Unscheduled write-downs heavily burdened Baywa AG's consolidated half-year results published on Friday. In July, the Munich-based group's share price more than halved after commissioning a restructuring report and it has since only recovered slightly from the slump.
The financial statement show that Baywa generated sales of €10.7 billion ($11.97 billion) in the first six months of this year, almost €2 billion less than a year ago. Earnings before interest and taxes (EBIT) before the so-called impairment tests totaled €0.0 million, down from €186.9 million a year ago. The most recent impairment tests resulted in an impairment loss totaling €222.2 million, Baywa stated.
All cash-generating units with their long-term assets had to undergo these impairment tests in recent weeks — a consequence of market capitalization falling below the book value of equity. Baywa further emphasized that these write-downs had no negative impact on ongoing restructuring efforts and the implementation of the restructuring concept currently being developed.
However, Baywa is still not daring to make a forecast for the current financial year.
According to the report, the Renewable Energies segment is primarily responsible for the decline in EBIT and a large part of the write-downs. Sales in the division fell from €3 billion to €1.8 billion year-on-year. According to Baywa, EBIT was minus €102.8 million, compared to a profit of €98.4 million in the first half of 2023. The value adjustments in the Renewable Energies segment, which were determined in the impairment tests in accordance with IAS 36, totaled €171.5 million. The largest part, €114.4 million, was attributable to the long-term assets of the IPP business unit, which markets electricity generated by the company's own wind power and PV systems. Significantly lower electricity prices changed assumptions regarding grid feed-in, rising capital costs, occasional changes to the terms of leasing contracts and increased financing costs made the adjustments necessary. In addition, write-downs on goodwill and long-term assets were made.
The company also commissioned a separate restructuring report to combat the crisis and appointed a separate chief restructuring officer. The restructuring report showed that the renewables subsidiary “is well positioned in its core markets in the long term.” Sales in the PV, wind power and battery storage projects business are also expected to pick up in the fourth quarter of 2024. In the past, the majority of sales also took place at the end of the year.
The results of the other divisions did not deviate much from Baywa's figures for the first half of 2023.
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