DGAP-News: Business figures for first half of 2014: BayWa

DGAP-News: BayWa AG / Key word(s): Half Year Results Business figures for first half of 2014: BayWa strong in extremely volatile agricultural markets - Renewable energies perform better - Restructuring of building materials successful 07.08.2014 / 10:30 --------------------------------------------------------------------- Business figures for first half of 2014: BayWa strong in extremely volatile agricultural markets - Renewable energies perform better - Restructuring of building materials successful In the first half of 2014, BayWa AG generated revenues of EUR7.7 billion (2013: EUR8.3 billion) and EBIT of EUR62.1 million (2013: EUR157.2 million). The major difference between the two sets of half-year results is predominantly due to one-off effects in the first half of 2013, as EBIT of around EUR95 million was generated from the sale of properties. Operating EBIT of just under EUR92 million in the first half of 2014 (2013: around EUR100 million) shows that BayWa AG performed strongly in its markets. Markets' development has been extremely volatile over the past three months: In particular, the development in the agricultural sector was characterised by sharp declines in grain and oilseed prices in the second quarter of 2014 and a corresponding reduction in farmers' willingness to sell and apprehension among processing companies in terms of buying activities, leading to a fall in earnings. By contrast, the Group generated major growth in the Building Materials Segment and the Renewable Energies business sector in the first half of 2014. "The restructuring measures involving the sale of loss-making sites in North Rhine-Westphalia and Rhineland-Palatinate were successful," explained Chief Executive Officer of BayWa AG, Klaus Josef Lutz. "Thus, we have managed to implement the business solution that we announced within a very short space of time, in order to sustainably increase the profitability of the Building Materials Segment." The Renewable Energies business sector also made an important contribution to earnings in the first half of 2014, which increased significantly year on year as a result of project sales in the United Kingdom and the USA. "This shows how important our international growth strategy is, as in the case of agricultural trade, because international activities secure BayWa AG a major share of its earnings in some problematic market situations," emphasised Lutz. Despite all the major challenges posed by the extremely volatile agricultural markets at the moment, Lutz predicts that business performance will remain stable in 2014. Agricultural business shaped by low prices in Q2 - Agricultural equipment earnings remain at high level After an unusually strong first quarter 2014, BayWa's agricultural business was strongly influenced in the second quarter by increasingly volatile grain markets coupled with high harvest expectations and falling prices. Revenues in the Agriculture Segment, which comprises trading in agricultural produce and operating resources as well as the Agricultural Equipment and Fruit business units, stood at just under EUR5.3 billion in the first half of 2014 (2013: EUR5.8 billion) and EBIT came to EUR66.2 million (2013: EUR87.5 million). Revenues of just under EUR4.4 billion were generated in the first half of 2014 (2013: EUR4.9 billion) in agricultural trade, while EBIT came to EUR42.4 million (2013: EUR59.5 million). These figures were mainly the result of an extremely problematic market environment compared to the previous year: The start of the Ukraine crisis caused huge price rises on grain markets. However, prices then fell again with the emergence of high harvest expectations in Europe and the USA over the course of the second quarter. This price trend had a negative impact on profit margins. Due to the low price level, farmers have so far exercised restraint in terms of selling grain while the agricultural industry has also been reticent when it comes to their orders. Upfront buying effects in sales of fertilisers in the first quarter due to the mild weather conditions led to a considerable reduction in fertiliser prices. "We are currently experiencing weak agricultural market development, but we have so far been able to assert ourselves well," explained Lutz. "It's certain that both customers and suppliers will have to return to the market. Currently, stock exchanges show a four-year low in corn and wheat prices. Due to exceptional harvests in export countries, there are huge marketing opportunities for grain both this year and next." In fruit trading, BayWa recorded revenues of EUR268.2 million in the first half of 2014 (2013: EUR302.7 million) and EBIT of EUR12.7 million (2013: EUR18.4 million). The Fruit business is still down year on year, as the German market was shaped by below-average sales volumes due to a low last fruit harvest. In addition, there were delays to the acquisition of apple trading company Apollo by New Zealand subsidiary Turners & Growers Limited due to an extremely long review process by the licensing authorities. With positive signals coming from the authorities, the final acquisition of Apollo can be completed in the near future. In Germany, a good apple harvest both in terms of quantity and quality is expected from the late summer. The marketing of New Zealand apples is also very promising. Business with agricultural equipment was able to match the extremely positive figures of the previous year in the first half of 2014: Revenues came to EUR648.7 million (2013: EUR652.1 million), while EBIT rose by over 16% to EUR11.2 million (2013: EUR9.7 million). The 6% rise in used machinery, which was able to compensate for the fall in demand for new tractors, and increased demand for farm and animal equipment had a particularly positive effect. Since orders on hand are slightly up year on year, it can be assumed that the positive business performance will continue. Further growth in renewable energies - Heating oil business declines due to weather conditions In the first half of 2014, the Energy Segment, which comprises the Renewable Energies business sector and conventional energy business with the trade of fossil and renewable fuels and lubricants, performed similarly to the previous year. Revenues in the first six months of the year stood at EUR1.6 billion (2013: EUR1.7 billion) and EBIT came to EUR17.5 million (2013: EUR17.7 million). The Energy Segment's pleasing performance is due to the consistently positive development of the renewable energies business and, above all, the international project business in this area. In the first half of 2014 in the Renewable Energies business sector, the project planning, construction and sale of wind power plants in Germany, the United Kingdom and the USA made up the largest share of earnings. BayWa's internationalisation had a beneficial effect on solar module trading, as demand for solar modules in the USA increased considerably, by contrast to Germany. Overall, revenues in the Renewable Energies business sector rose substantially to EUR306.3 million (2013: EUR188.7 million), while EBIT increased to EUR16.8 million (2013: EUR12.6 million). "We have expanded our business activities even further internationally," said Chief Executive Officer Klaus Josef Lutz. After entering the Swedish market by acquiring a majority share in wind power plant project management company HS Kraft AB, BayWa r.e. entered the solar park development and construction market in the USA by acquiring Martifer Solar USA, Inc. in July 2014. "Thanks to the international structure of this business sector, renewable energies at BayWa will continue to develop extremely positive," said Lutz. Conventional business involving the trading and sale of heat energy carriers was hard hit by the extremely short winter and an unusually warm spring. A year-on-year rise in the sales of fuels and lubricants on account of the improved economic climate compared to the first half of 2013 was unable to compensate for the poor heating business with heating oil and pellets. As winter 2013 was much longer and colder than winter 2014, both revenues and EBIT fell year on year in the first half of 2014: The business unit generated revenues of EUR1.3 billion in the first six months of 2014 (2013: EUR1.5 billion) and EBIT of EUR0.7 million (2013: EUR5.1 million). BayWa anticipates recovery effects in this business unit with the onset of cooler weather in autumn at the latest. Building materials: Successful restructuring in North Rhine-Westphalia and Rhineland-Palatinate - Positive development in construction industry providing extra impetus The Building Materials Segment, which comprises trading activities involving building materials in Germany and Austria, performed much better in the first half of 2014 than in the same period last year. This is largely due to the successful restructuring of the segment: Loss-making locations in North Rhine-Westphalia and Rhineland-Palatinate were transferred to their new owners on 1 May 2014 and 1 June 2014 respectively. As a result, they have been allocated to the Other Activities Segment in this reporting period. The Building Materials Segment's figures for 2013, when the sold sites were still included in business performance, have not been adjusted. As a result, revenues in the first half of 2014 fell slightly to EUR724.9 million (2013: EUR766.4 million), even though building materials trade in the core region of BayWa generated sales increases across all product categories in the first half of 2014. EBIT for the first half of 2014 stood at EUR8.0 million (2013: EUR-4.2 million). Building Materials trade benefitted from the positive climate in the construction industry and was also able to boost sales of gardening and landscaping products, which have relatively high profit margins. "With the sale of loss-making locations in North Rhine-Westphalia and Rhineland-Palatinate, we are now concentrating on our core regions in Bavaria, Württemberg and Saxony," said Klaus Josef Lutz. "The first half of the year has already shown that these restructuring measures have had a very positive impact on the segment's profitability." BayWa AG sold 32 sites in North Rhine-Westphalia and Rhineland-Palatinate to regional building materials traders. All employees were taken on by the new owners. Contact: Marion Danneboom, BayWa AG, Head of PR/Corporate Communication, tel. +49 (0)89/92 22-36 80, Fax +49 (0)89/92 22-36 98, e-mail: marion.danneboom@baywa.de --------------------------------------------------------------------- 07.08.2014 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: BayWa AG Arabellastraße 4 81925 München Germany Phone: 089/ 9222-3691 Fax: 089/ 9222-3698 E-mail: marion.danneboom@baywa.de Internet: www.baywa.de ISIN: DE0005194062, DE0005194005, WKN: 519406, 519400, Indices: SDAX Listed: Regulierter Markt in Frankfurt (Prime Standard), München; Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, Stuttgart End of News DGAP News-Service --------------------------------------------------------------------- 281268 07.08.2014