Substantial increase in the first quarter for BayWa
WindSolarBioenergyServicesSolar DistributionEnergy TradeEnergy SolutionsHybrid Projects
At €45.1 million, earnings before interest and tax (EBIT) were up significantly year on year (Q1/2020: minus €27.8 million). All three operating segments contributed to this development. “A sensational start to the year,” says BayWa Chief Executive Officer Prof. Klaus Josef Lutz. “Thanks to its diversified portfolio, BayWa is beating the coronavirus pandemic and the typical seasonal influences that we are usually subject to in the first quarter. I expect us to be able to match 2020’s record figures as planned this year, even though it remains difficult to predict the further course of the coronavirus pandemic and its impact on the global economy.”
In particular, the Renewable Energies business unit and the international agricultural trade activities of the Cefetra Group business unit (formerly: BayWa Agri Supply & Trade – BAST) saw an unusually strong start to the year. While BayWa r.e. renewable energy AG sold large-scale wind farms and solar parks in Japan and France, the Cefetra Group benefited from the continued rally of agricultural product prices. In the fruit business, above-average prices continued ensuring stable earnings. The indicators in agricultural trade in Germany are also positive, with the agricultural input business recovering from its price-related lean spell in the previous year. Furthermore, the trade in agricultural machinery continued setting records.
By contrast, sales of heating oil and fuels fell as expected, whereas the business involving wood pellets as sustainable energy carriers continued to post gains. The building materials trade benefited from a relatively mild winter and rising prices for building materials. As a result, the negative EBIT in the Building Materials Segment that is typical for the first quarter was significantly less marked than usual.
Revenues in the Energy Segment stood at €1.0 billion in the first quarter (Q1/2020: €0.9 billion). At €37.0 million, EBIT was up significantly year on year (Q1/2020: minus €4.0 million), thanks in part to the sale of a 35-megawatt solar park in Japan that covers the annual energy needs of an average of 15,000 households from renewable sources. BayWa plans to build solar parks and wind farms with a total output of 1.1 gigawatts worldwide this year, primarily in the second half of 2021. This year is the first in which the capital increase at BayWa r.e. through the Swiss investor EIP, which was completed in March 2021, will have an effect. Demand for solar modules remains high, with sales continuing to rise in the first quarter. By contrast, higher crude oil prices, the carbon tax and stockpiling on the part of many households last year led to a substantial decline in demand for heating oil. However, sales of lubricants increased and were 10% higher than in the same quarter of the previous year.
In the first quarter, the Agriculture Segment recorded revenues of €2.9 billion (Q1/2020: €2.7 billion) and an increase in EBIT to €31.2 million (Q1/2020: €9.8 million). Both the German agricultural business and international grain and oilseed trading benefited from the sharp rise in agricultural product prices and higher price volatility. Coupled with high demand, especially from China, the unfavourable weather conditions in key cultivation regions, which could lead to smaller harvests, boosted international grain markets. BayWa also recorded higher sales and higher prices for fertilizers than in the previous year. Farmers increased the amount of land under cultivation, leading to greater demand for seed. The field of agricultural equipment also benefited from the high willingness to invest in agriculture at the present time, with used machinery, maintenance and workshop services in particularly high demand in the first quarter. The German government’s agricultural stimulus package “Bauernmilliarde” (farmers’ billion), is providing additional tailwind, especially for further business involving modern application technology.
The Global Produce business unit achieved stable earnings on a par with the previous year, with the domestic pome fruit business benefiting from above-average apple prices. BayWa expects the apple harvest in New Zealand to fall short of the previous year’s level, therefore keeping prices high. One year after its destruction during a storm, the climate-controlled greenhouse in Al Ain will again make a contribution to earnings in 2021, with the first tomatoes having been harvested and marketed locally in early April.
Building Materials Segment
The Building Materials Segment generated revenues of €373.0 million in the first quarter (Q1/2020: €333.7 million). EBIT stood at minus €5.7 million (Q1/2020: minus €12.0 million), as is typical of the season. The mild winter made it possible for work to continue largely unabated on construction sites, benefiting sales in all product categories. Good capacity utilisation in the construction sector, combined with a scarcity of raw materials, led to higher prices and supply bottlenecks for some building materials. BayWa benefited from its extensive inventories and stable supplier relationships and was able to use this unique situation to its advantage.
An overview of the key figures on the business development of the BayWa Group as at Q1 2021 can be downloaded here.