PIERER Mobility AG Financial Results H1 2024 | Strategic Response to Economic Challenges and Future Outlook

Overview of PIERER Mobility AG’s Financial Performance in H1 2024

In this in-depth video presentation, Hans Lang, the Head of Investor Relations at PIERER Mobility AG, comprehensively analyses the company’s financial performance for the first half of 2024 (H1 2024). Against the backdrop of a volatile global economy, marked by high interest rates in the United States, inflationary pressures across Europe, and decelerating global growth, PIERER Mobility faced significant challenges that adversely impacted its financial results.

Revenue Decline in H1 2024

Key Revenue Figures

Hans Lang begins by detailing the company’s revenue figures, which saw a notable decline of 27% compared to last year, falling to €1.007 billion from €1.388 billion in H1 2023. This decline is attributed primarily to reduced sales volumes in the Motorcycle segment, particularly in the United States, Europe, and China. The negative economic conditions also led to aggressive discounting, further influencing revenue. Despite these setbacks, PIERER Mobility managed to maintain a market share of over 10% in key regions, including Europe, the USA, and China, highlighting the brand’s resilience in a tough market.

Profitability Metrics and Losses

EBITDA and EBIT Analysis

The video delves into the specifics of the company’s profitability metrics, revealing a dramatic shift from the positive earnings of the previous year. The EBITDA for H1 2024 turned negative at -€102 million, a significant drop from €179 million in H1 2023. Similarly, the EBIT fell sharply to -€195 million, down from a positive €97 million in the previous year. Hans Lang explains that this downturn was driven by several factors, including a substantial €117 million loss in the Bicycle segment. Of this loss, €75 million was related to impairments and restructuring efforts as the company realigned its focus towards high-margin premium brands such as Husqvarna, GASGAS, and Felt.

Strategic Response to Financial Challenges

Restructuring in the Bicycle Segment

The presentation further discusses the company’s strategic response to these challenges. Hans Lang outlines the extensive restructuring measures implemented across the Bicycle segment, including the sale of the R Raymon brand in 2023. While this sale reduced the company’s revenue, it was a strategic decision to focus on premium e-bicycles and bicycles. This strategic pivot is aimed at optimizing the product mix and reducing the oversupply issues that have plagued the market. The restructuring is expected to yield long-term benefits despite the short-term financial pain it has caused.

Motorcycle Segment Adjustments

On the Motorcycle side, the video highlights the impact of high production costs in Austria, exacerbated by rising wage settlements and increasing regulatory costs. To mitigate these pressures, PIERER Mobility has significantly reduced production volumes, particularly in its Mattighofen plant, and is implementing tight cost management practices. Additionally, the integration of MV Agusta, the Italian luxury motorcycle brand, is progressing according to plan and is expected to enhance the company’s product portfolio and market positioning.

Financial Structure and Debt Management

Overview of Financial Position

Hans Lang also provides a detailed overview of the company’s financial structure, emphasizing that PIERER Mobility maintains a solid financing position despite the challenges. The company’s net debt increased to €1.469 billion as of June 30, 2024, partly due to the need to support its dealer network amidst rising interest rates. However, the company has secured flexible financing arrangements, including promissory note loans, private placements, and working capital financing, which ensure that PIERER Mobility remains well-funded.

Working Capital Management

The video also covers the company’s proactive management of its working capital. The company is implementing measures to reduce its working capital, such as improving inventory turnover and optimizing its accounts receivable and payable. These efforts are expected to see significant improvement by the end of 2024 and into 2025, further strengthening the company’s financial position.

Outlook for the Remainder of 2024

Performance Expectations

Hans Lang provides a cautiously optimistic outlook for the remainder of 2024. The company anticipates a significantly better performance in the second half of the year, driven by a higher-margin product mix, particularly in the off-road Motorcycle segment, and the continued benefits from restructuring the Bicycle division. The video confirms the full-year outlook for 2024, projecting a revenue decline of 10%-15% compared to 2023 but with the potential for a balanced to slightly positive EBIT in the Motorcycle segment.

Bicycle Segment Forecast

In contrast, the bicycle segment is expected to continue facing challenges, with an EBIT forecasted to be between €110 million and €130 million for the full year, largely due to extraordinary impairments and restructuring costs.

Conclusion

In conclusion, this video presentation offers a thorough and transparent view of PIERER Mobility AG’s financial health and strategic direction during a turbulent period. While the first half of 2024 has been challenging, the company is taking decisive actions to navigate these difficulties and position itself for a stronger recovery in the year’s second half and beyond. Investors are reassured that PIERER Mobility’s management is committed to steering the company through this transformation year with a focus on long-term value creation.