BayWa AG sees jump in earnings in first quarter
WindSolarBioenergyServicesSolar DistributionEnergy Trade
The international trading and services group reported revenues of €4.1 billion in the first three months of the current financial year (Q1/2018: €3.8 billion). As is typical for the season, earnings before interest and tax (EBIT) stood at €–13.8 million in the first quarter of 2019 (Q1/2018: €–41.0 million). The main reasons for the higher earnings were the mild weather conditions, which led to anticipatory effects in the Agriculture and Building Materials Segments, as well as increased demand for heating oil and fuels. In the fields of renewable energies, the various solar power and wind turbine construction projects are currently on schedule, and most will be sold in the second half of the year. BayWa sees the positive start to the season as providing a solid basis for achieving the earnings growth planned for 2019.
In the Agriculture Segment, the domestic agricultural business benefited from the shift forwards in field management by up to four weeks, which led to increased demand, particularly for fertilisers. Domestic trade in produce also developed positively, as it was possible to market grain inventories from the previous year at improved trade margins in the first quarter of 2019. As expected, the low price volatility in the international agricultural business led to very low profit margins. The Agricultural Equipment business unit continued to see high demand for agricultural machinery and equipment and once again recorded a strong first quarter. The Global Produce business unit (formerly Fruit) succeeded in increasing its marketing volume year on year. The marketing season for the new apple harvest in New Zealand, which is now under way, should provide the business unit with further impetus and compensate for the moderate profit margins in Germany as a result of low apple prices in Europe. All told, the Agriculture Segment’s revenues amounted to €2.8 billion in the first quarter of the current year (Q1/2018: €2.7 billion). EBIT stood at €6.1 million in the reporting period (Q1/2018: €–2.7 million).
The conventional energy business increased significantly year on year and benefited from higher demand for heating oil and wood pellets as a result of lower household stocks. Fuel trading also saw volume-related increases. The rise in earnings in the Renewable Energies business unit was primarily attributable to the sale of BMH Biomethan GmbH. Sales of wind farms and solar parks are mostly scheduled for the second half of the year, at which time they will be recorded through profit and loss. For the current financial year, BayWa plans project sales of roughly 660 megawatts (MW) in the Renewable Energies business unit (2018: 450 MW). Revenues in the Energy Segment amounted to €964.1 million in the first quarter of 2019 (Q1/2018: €775.8 million). EBIT stood at €6.9 million in the first quarter of 2019 (Q1/2018: €–3.5 million).
Building Materials Segment
The mild weather in the first quarter of 2019 also resulted in a dynamic start to the season in the Building Materials Segment despite negative EBIT, as is typical of the season. Work on construction sites was able to resume earlier than usual. In conjunction with continued stable construction activity, this led to rising sales in all product groups. BayWa expects EBIT in the Building Materials Segment to be positive by the second quarter. Revenues in the Building Materials Segment amounted to €285.8 million in the first quarter of 2019 (Q1/2018: €287.9 million). EBIT stood at €–14.6 million (Q1/2018: €–15.7 million).
Innovation & Digitalisation Segment
The Innovation & Digitalisation Segment once again succeeded in raising its revenues year on year, primarily due to the constant expansion of the product range, the continued international sales focus and the efforts to attract new customers. The BayWa Online Portal, which was launched in February, is likely to lead to further increases in revenues in the months ahead. On account of the necessary investments, especially in the enhancement of digital farming solutions, the segment’s operating earnings were negative as expected. The Innovation & Digitalisation Segment’s revenues amounted to €2.3 million in the first quarter of 2019 (Q1/2018: €2.0 million). EBIT stood at €–3.2 million in the reporting period (Q1/2018: €–3.0 million).