Baywa: Acquisitions ensure growth in revenues and income

Munich / DE. (bag) «We remain on our success course», said Klaus Josef Lutz, Chief Executive Officer of BayWa AG, summarising the increases in revenues and income at BayWa after the first nine months of financial year 2013. Lutz also anticipates a strong fourth quarter and further improvement to the BayWa result in 2013.

Revenues as per 30 September 2013 climbed to just under 12,2 billion EUR (previous year: 7,9 billion EUR), while Ebit increased by 40 percent to 177,7 million EUR. Excluding one-off effects largely resulting from this year´s property sales, BayWa generated operating Ebit of 133,8 million EUR (previous year: 125,4 million EUR).

«Our international agricultural activities were the cornerstone of our third-quarter results», Lutz pointed out. Agricultural equipment and the domestic fuel and lubricant trading business also fared well. Only the Building Materials Segment failed to match year-on-year figures due to extreme weather conditions in the first half of the year. Largely thanks to the BayWa Group´s international activities, this trend in the Building Materials Segment was able to be compensated for in total third-quarter earnings. «This proves that our expansion strategy is making BayWa weatherproof in every sense of the word and is reducing its reliance on regional market development», said Lutz.

The Chief Executive Officer anticipates a final-quarter push in almost all BayWa business areas. The Renewable Energies business unit is set to record substantial growth before the end of the year, after a total of three wind parks were sold in the UK and Germany in early October. According to Lutz, Ebit in this business unit is already certain to exceed the 2012 figure of 32,5 million EUR.

Due to the increased sales volume from the 2013/2014 harvest and the forecasted stability in grain prices, agricultural trade – especially in traditional BayWa sales regions – is likely to take another leap forward. In the Building Materials Segment, recovery effects will depend on the onset of winter and available capacity in the construction industry.

«Business development so far, coupled with the current framework conditions in the Agriculture and Energy Segments, gives the BayWa Group a solid basis from which we can reach new heights in terms of revenues and earnings as the financial year draws to a close», said Lutz, summarising the outlook for the rest of 2013.

Agriculture: International participations driving result

In the Agriculture Segment, which comprises trading in agricultural resources and produce as well as the Agricultural Equipment and Fruit business units, BayWa succeeded in generating revenues of 8,3 billion EUR in the first nine months of the current financial year (previous year: 3,8 billion EUR). Ebit also developed very well, coming in at 103,3 EUR as per 30 September 2013 (previous year: 81,8 million EUR).

This major rise in revenues and Ebit is largely the result of the initial consolidation of Cefetra B.V. and Bohnhorst Agrarhandel GmbH in the current financial year. In addition, New Zealand fruit-trading company Turners + Growers Limited (T+G) is also contributing to full-year segment earnings in 2013 for the first time.

In the Agricultural Trade business unit, revenues as per 30 September 2013 climbed to just under 6,9 billion EUR (previous year: 2,5 billion EUR), while Ebit rose significantly year on year to 66,1 million EUR (previous year: 50,6 million EUR). Aside from the expansion of business activities in trading in agricultural products and operating resources through new acquisitions Cefetra and Bohnhorst, Agricultural Trade also prospered from above-average harvests in BayWa sales regions, as anticipated. A low willingness to sell was observed among farmers at the beginning of the harvest phase due to the lower producer prices compared to 2012; however, this then increased over the course of the third quarter as a result of the rallying wheat price. In addition, solid development in the trade of operating resources also supported positive business development. The decline in fertiliser prices stabilised this business over the course of the summer and low prices are also likely to trigger further buying interest in the fourth quarter of the year.

Demand in the Agricultural Equipment business unit remained brisk and pushed revenues up to 981,7 million EUR as per 30 September 2013 (previous year: 941,6 million EUR). Sales of new tractors and workshop services increased year on year and the expansion of sales specialisation with the two brands AGCO and CLAAS also had a positive impact. Even though the associated hiring of new staff goes hand in hand with cost increases, Ebit was able to keep pace with revenue development in the reporting quarter and make up for the weather-related shortfall from the first half of the year. At 16,2 million EUR, Ebit is at around the same level after nine months as in the previous year (16,6 million EUR).

In the Fruit business unit, the Group benefited from the international business activities of New Zealand fruit-trading subsidiary T+G. The prices for apples from this year´s southern-hemisphere harvest were higher than in the previous year. What´s more, further impetus resulted from higher demand for fruit from the southern hemisphere caused by the weather-related delay to the European harvest. Given that German trade activities also recorded rising year-on-year prices for dessert apples during the marketing of the previous year´s harvest, revenues stood at 450,0 million EUR after nine months of the current financial year (previous year: 350,2 million EUR). The full-year inclusion of T+G´s earnings contributions led to a significant year-on-year increase in Ebit, which rose to 21,0 million EUR as per 30 September 2013 (previous year: 14,6 million EUR).

Energy: Renewable energies on course

The Energy Segment comprises the Group´s trading activities in fossil and renewable fuels and lubricants as well as its business in renewable energies, which is pooled in BayWa r.e. renewable energy GmbH. Overall, the segment´s revenues fell slightly year on year, primarily as a result of a decline in heating oil prices. In the first nine months of the current reporting year, the segment generated revenues of 2,5 billion EUR (previous year: 2,7 billion EUR). Ebit stood at 17,7 million EUR as per 30 September 2013, down around 30 percent year on year. However, this was mainly due to the fact that the successful sale of three wind parks in the UK and Germany will only become effective in the fourth quarter.

The segment was able to sell greater quantities in the heating business and in in fuels and lubricants trading in the first nine months of financial year 2013 as against the previous year. The year-on-year decline in heating oil prices had a particularly positive impact on demand and led to increases in sales. Lubricant sales benefited from the general recovery of the German economy and also increased. BayWa rallied against the general market trend and achieved growth of around four percent in petrol and diesel sales volume. Revenues in the conventional energy business fell to around 2,2 billion EUR (previous year: 2,4 billion EUR), primarily as a result of falling heating oil prices compared to the previous year. However, thanks to the positive development of margins in the filling station business in particular, Ebit rose significantly to around 7,5 million EUR as per 30 September 2013 (previous year: 5,8 million EUR).

Revenues in the Renewable Energies business unit stood at 289,2 million EUR after the first nine months of 2013, down slightly year on year (previous year: 300,7 million EUR). As an increasing number of initial investments had to be made as part of the expansion of the systems planning business and, above all, the planned sale of three wind parks with total output of 42,7 megawatts was only realised in the fourth quarter, Ebit as per 30 September 2013 came to 10,2 million EUR (previous year: 19,2 million EUR). «Thanks to the proceeds from the sale of these three wind parks, we have already ensured that Ebit for 2013 in the renewable energies business will exceed the previous year´s figure of 32,5 million EUR», Lutz said. Lutz also stated that BayWa will continue to put a great deal of effort into the international diversification of its renewable energies business. In light of falling sales of photovoltaic components after cuts to subsidies in continental European markets, but robust demand for solar modules in the US, the Chief Executive Officer believes that the strategy has proven its worth.

Building Materials: Shortfall from H1/2013 almost completely recovered

The Building Materials Segment mainly comprises the Group´s building materials trade in Germany and Austria. Third-quarter sales almost fully compensated for weather-related declines in the first half of the year. The warm, dry summer had a particularly positive effect on this segment. As a result, revenues after nine months of the current financial year fell just short of the previous year´s figures, coming in at around 1,28 billion EUR (previous year: 1,32 billion EUR). Since construction and civil engineering have seen the greatest demand – especially for low-margin mass building materials such as concrete, steel and bricks – the recovery effect was not as high: Ebit came to 12,8 million EUR as per 30 September 2013 (previous year: 23,1 million EUR). Traditionally, the fourth quarter sees an increase in the share of special building materials sales for building extensions and refinement with correspondingly higher trade margins. Provided weather conditions do not hamper construction activity, the result in the Building Materials Segment could increase substantially in the fourth quarter.