BayWa AG, of Munich, Germany, has successfully wrapped up the first nine months of 2017 with increases in revenues and EBIT. The revenues of the international trading and services group came to approximately €12 billion as at 30 September 2017 (9M/2016: €11.4 billion).
Earnings before interest and tax (EBIT) climbed to €90.3 million at the end of the third quarter (9M/2016: €85.4 million). This improvement in earnings was carried by all three core operating segments: Agriculture, Energy and Building Materials.
In terms of Agriculture, the extremely positive development of agricultural equipment business overcompensated in particular for the weather-related losses in fruit trading.
Agricultural trading and sales activities were also able to outperform the previous year, despite restructuring costs. “The process of recovery in the Agriculture Segment has continued and we expect further gains in the final quarter,” said Klaus Josef Lutz, Chief Executive Office of BayWa AG.
“All in all, we believe that we will carry this positive performance through to the fourth quarter and generate significant year-on-year increases in full-year revenues and EBIT,” said Lutz, looking to the end of the financial year.
Agriculture Segment: Positive development, particularly for agricultural equipment
The Agriculture Segment, which is divided into Grain Origination and Agricultural Trade, Fruit and Agricultural Equipment business units, generated a slight year-on-year rise in revenues to €8.25 billion (9M/2016: €8.19 billion) as well as a significant improvement in earnings to EBIT of €49.6 million (9M/2016: €45.1 million) as at 30 September 2017.
The earnings improvement was primarily due to the considerable rise in the sale of new and used machinery (particularly tractors) and cost savings. As expected, the widespread willingness of farmers to invest in agricultural equipment continued. The third quarter in the Agriculture Segment was characterised by subdued export and marketing activities for standard produce, which was caused by falling prices.
Fruit trading activities also failed to match the level of the previous year due to a delay to the marketing season for overseas apples due to weather conditions and the failed harvest in Germany and Europe; in addition, the previous year had benefited from a one-off effect from the sale of a T&G Global Limited shareholding.
Innovation & Digitalisation Segment: Significant Rise in Revenues due to Broader Product Range
The Innovation & Digitalisation Segment pools all BayWa Group activities relating to digital farming and e-business and has existed for over a year. Revenues in this segment rose significantly as at 30 September 2017 to €4.8 million (9M/2016: €4.4 million).
This was primarily due to the broader product range and the international expansion of sales activities over the past few months. Due to the year-on-year rise in investments in the development of digital farming solutions and the new BayWa Online World, the segment recorded EBIT of €–7.9 million after the first nine months of the year (9M/2016: €–6.2 million).
Source: baywa.com
