While KTM, Husqvarna and GasGas parent Pierer Mobility can still claim to be Europe’s largest motorcycle manufacturer, full-year preliminary results for 2023 illustrated a veritable nightmare. BDN financial editor Roger Willis reports.
On the upbeat side, Pierer achieved a 9.2% consolidated revenue increase to a record £2.271bn, mainly driven by its motorcycle segment. And unit sales of motorcycle brands now in the Pierer portfolio rose by 1.6% to 381,555.
But the cost of motorcycle dealer inventories, despite strong demand, climbed sharply due to grievously higher interest rates. So extended payment terms and greater discounts had to be granted to support both dealers and suppliers, swallowing liquidity reserves. The associated negative impact on free cash flow reached £350.8m, up from just £2.6m in 2022. This situation was then compounded by a previously-reported implosion of the pedal bicycle and e-bicycle markets, in which Pierer had been heavily involved, leading to an exit from the former and restructuring for the latter.
The combined consequences of these events were a 32% decline in Pierer Mobility’s annual operating profit to £136.6m and overall operating margin falling to 6%. The motorcycle segment maintained a margin of about 9%, though. Pre-tax profit dived by a savage 57.3% to £78.6m. Net earnings have yet to be defined in fully audited results.
On a brighter note, Pierer’s wholly-owned motorcycle brand sales comprised 280,206 KTM products, 67,462 from Husqvarna and 29,532 from GasGas. In addition, its European distribution network also sold 1852 MV Agusta machines and 2503 from Chinese partner CFMoto.
Overall European sales were about 15% up to approximately 140,000 motorcycles and around 240,000 were sold outside Europe. Of these, Pierer’s North American subsidiary managed to sell more than 100,000 bikes for a second consecutive year. And Australia, including New Zealand, shifted 19.700. The Indian market, supplied by Pierer’s production partner Bajaj Auto, accounted for almost 66,000 KTM and Husqvarna motorcycles.
As previously reported in BDN, Pierer Mobility intends to overcome recent difficulties with a focus on core powered two-wheeler business — motorcycles and e-bicycles — in its 2024 financial year. Specifically, this will centre on the KTM, Husqvarna, GasGas and MV Agusta brands. And in order to recover profitability, the group will implement significant cost-cutting measures, including a reduction in employee headcount at Mattighofen and Munderfing operations in Austria, while transferring some R&D activities to strategic partners Bajaj Auto and CFMoto, respectively based in India and China.
€-£ currency translation at forex rates applicable on 13 February