Austria-based KTM, Husqvarna, GasGas, and MV Agusta parent Pierer Mobility isn’t due to unveil its half-yearly financial results until late August. So, the full picture will be revealed in BDN’s October issue.
Meanwhile, Pierer has seen fit to release “adjusted guidance” for 2024 in advance – a cautionary profit warning for investors, presumably compiled by Viktor Sigl, the chief financial officer of both Pierer Mobility and KTM.
However, Sigl has since abruptly departed by mutual agreement with their respective supervisory boards. Pierer Mobility chief executive Stefan Pierer has taken over the CFO roles from Sigl on an interim basis.
According to the company, momentum during the current financial year has slowed significantly in Pierer’s core US and European motorcycle markets. The latest interest rate decisions in the USA mean rates will remain high, which will negatively impact American sales expectations. Sales figures in Europe are also still reportedly volatile.
So, overall, motorcycle unit sales will fall short of targets after three years of above-average success. Therefore, dealers will have to reduce their inventories and thus continue to tie up considerable capital. Together with extended payment terms and higher discounts, this is likely to have a negative effect on operating and net profit.
Reiterating a previous warning, Pierer reminded investors that demand for bicycles rose rapidly during the Covid pandemic, leading to bicycle market overheating and disruptions throughout the entire supply chain. As a result, Pierer’s own stocks and those of suppliers and dealers reached record levels.
The reduction of these inventories to a normal level is apparently continuing, while at the same time massive pressure is being exerted on selling prices. Due to such developments, extraordinary impairment and restructuring requirements in 2024 will lead to a significantly negative outcome in the bicycle segment.
For the full 2024 financial year, Pierer’s executive board now foresees a 10% to 15% decline in sales for both the motorcycle and bicycle divisions. For motorcycles, the board assumes that the introduction of cost savings will be able to compensate for declining sales to such an extent that a balanced to slightly positive operating profit can be generated. The development of existing dealers and further expansion of dealer networks to support brand strategies will be key contributory issues.
However, for bicycles, the board anticipates an unavoidable operating loss of €110m to €130m (£93.3m to £110.3m) across the full year, which is essentially due to the aforementioned extraordinary requirements, after which restructuring of the bicycle division should be complete. Effectively, Pierer will have totally exited the pedal-bicycle market through disposal of its brands and is now focused solely on e-bicycles.