30.03.2017
BayWa AG DE0005194062
DGAP-News: Business figures for 2016: BayWa intends to increase earnings following a difficult agricultural year
DGAP-News: BayWa AG / Key word(s): Final Results
Business figures for 2016: BayWa intends to increase earnings following a
difficult agricultural year
30.03.2017 / 10:30
The issuer is solely responsible for the content of this announcement.
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Business figures for 2016: BayWa intends to increase earnings following a
difficult agricultural year
The international trade and services company BayWa AG, Munich, Germany,
increased revenues by a good 3% in the financial year 2016 to EUR15.4
billion (2015: EUR14.9 billion). Although fruit trading and the energy
business both generated a record annual result, the persistently difficult
and very volatile agricultural trading markets pushed the overall Group's
earnings before interest and tax (EBIT) to EUR144.7 million (2015: EUR158.1
million).
"Developments over the past financial year have once again shown the
importance of BayWa's broad positioning. In particular, the international
fruit business and renewable energies were key to driving our Group EBIT.
Optimisation measures were also introduced in the Building Materials Segment
and had a positive impact on earnings," Klaus Josef Lutz, Chief Executive
Officer of BayWa AG, explained.
The underlying conditions for agricultural trade and agricultural equipment
activities, on the other hand, had been very difficult for the entire
industry; the ramifications of these conditions also had a significant
impact on BayWa: Although a record global harvest resulted in a higher
commodity trading volume of approximately 34 million tonnes for BayWa (2015:
30 million tonnes), these same record levels also brought about an overall
drop in prices accompanied by a corresponding pressure on margins. Farmers'
investments in equipment and operating resources declined as a result of a
drop in producer prices and lower revenues. "In particular the last year's
development of soya and soya meal prices put pressure on our activities,"
Lutz emphasised. Changing forecasts for global soya harvests, some of them
contradictory, led to extreme price volatility, which was then also further
enhanced by technical market mechanisms in trading activities, such as by
hedge funds. Lutz explained that as the impact of these mechanisms is
increasing, BayWa plans to gain expertise through cooperations so as to
optimise the company's trading strategies.
BayWa plans to significantly increase earnings in the agricultural sector
once again in 2017, thereby also raising Group EBIT. Lutz believes BayWa to
be well prepared to do so: BayWa expects a further rise in global
agricultural trade sales volumes. The company will also profit from the
activities of speciality trader Thegra Tracomex Group, which was acquired at
the start of the financial year 2017 and trades in organic grain, among
other things. Optimising the capital invested is also expected to raise
agricultural trade returns. In particular, BayWa intends to press ahead with
the process of expanding the lucrative speciality business. Subject to
approval by the competent authorities, BayWa entered into the cultivation
and trading of premium tomatoes in the United Arab Emirates in February.
BayWa also expects higher earnings in the German agricultural business in
the current year, as rising prices for agricultural produce will likely
again result in more liquidity and boost farmers' willingness to invest. "We
also expect renewable energies and fruit EBIT to be strong in 2017," Lutz
explained; he also forecasts stable development in the Building Materials
Segment.
The Board of Management of BayWa AG will propose to the Supervisory Board
keeping the Group's dividend stable and paying EUR0.85 per share - the same
dividend paid for 2015.
Agriculture: fruit sets new revenues and EBIT highs
Revenues for the Agriculture Segment increased to EUR10.9 billion in the
financial year 2016 (2015: EUR10.1 billion). EBIT came to EUR70.1 million
(2015: EUR90.1 million). This trend was primarily due to the negative
effects impacting agricultural trade and agricultural equipment business
activities, as well as a weaker business with operating resources.
Effective 1 January 2016, the Agricultural Trade business unit was split up
into the two new BayWa Agri Supply & Trade (BAST) and BayWa Agricultural
Sales (BAV) business units*. In 2016, BAST generated revenues of EUR6.1
billion and a negative EBIT of EUR11.5 million. BAV generated revenues of
EUR2.8 billion and EBIT of EUR28.7 million.
While the BAST business unit had to contend with the negative impact of
extreme volatility, particularly in the soya business, persistent low prices
for agricultural produce put pressure on BAV margins. The operating
resources business also suffered from unfavourable weather conditions and,
as was also the case in 2015, from the strained liquidity situation at
agricultural operations and farmers' low propensity to invest.
As had been expected, the latter also impacted the agricultural equipment
business: Sales of new and used machinery fell, as did demand for farm
equipment. Revenues in the Agricultural Equipment business unit fell only
slightly in the financial year 2016 to EUR1.26 billion. As a result of the
expected difficult market situation, EBIT amounted to EUR10.6 million (2015:
EUR21.5 million). EBIT was also impacted by infrastructure investments and
specialisation in terms of sales activities.
BayWa's fruit business, on the other hand, developed extremely well,
reporting significant increases in revenues and EBIT in 2016; revenues
climbed to EUR659.3 million (2015: EUR567.4 million), while EBIT set a new
record high of EUR42.3 million (2015: EUR27.0 million). The positive
development is mainly due to the expansion of the fruit business at
international level to include high-margin exotic fruit by acquiring TFC as
well as rising prices for New Zealand fruit. The sale of the packaging
logistics unit (Fruit Case Company) of New Zealand Group company T&G Global
Limited also generated a non-recurring earnings contribution of
approximately EUR7.5 million.
BayWa expects fruit sales to rise further in 2017, due in part to an
increase in trade with Asian markets. According to BayWa estimates, the
agricultural equipment business will likely recover, as order intake has
increased year on year since November 2016. The reorganisation of Massey
Ferguson and the general rise in prices for agricultural produce are also
expected to provide a boost. In the agricultural trade business of BAST and
BAV, BayWa expects earnings to rise considerably compared to 2016 as a
result of the optimisation of financing provided for trading in standard
produce as well as the general rise in farmers' liquidity.
Energy: Conventional and renewable energies earnings rise
Revenues for the Energy Segment amounted to EUR3.0 billion (2015: EUR3.3
billion) in 2016. This trend is due to heating oil and fuel prices being
down year on year once again as well as the decline in prices for solar
modules. EBIT rose to EUR83.1 million (2015: EUR77.2 million), mainly due to
the successful sale of wind and solar parks in Germany and abroad as well as
positive developments in the pellets and fuel businesses.
In 2016, the conventional energy business generated revenues of EUR2.0
billion (2015: EUR2.2 billion) and EBIT of EUR15.8 million (2015: EUR15.4
million). This business unit also developed positive in 2016 as a result of
the rise in sales of diesel fuels, the expansion of contracting activities
and the takeover of Dr. Gies Vermögensverwaltungs-Future Energies GmbH
operations.
The Renewable Energies business sector recorded more gains in 2016, setting
a new EBIT record of EUR67.3 million (2015: EUR61.8 million). Revenues came
to EUR945.9 million (2015: EUR1.02 billion). "The international orientation
of this business unit proved to be successful once again in 2016," Klaus
Josef Lutz explained. The commissioning and plant sales pipeline in the
areas of wind, solar and bioenergy totals approximately 510 MW for 2017. "We
feel that we are well prepared for the current year," said the Chief
Executive Officer, providing a positive outlook for this business sector for
2017.
Building Materials: EBIT and revenues up year on year
The Building Materials Segment reported gains in both revenues and EBIT in
the financial year 2016: revenues climbed slightly to EUR1.53 billion (2015:
EUR1.50 billion), while EBIT rose to EUR28.5 million (2015: EUR27.4
million). The BayWa Group's building materials activities profited, in
particular, from the continued favourable economic climate in Germany, as
well as the optimisation of the site network and lower logistics costs.
Earnings resulting from building materials trade are expected to remain
stable in 2017.
New segment: Innovation & Digitalisation implemented in 2016
In the second half of 2016, the activities of the former Digital Farming
business unit were transferred to newly founded development segment
Innovation & Digitalisation. This segment comprises both digital farming
offerings, such as specialised software products, digital maps, or
consulting services, as well as all of the BayWa Group's e-commerce
activities. Revenues amounted to EUR6.0 million (2015: Digital Farming
revenues of EUR5.2 million). EBIT amounted to EUR-8.6 million
(2015: EUR-2.9 million), as all development and service costs for Digital
Farming and e-commerce are incurred in this segment, while the earnings from
online retail activities are allocated to the corresponding business unit.
BayWa's goal is to adopt a leading role as a professional partner for
agriculture in terms of digital farming and farm management, and will invest
in innovations, such as software programmes, accordingly in the coming
years. Sales of software and the corresponding licences will generate
significant revenues increases in the future.
* This change to the organisational structure means that it is not possible
to directly compare the figures with those of the previous year as it was
not possible to retroactively fully divide up the corresponding previous
year's figures among the two new business units.
Contact:
Marion Danneboom, BayWa AG, Head of PR/Corporate Communications/Public
Affairs,
tel. +49 (0)89/92 22-36 80, Fax +49 (0)89/92 22-36 98,
e-mail: [email protected]
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30.03.2017 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.
Archive at www.dgap.de
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Language: English
Company: BayWa AG
Arabellastraße 4
81925 München
Germany
Phone: 089/ 9222-3691
Fax: 089/ 9222-3698
E-mail: [email protected]
Internet: www.baywa.de
ISIN: DE0005194062, DE0005194005,
WKN: 519406, 519400,
Indices: SDAX
Listed: Regulated Market in Frankfurt (Prime Standard), Munich;
Regulated Unofficial Market in Berlin, Dusseldorf,
Hamburg, Hanover, Stuttgart, Tradegate Exchange
End of News DGAP News Service
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559969 30.03.2017
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