BayWa AG generated above-average earnings before interest and tax (EBIT) in the first quarter of the current financial year. Despite falling year on year to €91.8 million on the heels of an exceptional first quarter of 2022 (Q1/2022: €144.9 million), EBIT still exceeded the comparable figure for other previous years by a clear margin. At €6.3 billion (Q1/2022: €6.3 billion), revenues were on a par with the previous year in the first quarter of 2023.
“All in all, a strong first quarter and a good starting point for further business performance this year,” says BayWa Chief Executive Officer Marcus Pöllinger. “The volatile market environment of one year ago, in which we faced a particularly forceful call to action as a provider of essential goods and services and more than delivered on our promises to our customers, has since settled down somewhat. By contrast, the global trends that we at BayWa serve through our business divisions remain intact, as the strong figures for the first quarter of this year also show.”
Individual segment performance
Renewable Energies Segment
With revenues of €1.5 billion (Q1/2022: €1.6 billion) and EBIT of €53.0 million (Q1/2022: €63.9 million), the Renewable Energies Segment recorded a good start to the new year. Demand for solar modules and inverters remains high and made a significant contribution to the result. In project business, the lion’s share of wind farms and solar parks are usually sold in the second half of the year.
Energy Segment
In combination with revenues of €633.2 million (Q1/2022: €649.2 million), EBIT in the Energy Segment declined year on year, as expected, to stand at €4.5 million in the first quarter of 2023 (Q1/2022: €8.4 million). The drop was price-related and was also attributable to reluctance to buy among customers, who continued to maintain significant stocks and speculated on falling prices. In fuels, BayWa expects to see higher sales volumes in the months ahead due to the seasonal increase in agricultural and construction activity.
Cefetra Group Segment
The Cefetra Group Segment reported revenues and EBIT on a par with the previous year, at €1.4 billion (Q1/2022: €1.4 billion) and €17.1 million (Q1/2022: €17.1 million), respectively. Having successfully seized trading opportunities a year ago on account of the price rally on international agriculture exchanges, the Cefetra Group benefited this past quarter from better prices for freight and shipping. The specialities business, which includes products such as proteins, nuts and legumes, also developed very positively in the first quarter of 2023.
Agri Trade & Service Segment
In the Agri Trade & Service Segment, revenues increased to €1.5 billion in the first quarter of 2023 (Q1/2022: €1.4 billion). EBIT stood at €31.0 million (Q1/2022: €58.7 million). The result was buoyed by above-average earnings margins in domestic grain trading, but was also weighed down by farmers’ reluctance to buy agricultural inputs. BayWa anticipates rising sales in the months ahead, especially for seed and crop protection products, once the weather permits farmers to make such purchases.
Agricultural Equipment Segment
The Agricultural Equipment Segment started the new year with a high order backlog, as reflected in new record figures. Revenues stood at €539.9 million in the first quarter of 2023 (Q1/2022: €476.0 million), with EBIT of €22.4 million (Q1/2022: €11.3 million). Farmers continue to have a healthy investment appetite. The number of tractors sold is on a par with the previous year, and both capacity utilisation and productivity at BayWa’s workshops remain high. BayWa expects this trend to continue in the months ahead.
Global Produce Segment
Inclement weather in various fruit-growing regions had an effect on results and earnings in the international fruit business. In combination with revenues of €257.1 million (Q1/2022: €224.3 million), the Global Produce Segment recorded EBIT of minus €12.6 million (Q1/2022: €7.3 million). While Cyclone Gabrielle damaged a portion of the apple harvest in New Zealand, key procurement regions for avocados and mangoes also reported lower harvest volumes and quality issues. In domestic fruit trading, discount campaigns among retailers stimulated sales of dessert pome fruit. BayWa expects buying to stabilise over the course of the year. However, the overall conditions should remain challenging.
Building Materials Segment
Revenues in the Building Materials Segment stood at €414.4 million in the reporting period (Q1/2022: €477.4 million). EBIT stood at minus €9.1 million (Q1/2022: minus €1.2 million), as is typical for the season. The supply and price situation for building materials eased slightly compared to the same period in the previous year, which affected trading margins in the first quarter of 2023. Order backlog remains high in the Building Materials Segment. BayWa also anticipates rising demand for building materials for energy-efficient modernisation work and climate-friendly construction. In addition, reservations have already been received for the first units from BayWa Bau Projekt GmbH construction projects in Bad Endorf and Munich, even though the marketing phase has yet to begin.
Copyright photo: (c) BayWa AG
