BayWa generates first quarter result typical for the season

WindSolarBioenergyServicesSolar DistributionEnergy TradeEnergy Solutions

05-07-2020

BayWa generated revenues of approximately €3.9 billion in the first quarter of 2020 (Q1/2019: €4.1 billion). Earnings before interest and tax (EBIT) were negative at minus €27.8 million, as is typical for the season (Q1/2019: minus €13.8 million). The year-on-year decline in earnings is primarily due to one-off income from the disposal of a participating interest in the first quarter of 2019. “BayWa is a key part of the economy, which is why all areas of the company have been able to continue their business activities and perform the associated basic supply function over the past few weeks during the coronavirus-related shutdown,” said Klaus Josef Lutz, Chief Executive Officer of BayWa AG.

BayWa r.e. renewable energy GmbH’s project business performed as planned, and further gains were also made in solar trade activities. BayWa believes that, as has been the case in the past few years, the majority of earnings in the Renewable Energies business unit will be generated in the second half of the year. Earnings in the Conventional Energy business unit were unexpectedly high as a result of brisk demand for heating oil caused by the sharp fall in oil prices. While domestic and international agricultural product trading was affected by uncertainty due to the COVID-19 crisis, fruit trading activities benefited from high consumer demand sparked by the coronavirus. The Agricultural Equipment business unit reported a satisfactory quarterly result, and the Building Materials Segment posted positive development due to the mild winter and practically uninterrupted construction activities. The first three months of the year are only of minor relevance to the annual result due to the seasonal business development at BayWa and weather-related fluctuations. Furthermore, the coronavirus pandemic and the resulting negative impact on the global economy mean that there is currently no way of making a well-founded and reliable forecast of BayWa’s business development in the financial year 2020.

Energy Segment
The Energy Segment generated revenues of €869.7 million in the first quarter of 2020 (Q1/2019: €964.1 million) and EBIT of minus €4.0 million (Q1/2019: €6.9 million). The decline in earnings was primarily due to the one-off effect at BayWa r.e. from the sale of BMH Biomethan GmbH in the first quarter of 2019. In addition, the results for the first quarter of 2019 included the filling station business of BayWa subsidiary TESSOL, which was sold effective as at 31 December 2019.

As planned, BayWa r.e. renewable energy GmbH sold in the first quarter three solar parks in the Netherlands with a total output 27 megawatts (MW). This year, BayWa r.e. intends to sell solar and wind projects with a capacity of 1.2 gigawatts (GW) (2019: 911 MW). The majority of these projects are to be sold in the second half of 2020 and should have corresponding positive effects on earnings.

In Conventional Energy, demand for fuel at BayWa’s remaining automatic filling stations declined year on year in the first quarter of 2020 due to the coronavirus pandemic. By contrast, heating oil business performed significantly better than expected thanks to the extremely low oil prices.

Agriculture Segment
The Agriculture Segment generated revenues of €2.7 billion in the first quarter of 2020 (Q1/2019: €2.8 billion) and EBIT of €9.8 million (Q1/2019: €6.1 million). The rise in earnings was predominantly due to the positive development of the Agricultural Equipment business unit as well as fruit trading in the Global Product business unit. The trade fair Agritechnica led to a high willingness among farmers to invest in agricultural equipment. In addition, demand was also up for maintenance and services in workshops. The Global Produce business unit benefited from coronavirus-related panic buying of fruit and a solid start to the marketing season for the new apple harvest in New Zealand.

International trade involving agricultural products was impacted by the effects of the shutdown, particularly in southern Europe. This resulted in subdued export and sales activities involving standard products such as wheat and corn. By contrast, specialities business was relatively stable. The domestic agricultural products and input business was on par with the previous year’s period. Fertilizer business was affected by weather conditions, which will result in deferral effects into the second quarter of 2020. Austrian agricultural business developed positively, which also played a role in the Agriculture Segment’s earnings in the first quarter of 2020 being higher than in the same period in the previous year.

Building Materials Segment
Revenues in the Building Materials Segment stood at €333.7 million (Q1/2019: €285.8 million) in the first quarter of 2020. EBIT came to minus €12.0 million (Q1/2019: minus €14.6 million). The mild winter saw a year-on-year improvement in earnings in the Building Materials Segment. Construction work in some regions started back up again at the beginning of the year, which had a resulting positive effect on demand. Sales were up across the entire product range due to the robust development of the construction industry. The building material trade for commercial customers in Germany was excluded from the coronavirus-related closures and was therefore in a position to more than compensate for the shutdown imposed in the Austrian locations. Online trade was also up across almost all product ranges.

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