PIERER Mobility AG - Full Year 2024 financial guidance suspended, Executive Board reduced from six to two directors
This has not been the best year so far for KTM, Husqvarna, GasGas and MV Agusta parent company PIERER Mobility, and it just got a whole lot worse. Its problems with dealer and factory inventory stockpiling started some 18 months ago as the company continued to pursue an aggressive dealer network and showroom inventory expansion policy.
A policy that peaked with the effective full acquisition of MV Agusta, and that was predicated on the assumption that the kind of growth it had seen in the previous five years would be likely to continue.
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| In what can only be interpreted as an emergency measure, PIERER Mobility AG has reduced the Executive Board of the listed holding company to two members from six: Stefan Pierer (CEO) and Gottfried Neumeister (seen here) - the motorcycle industry outsider management executive who was hired as Pierer's Co-CEO at the beginning of September 2024. |
The latest black smoke to emerge from the money-making machine, that its Mattighofen, Austria manufacturing campus had become, came in October in the form of another 'ad hoc' financial advisory from the Vienna Stock Exchange listed, Swiss Stock Exchange traded parent company. Usually the bearers of glad tidings, recently PIERER 'ad hoc' advisories have become harbingers of doom, and this latest one was startlingly bad.
Not only has growth stalled, but PIERER Mobility AG had to accept that the "difficult macroeconomic conditions" affecting sales of its motorcycles and value of its brand investments "lasting longer than expected", but the company has been forced into the rare step of suspending its guidance for the Full Year 2024. This is a step normally associated with an enterprise that is firmly caught in the headlights as a freight train plows into its balance sheet.
"The European economy is stagnating, with the important German market in particular in recession. In the USA, consumer purchasing power remains low due to the high cost of living and the long period of expensive consumer credit".
PIERER Mobility quite candidly (and quite accurately) states that in the motorcycle segment, the "U.S. market as a whole is declining" and that "Europe is losing momentum".
The company goes on to say that "the second half of the year at PIERER Mobility is generally characterised by a high-margin product mix, especially in the off-road segment. However, the available registration data for the overall motorcycle market in the USA for the period from January to September 2024 shows a decline [in total market sales data] of -6.3%. September was also the weakest month since January 2024 with a decline of -14.6%", and that this means that "a rapid recovery cannot be expected".
"In Europe, the registration data for the overall motorcycle market from January to September 2024 is at the previous year's level due to increases in the low-price segment. However, it shows a slowdown in momentum
"Despite the slight reduction in inventories, further destocking remains an important objective. However, PIERER Mobility remains clearly committed to supporting dealers and suppliers as a strategic partner in these difficult times. As a result of measures taken in this respect, working capital and consequently the company's net debt and interest expenses increased".
The company points to previously announced bicycle segment restructuring being "in full swing" with "destocking" continuing.
"The balance sheet restructuring will be completed in 2024. This will involve an additional extraordinary impairment requirement that is higher than originally assumed". To a large extent "the reduction of the cost structure in the core business with a reduction in the headcount and the consolidation of all R&D activities for the Group's brands has already been implemented".
The "redimensioning" of the entire bicycle division will be "systematically continued in 2025. The aim is to operate the bicycle division profitably with a business model focused on niches and premium".
"As a result of these circumstances, PIERER Mobility will fall short of expectations in terms of revenue and earnings, as well as with regard to the reduction in working capital and net debt in the current financial year" and has confirmed that it is revoking its guidance for the 2024 financial year. "A new review of non-cash value adjustments will also be carried out by the end of the year".
In what can only be interpreted as an emergency measure, PIERER Mobility AG has reduced the Executive Board of the listed holding company to two members from six: Stefan Pierer (CEO) and Gottfried Neumeister (Co-CEO). Neumeister is a management executive with a diverse background (but motorcycle industry outsider), whom Pierer hired as a Co-CEO at the start of September this year.
When the news of Neumeister's appointment was published, the arrival at the top of the business of someone who is less likely to have an 'emotionally' invested mindset where the accumulation of a stack of motorcycle brands is concerned, had been broadly welcomed by financial and motorcycle industry company observers.
On the Swiss Stock Exchange, Pierer stock was trading as low as CHF 13.90 on 23 October, two days after this latest announcement. That is down from as high as CHF 84.70 in March 2023, with an all-time high of CHF 94.00 seen in February 2022.
