BayWa AG, Munich, significantly increased its operating result (EBIT) in the first half of 2019 compared to the same period of the previous year. As of June 30, 2019, EBIT amounted to € 52.2 million (previous year: € 32.1 million). Sales increased slightly to € 8.4 billion (previous year: € 8.3 billion). The improvement in EBIT is largely attributable to positive developments in the operating business units, above all in the Energy segment. “BayWa improved its operating business by around EUR 12 million in the first half of the current year. I am pleased that this does not only come from the field of regenerative and classic energy, but also from the German agricultural trade, which made a significant leap in earnings compared to the previous year “, explained the CEO of BayWa AG, Klaus Josef Lutz.
Overall, Lutz looks optimistically into the second half of 2019: As with BayWa re renewable energy GmbH (BayWa re), as in the previous year, most project sales are planned for the final quarter again and classical energy already has a large earnings advantage, it goes from one Earnings in the Energy segment exceeding the previous year’s high level.
Even if the weather conditions in Germany are again not optimal this year, the domestic agricultural trade should continue to develop stably. The international agricultural trade will continue to have to deal with markets that are influenced by global political-economic uncertainties and relatively low volatility. BayWa sees good opportunities for the fruit business: a declining harvest is expected in Germany and Europe, with correspondingly rising marketing prices and additional sales opportunities for products from the southern hemisphere. The same applies to the trade in tropical fruits. The technology posted a higher order volume in the first half of 2019 than in the same period of the previous year and should continue to catch up. In the construction segment, it is expected that the positive development for 2019 will continue to be positive. CEO Lutz expects consolidated EBIT for 2019, which is higher than in 2018, due to the overall positive signs.
Agricultural segment: Domestic agricultural trade with significant increase in earnings
The Agriculture Segment recorded sales of € 5.7 billion in the first half of 2019 (previous year: € 5.8 billion). EBIT rose slightly to EUR 53.6 million (previous year: EUR 52.4 million). The increase in earnings is attributable to the significantly better development of the domestic products and supplies business this year, so that the increase in EBIT in the Agricultural business field more than offset the slight decline in the other business segments of the segment. Segment sales fell slightly in the first half of 2019 due to lower volumes of international grain and oilseed trade at BayWa Agri Supply & Trade (BAST). The international business in the first six months of 2019 was characterized by low volatility. As expected, BayWa’s specialty business developed in the 1.
The improvement in the Agricultural business is mainly attributable to the better marketing of cereal stocks from last year. The business also benefited from the early start of the season and the increase in fertilizer prices. Furthermore, significantly more seeds were sold in the reporting period 2019 than in the first six months of 2018.
Despite the unfavorable weather conditions in New Zealand and the corresponding loss of quality in the apple crop as well as the fall in prices of apples in Germany due to the record harvest in 2018, the result for the Global Produce business in the first half of 2019 was almost at the previous year’s level. This is mainly due to the fact that New Zealand’s T & G Global Limited (T & G Global) marketed most of its apple exports to Asia; in particular to China, where demand was higher than elsewhere due to frost-related recov- ery. T & G Global was thus more than able to offset the weaker demand from the EU. The tropical fruit trade also developed positively as new sales channels were established in Germany.
Even though the Technology segment was not able to reach the exceptionally high level of the previous year in the first half of 2019, agricultural machinery business developed positively due to the continuing high willingness of farmers to invest in the core sales areas of BayWa. Sales of used tractors rose year-on-year by 9 percent; The number of new machines sold even reached the high sales figures for the first half of 2018. In contrast, the necessary higher IT costs, which are processed in the half-year result, had a counteracting effect.
Energy segment: earnings growth continues
In the first half of 2019, the Energy segment achieved both an increase in sales and EBIT compared with the same period of the previous year: Sales amounted to € 1.9 billion (previous year: € 1.6 billion). EBIT amounted to 12.1 million euros (previous year: 1.3 million euros). On the one hand, this development can be attributed to higher sales volumes of heating oil due to favorable prices. On the other hand, a strong trading business with photovoltaic (PV) components was recorded and also the proceeds from project sales of BayWa re increased.
In the classical energy business, rising demand for both liquid and solid fuels (pellets) as well as for fuels meant that, as of June 30, 2019, the high prior-year figure for EBIT and revenue was once again exceeded.
In the first half of 2019, the Renewable Energies business area was characterized by the design and construction of a large number of wind and solar energy projects. As planned, BayWa re will sell most of its wind and solar power plants again in the final quarter in 2019. BayWa re took over the business activities of British Forsa Energy in the spring in order to realize BayWa re’s further strong growth in the construction of solar and wind power plants. The acquisition will secure access to a pipeline of Scottish onshore wind farms with a total capacity of 350 megawatts (MW).
In the first half of 2019, BayWa re also continued its growth in the trading of PV components and achieved a doubling of PV modules sold compared to the same period of the previous year. Business with commercial and technical operations management for solar and wind power plants also developed positively. For example, BayWa re now took over the service for the Talanx Group’s 300 MW onshore wind farm portfolios.
In the Construction segment, the weather-related sales backlog from the 1st quarter of 2019 to 30th June of this year was completely made up for: The segment benefited from strong capacity utilization in the sector companies and increased investments in the transport infrastructure. The continuing boom in residential construction also favored the sale of prefabricated building elements. However, the high capacity utilization of the industry limits the scope for expanding sales. Nevertheless, sales and earnings in the first six months of 2019 almost reached the level of the same period of the previous year: As of June 30, 2019, revenue in the Construction segment amounted to EUR 775.3 million (previous year: EUR 797.7 million). In the same period, EBIT amounted to € 7.0 million (previous year: € 7.4 million).
Innovation & Digitalization segment
This segment brings together all of the Group’s activities in the areas of Digital Farming, eBusiness and Agro Innovation Lab. Sales increased slightly in the first half of 2019 to 5.0 million euros (previous year: 4.9 million euros), because the number of customers and license agreements increased. Due to necessary investments for the further development of the software products, the segment reports an EBIT of minus EUR 6.5 million (previous year: minus EUR 6.0 million).