BayWa AG Faces Substantial Challenges as Revenue and EBIT Plunge

BayWa AG, a major player in the solar wholesaler market, is currently experiencing significant turmoil, as evidenced by its preliminary financial results for the first half of the year. The Munich-based conglomerate reported a considerable drop in revenue from €12.6 billion in the previous year to €10.7 billion. More alarmingly, earnings before interest, taxes, depreciation, and amortization (EBITDA) more than halved to €149.5 million, down from €322.1 million in the same period last year. Preliminary earnings before interest and taxes (EBIT) for the second quarter stood at €61.3 million, bringing the half-year total close to zero, primarily due to a first-quarter EBIT loss of €61.3 million.

The company has indicated that these EBIT figures are provisional and subject to impairment tests (IAS 36) necessitated by stock price movements. This assessment has also delayed the finalization and publication of the half-year figures, initially scheduled for August 8, now postponed to September 27.

BayWa has retracted its forecast of achieving an EBIT of between €365 and €385 million for the current fiscal year, citing the ongoing restructuring review. The Board stated that it is not feasible to provide a reliable new forecast for the fiscal year 2024 EBIT at this time.

Approximately two weeks ago, BayWa commissioned a restructuring report in response to a tight financial situation. The company remains in constructive discussions with financial partners and believes that these talks and measures will strengthen its financial position sustainably.

In its first-quarter report, BayWa AG disclosed long-term debts exceeding €5.1 billion and short-term debts over €6.2 billion. The company is reportedly seeking a buyer for its 51% stake in its renewable energy subsidiary, Baywa re, to manage short-term liabilities. Following the sudden resignation of Baywa re’s CFO, Mihaela Seidl, due to personal reasons, CEO Matthias Taft will temporarily assume her responsibilities. The remaining 49% of Baywa re is owned by Swiss investor EIP, who purchased the shares in 2021 for €530 million.

The restructuring report’s commission was announced on the evening of July 12, after which the stock price dramatically fell from €22.70 to €16.24 by the following Monday, eventually dropping to a provisional low of €10.60.

BayWa AG’s ongoing financial challenges highlight the volatile conditions within the solar wholesaler sector, emphasizing the importance of strategic adjustments and robust financial planning to navigate current market dynamics.