8 million. This is mainly due to the fact that valuation assumptions regarding the goodwill of individual acquisitions have changed.

The Agri Trade & Service Segment recorded higher sales volumes up to 30 June of this year, both in trading with agricultural products and in the sale of fertilisers and crop protection products. This was offset by lower prices, which had a negative impact on earnings: At EUR 28.5 million (previous year: EUR 39.8 million), EBIT was significantly down on the previous year. Revenues totalled EUR 2.6 billion (previous year: EUR 2.8 billion). The impairment in the Agri Trade & Service Segment totalled EUR 10,8 million. It primarily relates to trade activities with agricultural products and operating resources in southern Germany. The valuation assumptions in the Agri Trade & Service Segment also had to be adjusted in the first half of the year.

The Agricultural Equipment Segment once again achieved a strong result: revenues of EUR 1.3 billion (previous year: EUR 1.2 billion) and EBIT of EUR 63.0 million (previous year: EUR 41.2 million) increased in the reporting period. BayWa sold more new and used machinery in the first half of 2024. The service and spare parts business benefited from the weather-related early start to the agricultural season. Depreciation and amortisation in the Agricultural Equipment Segment was insignificant at EUR 1,5 million. This mainly affected software and licences in connection with business activities in southern Germany and Austria.

The Global Produce Segment recovered significantly in the first half of this year. While the previous year was still affected by the negative consequences of a cyclone in New Zealand, this year the segment is benefiting from higher prices in both the domestic and international apple business. In addition, part of the outstanding insurance payment for the storm damage in New Zealand was recognised in profit or loss in the reporting period. Compared to the same period last year, EBIT improved to EUR 5.7 million (previous year: EUR minus 2.1 million). Revenues totalled EUR 540.7 million (previous year: EUR 518.1 million). There was no need for amortisation in the Global Produce segment.

The slump in construction activity on the housing market continues to have the Construction Segment firmly in its grip: demand for building materials is weak due to the low level of investment in new residential construction projects. The second quarter, which is usually one of the strongest in the year in terms of sales, was therefore unable to fulfil expectations. BayWa Bau Projekt GmbH, which realises construction projects together with partners, developed positively as planned in the first half of the year, but was unable to compensate for the losses in building materials trading. With revenues of EUR 900.5 million (previous year: EUR 978.8 million), the segment posted negative EBIT of EUR minus 0.7 million after six months (previous year: EUR 0.7 million). At EUR 1,3 million, the amount of depreciation and amortisation in the Construction Segment is insignificant. The majority of this was attributable to buildings used as building materials sites.