Quarterly Report • Aug 31, 2020
Quarterly Report
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PIERER MOBILITY AG REPORT H1 2020
| EARNINGS RATIOS | H1 2019 | H1 2020 CHANGE IN % | ||
|---|---|---|---|---|
| Revenue | in m€ | 754.9 | 600.0 | -20.5% |
| EBITDA | in m€ | 98.5 | 64.2 | -34.8% |
| EBIT | in m€ | 46.6 | 1.7 | -96.3% |
| Net result after tax | in m€ | 29.3 | -9.6 | < 100% |
| EBITDA margin | in percent | 13.1% | 10.7% | |
| EBIT margin | in percent | 6.2% | 0.3% | |
| BALANCE SHEET RATIOS | 12/31/2019 | 06/30/2020 CHANGE IN % | ||
| Balance sheet total | in m€ | 1,613.9 | 1,666.0 | 3.2% |
| Equity | in m€ | 618.6 | 589.8 | -4.7% |
| Equity ratio | in percent | 38.3% | 35.4% | |
| Working capital employed 1) | in m€ | 274.2 | 285.9 | 4.3% |
| Net debt 2) | in m€ | 395.8 | 489.4 | 23.6% |
| Gearing 3) | in percent | 64.0% | 83.0% | |
| CASH-FLOW AND CAPEX | H1 2019 | H1 2020 CHANGE IN % | ||
| Cash-Flow from operating activities | in m€ | 46.3 | 41.5 | -10.2% |
| Cash-Flow from investing activities | in m€ | -77.5 | -68.2 | 12.1% |
| Cash-Flow from financing activities | in m€ | 41.2 | 6.7 | -83.8% |
| Capital expenditure 4) | in m€ | 80.1 | 72.9 | -9.0% |
| EMPLOYEES | 12/31/2019 | 06/30/2020 CHANGE IN % | ||
| Number of employees on reporting date 5) | Number | 4,368 | 4,329 | -0.9% |
| VALUE CREATION | 12/31/2019 | 06/30/2020 | ||
| ROCE (Return on Capital Employed) 6) | in percent | 12.7% | 7.8% | |
| ROE (Return on Equity) 7) | in percent | 16.4% | 9.9% | |
| ROIC (Return on Invested Capital) 8) | in percent | 10.6% | 6.4% | |
| STOCK EXCHANGE RATIOS 9) | 06/30/2019 | 06/30/2020 CHANGE IN % | ||
| Share price as of June 30; SIX Swiss Exchange | in CHF | 56.00 CHF | 48.00 CHF | -14.3% |
| Number of shares | in m units | 22.54 | 22.54 | |
| Market capitalization 10) | in m CHF | 1,262.17 | 1,081.87 | -14.3% |
| Earnings per share | in € | 0.66 | -0.21 | < 100% |
| Carrying amount per share 11) | in € | 24.75 | 26.17 | 5.7% |
| 1) Working capital employed = inventory + trade receivables – trade liabilities | 7) ROE = net result after tax / average equity |
2) Net debt = financial liabilities (current, non-current) – cash
3) Gearing = net debt / equity
4) Additions from property, plant and equipment and intangible assets according to schedule
of investments; excluding first-time adoption effect of IFRS 16 as of January 1st, 2019 5) Number of employees on the reporting date (including temporary staff)
6) ROCE = EBIT/average capital employed
Capital employed = property, plant and equipment + goodwill + intangible assets + working capital employed
8) ROIC = NOPAT / average capital employed; NOPAT = EBIT - taxes
9) Listed on the SIX Swiss Exchange since November 14th, 2016 10) Calculation also includes 224,043 numbers of treasury shares as of June 30th, 2020
11) Equity / number of shares
HUSQVARNA Vitpilen 701 MY20
HUSQVARNA FE 450 MY21
GASGAS EC 350F MY21
HUSQVARNA MOUNTAIN CROSS 8 MY20
| GROUP STRUCTURE | 4 |
|---|---|
| INTERIM CONSOLIDATED MANAGEMENT REPORT | 7 |
| INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 16 |
| CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
24 |
| DECLARATION OF THE EXECUTIVE BOARD | 36 |
| FINANCIAL CALENDAR | 37 |
in July 2020
3) acquisition in July 2020 4) until June 30, 2020 "Husqvarna E-Bicycles GmbH"
company "Husqvarna E-Bicycles GmbH" (now: "PIERER E-Bikes GmbH") is
currently being implemented
| PERFORMANCE OF THE PIERER MOBILITY GROUP8 | |
|---|---|
| ECONOMY AND MARKET DEVELOPMENT10 | |
| BUSINESS DEVELOPMENT AND ANALYSIS OF THE EARNINGS RATIOS11 |
|
| STATEMENT OF FINANCIAL POSITION ANALYSIS12 | |
| LIQUIDITY ANALYSIS 13 | |
| INVESTMENTS13 | |
| EMPLOYEES 14 | |
| RISK REPORT 14 | |
| RELATED PARTY DISCLOSURES 14 | |
| EVENTS AFTER THE REPORTING DATE 14 | |
| OUTLOOK14 | |
The PIERER Mobility Group is Europe's leading "Powered Two-Wheeler" manufacturer (PTW). Its world-famous motorcycle brands KTM, HUSQVARNA Motorcycles, and GASGAS make it one of Europe's technology and market leaders, especially in the premium motorcycle segment. The product range includes vehicles equipped with the latest generation of combustion engines, emission-neutral vehicles with innovative electric drives, and e-bikes. As a pioneer in electric mobility for two-wheelers in the low-voltage range (48 volts), the group, together with its strategic partner Bajaj, has put the foundations in place to assume a leading global role. The takeover of the electric bicycle business of PEXCO was another important step in intensifying our activities in the two-wheel electric mobility segment as well. Electric bicycles are marketed under the HUSQVARNA E-Bicycles, R Raymon and GASGAS E-Bicycles brands to participate in the attractive market growth in the e-bicycle segment and develop into a significant international player in this segment. Thanks to our innovative strength, we see ourselves as a technology leader in the two-wheeler sector in Europe. The partnership with Bajaj, India's second largest motorcycle manufacturer, strengthens the company's competitiveness in global markets.
In the first half of 2020, the PIERER Mobility Group achieved a group revenue of EUR 600.0 million (previous year: EUR 754.9 million). The decline in revenue is due to the impact of the global COVID-19 pandemic. Due to the suspension of deliveries from a renowned Italian supplier, vehicle assembly had to be stopped from mid-March to mid-May.
During the first six months of 2020, 70,171 KTM, HUSQVARNA and GASGAS motorcycles and 34,351 HUSQVARNA and R RAYMON e-bikes were sold. This represents an increase of 1.3% compared to the same period last year, although e-bikes were not included in the previous year. Including the 20,160 motorcycles sold by our partner Bajaj in India (previous year: 32,539), a total of 124,682 motorcycles and e-bikes were sold in the first half of 2020 (previous year: 135,711). The first half of 2020 was characterized, among other things, by the launch of the new long-distance HUSQVARNA 701 Enduro LR. In addition, KTM presented the 890 DUKE R in the middleweight class at the end of the first quarter. Furthermore, the street models from the Vitpilen and Svartpilen series of the 2020 model year were launched in the first quarter of 2020. In the motocross segment, the models of the updated KTM EXC series have been available from dealers since July 2020. In addition, HUSQVARNA Motorcycles successfully launched the new TE and FE Enduro series for the 2021 model year. In the e-bike segment, the new products were available in specialist bicycle dealers in time for the sales launch. The new Husqvarna E-Bicycles models were impressive, and for the first time the collection included all categories and price ranges, from city to extreme trail, from entry-level to high-end machines. R RAYMON e-bikes really took off with the new Yamaha drives, which were used in all TrailRay and TourRay top models and support the riding experience with technologies such as the Quad Sensor System and Automatic Support Mode. With 15,000 bikes sold, the classic R RAYMON models were in much greater demand than in the previous year. Due to the positive sales trend, both brands will start delivering the first models for the 2021 model year from August, so that they can continue to be represented at dealerships with an impressive range in the second half of the year.
The motorcycle market developed surprisingly strongly, particularly in North America (+2%) and Australia / New Zealand (+11%). Despite the corona lockdown, global motorcycle registrations fell only slightly by -7% in the first half of 2020. The PIERER Mobility Group, with its KTM and HUSQVARNA brands, benefited particularly from this and achieved high market share gains: In the first six months of the current financial year, the group outperformed the overall market (-7.4%) in the most important motorcycle markets (> 120 cc) with a 1.4% increase in registrations, thus increasing its market share by one percentage point to 11.8%.
In Europe, the overall market recorded a decline of -14.7% in the first half of 2020. During the same period, KTM was able to increase its market share by half a percentage point to +11.8%, despite declining new registrations (-11.4%) in the major European markets such as France, Italy, Great Britain, and Spain. In the North American market (USA, Canada), the number of new registrations increased by 1.7% in the first six months of 2020. KTM increased its registrations by +18.3% and thus further expanded its market share from 9.4% to 10.9% as of June 30, 2020, thus successfully maintaining its excellent position. In the Australian / New Zealand market, new registrations increased by 11.2% in the first half year compared to the previous year. The registrations of KTM and HUSQVARNA motorcycles increased by +39.3%. The market share rose from 14.1% to 17.7% during the corresponding period. The Indian market was hit particularly hard by the COVID pandemic. Against this background, our strategic partner Bajaj was able to sell 20,160 KTM and Husqvarna models in India and Indonesia in the first half of the year, which equates to a decline of 38%.
After the two-month lockdown, the two-wheeler retail trade has experienced a boom due to an apparent change in mobility behavior, which is reflected in double-digit growth rates in registrations in the motorcycle as well as the e-bicycle segment.
During the corona pandemic, two-wheelers have increasingly proved their worth as an alternative to public transport and have become more important for private transport. Investments have also been made in the expansion of cycle paths in several major German cities.
In the previous year, PIERER Mobility AG and Bajaj Auto Ltd. decided to launch a series development project for PTW ("Powered Two-Wheeler") electric vehicles in the power range of between 3 and 10 kW (48 volts) at the level of KTM AG. The platform will support various product variants under the brands of both partners. This further step in the field of electric mobility is a logical extension of the existing activities in the e-bicycle segment. Series production will begin by 2022 at Bajaj's production site in Pune, India. This represents an important strategic step in the model rollout.
In July 2020, the PIERER Mobility Group acquired 100% of the shares of GASGAS Motorcycles GmbH ahead of schedule, thus positioning GASGAS as the group's third brand in the off-road motorcycle segment for ambitious beginners and as the global market leader in the trial segment. GASGAS is also expanding its product range by including a sporty selection of high-end e-mountain bikes.
The KTM 890 DUKE R, launched at the end of March, is regarded as the sportiest bike in the middleweight class due to its light, compact, and agile packaging. For riders who want to travel long distances, HUSQVARNA Motorcycles launched the 701 Enduro LR, a new long-distance Enduro with, among other things, a 25-liter fuel tank. In addition, four models from the street segment of the Vitpilen and Svartpilen range with a groundbreaking design and new technical features have been on the market since the first quarter of 2020. The new 2021 model generation of the KTM EXC and KTM EXC-F model series has been available from dealers since July. The 2021 TE and FE Enduro models (from TE 150i to TE 300i, from FE 250 to FE 501), restyled in a three-color design, were introduced by HUSQVARNA Motorcycles with improved performance. HUSQVARNA Motorcycles also announced the launch of the new motocross range for the 2021 model year. The complete 2020 GASGAS model range (consisting of the trial TXT RACING 300, 280, 250 and 125 models) is available worldwide from selected dealers. All machines are equipped with powerful and compact 2-stroke engines. The GASGAS trial model series sets the standard by which all other trial motorcycles are measured. In relation to bicycles, the existing model collection of the HUSQVARNA brand has been expanded for 2020 to include the segments Eco City, Gran Urban, Cross Tourer, Gran Sport and Gran Gravel. The top models of Husqvarna Bicycles are equipped with a powerful 630 Wh Intube battery. The new Shimano E8035 with 504 Wh is also available as an Intube version. In the 2020 model year, the emphasis is on the design of the drive unit, which is surrounded by Husqvarna's own open and free-floating skeleton interface. R Raymon e-bikes have been equipped for 2020 with the two new Yamaha drives, the top model PW-X2 with 80 Nm for high-end EMTBs and the sporty PWseries ST model with 70 Nm for sporty trekking e-bikes and EMTBs. The Quad Sensor System included in both motors ensures optimally metered drive support with a simultaneous reduction in weight compared to the previous model. The R Raymon 2020 e-bike collection comprises the categories EMTB Fully, EMTB Hardtail, EMTB Hardtail Kids, E-Gravel, E-Cross Wave, E-Trekking and E-City.
In the E-Bicycles segment, Husqvarna E-Bicycles GmbH (now: PIERER E-Bikes GmbH) was newly founded in the first half of 2020. Together with PEXCO GmbH and its subsidiaries, which were acquired in full in December 2019, this forms a separate segment of the PIERER Mobility Group. PIERER E-Bikes GmbH and PEXCO GmbH actually are owned via PIERER Mobility AG. The integration of PEXCO GmbH into the newly founded company PIERER E-Bikes GmbH is currently being implemented.
In the first half of 2020, the interest in AVOCODO GmbH was increased from 70% to 100%. The full-service provider is a specialist for mobile applications, web applications and business solutions, particularly in relation to digital solutions and custom developments.
The impact of the outbreak of the COVID-19 pandemic was recognized by management at an early stage. The PIERER Mobility Group reacted proactively to the COVID-19 crisis in March 2020, stopped production in Mattighofen due to disruptions in the supply chain from northern Italy and Spain, and applied for the relief offered by the short-time work scheme. Use was made of the short-time work option provided by the Austrian federal government for approximately 3,000 employees. In addition to the temporary suspension of production, a rigorous cost evaluation program was launched. Part of the planned business interruption in August was brought forward and accumulated annual leave and time in lieu was reduced. Due to the shutdown, motorsport and marketing activities were reduced significantly. The network of dealers was supported by the temporary extension of payment terms and with local logistics to and from end customers. The supply of spare parts to customers was guaranteed at all times.
In close cooperation with all suppliers, a new production plan was finalized in mid-April and vehicle assembly in Austria resumed in mid-May. Since then, production has been running at full capacity again. Short-time work ended for all employees at the end of May. For the time being, no bottlenecks are expected. In order to be able to identify and resolve potential risks even earlier in future, the supplier risk assessment has been revised and the corresponding risks have been reassessed for each country. A program has also been implemented to provide advance warning of any global events that have a direct or indirect impact on the supply chain.
According to the assessment of the International Monetary Fund (IMF) in June 2020, the COVID-19 pandemic will affect the development of global economic output in all regions. A decline of -4.9% in global economic output is expected for 2020, which is 1.9 percentage points below the expectations of the IMF forecast in April 2020. The impact of the COVID-19 pandemic in the first half of 2020 was worse than expected and the recovery will therefore be slower than previously forecast. In 2021, global economic output is expected to increase by 5.4%.
A decline of -8.0% for the current year and an increase of 4.8% for next year is expected in industrialized countries. A development of -10.2% is forecast for the euro area in 2020. The IMF expects growth of 6.0% for the euro area in 2021.
The economic output in emerging markets and developing economies is expected to decline by -3.0% in 2020 and increase by 5.9% in 2021. Growth of 1.0% is forecast for China in 2020 and 8.2% in 2021. India's economic output is expected to decline by -4.5% in the current year and increase by 6.0% next year.
With 319,500 registered vehicles in the first half of 2020, the European motorcycle market1) contracted by 14.7% compared to the previous year. This decline was mainly due to the development in European markets such as France (-22.5%), Italy (-26.4%), the United Kingdom (-28.1%) and Spain (-25.0%). Those countries were hit particularly hard by the corona pandemic and had to endure long lockdown periods. Positive developments were seen in Germany (+3.0%), Switzerland (+13.8%) and the Scandinavian markets. Despite the difficult market environment, the market share of KTM and Husqvarna for motorcycles registered for road use in the first half of the year in Europe was 11.8% (previous year: 11.4%).
The number of registrations in the U.S. motorcycle market2) increased during the first half of 2020 with around 214,830 registered vehicles (+1.7% compared to the previous year). KTM and Husqvarna increased their market share in the USA from 9.0% to 10.5% compared to the previous year.
In addition, registrations in the Australian / New Zealand motorcycle market rose to around 33,500 in the first half of 2020 (11.2% compared to the previous year), with KTM and Husqvarna increasing their market share from 14.1% to 17.7%.
There are currently no published figures available on market development in the E-Bicycle segment. According to the Association of German Bicycle Retailers (VDZ), the lockdown in the bicycle trade in the months of March and April, the months with the highest sales, led to a drop in revenue of approx. 30% to 60%. However, on the other hand, the lockdown also resulted in pent-up demand on the part of end users, which had a positive effect on May and June 2020. May 2020 was one of the strongest months the bicycle sector has ever experienced. The German Bicycle Industry Association (ZIV) assumes that revenue in the current financial year will be roughly on a par with the previous year, unless there is another lockdown for production and trade in the second half of 2020.
1) Motorcycles >= 120 cm3 without Motocross, Scooters, and ATVs, incl. electric motorcycles in the markets DE, FR, IT, UK, ES, SE, BE, AT, CH, FI, NO, GR 2) Motorcycles >= 120 cm³ excluding Motocross, scooters, and ATVs, including electric motorcycles
In the first half of 2020, the PIERER Mobility Group generated revenue of EUR 600.0 million (-20.5%) compared to EUR 754.9 million in the same period of the previous year. Approximately 95% of revenues were earned outside Austria. From a regional point of view, some 68% of the revenue was attributable to Europe (+7% compared with the previous year), 15% to North America including Mexico (-6% compared with the previous year) and 17% to the rest of the world (-1% compared with the previous year).
The EBIT is already positive for the first half of 2020 at EUR 1.7 million despite the Covid-19 lockdown and a two-month halt to production (previous year: EUR 46.6 million). The earnings before interest, taxes, depreciation, and amortization (EBITDA) of EUR 64.2 million is consequently below the previous year's figure of EUR 98.5 million. The net result after tax for the first half of the year is EUR -9.6 million (previous year: EUR 29.3 million).
The KTM Group achieved revenue of EUR 530.2 million in the first half of 2020. The interruption to production lasting approximately two months resulted in a loss of production of around 30,000 units. Various measures, such as the hiring of additional employees and the introduction of additional shifts, are intended to compensate mostly for the loss of production by the end of the year. The COVID-19-related production downtime in the first half of the year resulted in a decrease in sales around of EUR 220 million or 29% compared to the same period of the previous year. The gross margin decreased accordingly from 27.7% to 24.4%.
In the first six months of 2020, KTM achieved an EBITDA of EUR 57.1 million (-41.4% compared to the previous year) and an EBIT of EUR -2.5 million (previous year: EUR 46.2 million). In the first half of the year, the net result after tax fell from EUR 29.7 million to EUR -10.1 million.
Due to the lockdown measures initiated by several governments, numerous dealers were forced to temporarily close their businesses. This led to a decline in retail revenue in Europe of approximately 15% in the first half of the year, while in North America, due to the later implementation of the lockdown measures, the previous year's level was maintained. The development of KTM retail sales was above average compared to the competition, enabling KTM to increase its market share in both markets.
The market in India was characterized by regional shutdowns with a strong decline in retail revenue since April. The motorcycle production for KTM at our partner Bajaj is now back to normal. The supply of small-engined KTM and Husqvarna street motorcycles (up to 400 cm3 ) for the KTM Group's worldwide distribution is ensured.
From May onward, some countries eased the restrictions and thus allowed the global dealer network to partially reopen. The existing travel restrictions and a change in consumer behavior with regard to the use of public transport have led to an increased demand for powered two-wheelers. As a result, in May and June there was a significant catch-up effect in retail revenue and a significant reduction in dealer inventories.
Including the models sold in India and Indonesia by our partner Bajaj, 90,331 motorcycles were sold in the first half of 2020 (-33.4% compared to the previous year). Around 46% of the motorcycles were sold in Europe. A further 22% were sold in India and Indonesia by our partner Bajaj, 13% in North America including Mexico, and 19% in the remaining global regions.
19% remaining global regions
17% North America (incl. Mexico)
In the first half of 2020, revenue of EUR 68.3 million was generated in the e-bicycle segment. This represents an increase in revenue of around 77% compared to the same period of the previous year. Due to the initial consolidation of the e-bicycle segment at the end of December 2019, the previous year's figures are not included in the earnings figures of the PIERER Mobility Group.
A total of 34,351 Husqvarna and R Raymon e-bikes were sold in the first half of the year. Sales of non-e-bikes are distributed exclusively under the R Raymon brand and amounted to 8,492 units in the first half of the year. Focusing on the DACH region, Germany and Austria are the two most important markets with a sales share of over 85%.
The EBITDA for the first half of 2020 is EUR 5.6 million and the EBIT is EUR 3.5 million. Both operating figures are well above the budgeted expectations.
The very positive development of the e-bicycle segment in the first half of the year is also mainly related to the COVID-19 pandemic, which so far has had a very positive impact on the sales trend in the whole bicycle industry. Consequently, no short-time work had to be registered within this segment in the first six months of the 2020 financial year.
The structure of the statement of financial position of the PIERER Mobility Group is as follows:
| 6/30/2020 | 12/31/2019 | |||
|---|---|---|---|---|
| EUR million in % |
EUR million | in % | ||
| Non-current assets | 924.2 | 55.5% | 877.9 | 54.4% |
| Current assets | 741.8 | 44.5% | 736.0 | 45.6% |
| Assets | 1,666.0 | 100.0% | 1,613.9 | 100.0% |
| Equity | 589.8 | 35.4% | 618.6 | 38.3% |
| Non-current liabilities | 589.5 | 35.4% | 588.7 | 36.5% |
| Current liabilities | 486.7 | 29.2% | 406.6 | 25.2% |
| Equity and liabilities | 1,666.0 | 100.0% | 1,613.9 | 100.0% |
The balance sheet total of the PIERER Mobility Group increased by 3.2% from EUR 1,613.9 million to EUR 1,666.0 million compared to the consolidated financial statements as of December 31, 2019.
The increase in non-current assets is due on the one hand to the initial consolidation of KTM MOTOHALL GmbH and the related acquisition of property, plant, and equipment. On the other hand, the investment level, especially in the area of development projects, is above depreciation, which resulted in an increase in intangible assets in the first half of the year. Current assets increased only slightly by 0.8% to EUR 741.8 million.
Liabilities increased overall (current and non-current) by EUR 81.0 million, of which EUR 80.1 million relate to current liabilities. The increase in current liabilities is mainly due to the factoring and supplier finance program used between group companies. In addition, current and non-current liabilities increased due to the initial consolidation of KTM MOTOHALL GmbH and the associated assumption of bank liabilities.
Equity decreased in the first six months by EUR -28.9 million from EUR 618.6 million to EUR 589.8 million. The reduction is particularly adversely affected by the net result after tax of EUR -9.6 million. In addition, dividend payments of EUR 13.2 million by the operative KTM AG to the minority shareholders and the purchase of treasury shares of EUR 4.6 million caused a reduction in equity. The dividend, which KTM AG paid out to minority shareholders, will be returned by shareholders to KTM AG to strengthen liquidity. PIERER Mobility AG itself did not pay dividends in the first half of 2020 (previous year: € 6.8 million). The other effects mainly relate to the recognition of foreign currency differences with no effect on profit or loss and the measurement of financial instruments.
The cash flow from operating activities in the first half of 2020 amounted to EUR 41.5 million and was thus slightly below the previous year's figure of EUR 46.3 million. Despite the low result, the operating cash flow was maintained at the previous year's level due to a reduction in net working capital.
The cash outflow from investments amounted to EUR -68.2 million and overall is below the previous year's level of EUR -77.5 million.
Consequently, it was possible to increase the free cash flow in the first half of the year by around EUR 5 million compared to the same period in the previous year.
After taking the cash flow from financing activities of EUR 6.7 million into account, liquid funds decreased by EUR 20.9 million (including foreign currency effects of EUR -0.9 million) to EUR 140.0 million compared to December 31, 2019.
The liquidity requirement to secure the operating business was ensured throughout the entire company. Due to the strong equity base and long-term financing, sufficient liquidity reserves remain permanently available.
In the first half of 2020, total investments of EUR 72.9 million were made in the PIERER Mobility Group (previous year: EUR 80.1 million – excluding right-of-use additions from the initial application of IFRS 16 of EUR 38.9 million).
The investments are distributed among development projects (including tools), property, plant, and equipment, and intangible assets as follows:
The proportion of investments in development projects (including tools) in relation to total investments remained at the previous year's level of around 71%. The consistently high investments in series product development represent one of the key success factors of the PIERER Mobility Group.
The investments in the infrastructure (property, plant, and equipment) make up 17% (previous year: 22%) of total investments. Due to the intensive investment program over the last few years, investments in the infrastructure declined in the current financial year.
Another 12% (previous year: 6%) is attributable to intangible assets (IT and licenses). The increase is due in part to the acquisition of the GASGAS brand rights.
As of June 30, 2020, the PIERER Mobility Group employed 4,329 people, 3,592 of them in Austria (83%). Around 800 of the group's employees work in research and development.
KTM places a great deal of emphasis on apprentice training and is investing around EUR 2.5 million in the expansion of the apprentice workshop. This will provide the basis for a significant increase in the number of apprentices to 200 (to 170 in 2020). KTM guarantees all of these apprentices that they will be taken on after successfully completing their apprenticeship. The KTM_academy offers various further education opportunities for employee development, such as an MBA program tailored to KTM's needs in cooperation with the LIMAK Business School and a new blended learning training course in project management. In general, all the measures also focus on the interdisciplinary exchange of information between employees. In addition to training and further education, the sustainable increase in job satisfaction is a major topic. In this regard, KTM focuses on making the workplace and working hours more flexible.
With regard to the risk report, please refer to the consolidated financial statements as of December 31, 2019. Due to the current developments in the COVID-19 pandemic, the economic developments are being continually reassessed. In particular, market risks, industry-specific risks, and financial risks, such as liquidity, default, and interest rate risks, are being reevaluated.
Please refer to the notes to the interim financial statements for information.
Please refer to the notes to the interim financial statements for information.
The spread of COVID-19 caused significant disruption to supply chains and resulted in a loss of revenue due to global declines in demand and the legally required temporary closure of dealerships in many countries. Nevertheless, the motorcycle market has developed surprisingly strongly, especially in the USA and Australia. The KTM and HUSQVARNA brands were able to profit from this above-average growth and thus achieve further gains in market share. In addition, due to the measures related to COVID-19, KTM expects that powered two-wheelers will continue gaining in importance for private transport.
The group's objective is to continue to sustainably increase its market share in the global motorcycle markets despite the COVID-19 crisis. This will be supported, among other things, by the full integration of GASGAS as a third brand and the further development of the network of dealers.
Despite the challenging market environment, the general objective remains to continue increasing our market share in the markets that are important to KTM and Husqvarna. The relocation of the production of Husqvarna road motorcycles (up to 400 cm3 ) to our strategic partner Bajaj in the first quarter of 2020 will give KTM the opportunity to produce entry-level Husqvarna motorcycles at competitive production costs and thus further increase sales in emerging markets.
Despite the COVID-19 pandemic, research and development expenses (before capitalized development costs) remain at a high level, which is 9.7% (2019 FY: 9.1%) of revenue.
The risks to the company resulting from the corona crisis in connection with the supply chain, network of dealers, and the sales market are being closely monitored. Targeted measures are constantly being taken in response to disruptions to business operations. In this context, KTM supports the network of dealers financially among other things with targeted measures. In addition, KTM's supplier risk assessment was further developed and a global early warning system for events that directly or indirectly affect KTM's supply chain was implemented.
A special code of conduct has been introduced to minimize the risk of the COVID-19 pandemic and to safeguard production capacities. To protect the health and safety of employees, precautionary measures such as distance rules and hygiene measures such as the wearing of face coverings in defined areas and the disinfection of work areas have been implemented.
The focus of investment for 2020 will be on new development projects, which will remain at a high level as in previous years.
Due to the strong global demand, the group expects an increase in revenue to more than EUR 800 million in the second half of 2020, which is significantly higher than in the same period of the previous year (second half of 2019: EUR 765.3 million). The annual revenue for the 2020 financial year announced on 22 July 2020 is confirmed and is expected to exceed EUR 1,400 million (FY 2019: EUR 1,520.1 million), in which the e-bicycle segment will already contribute revenues of more than EUR 110 million. Based on current assessments, the EBIT margin for fiscal year 2020 will lie between 4% and 6% of revenues and free cash flow reach more than EUR 30 million.
Wels, August 31, 2020
The Executive Board of PIERER Mobility AG
Hubert Trunkenpolz Viktor Sigl
Stefan Pierer Friedrich Roithner
| EURk | 06/30/2020 | 12/31/2019 |
|---|---|---|
| Assets: | ||
| Non-current assets: | ||
| Property, plant, and equipment | 358,489 | 326,497 |
| Goodwill | 130,679 | 130,311 |
| Intangible assets | 410,820 | 391,954 |
| Investments accounted for using the equity method | 13,242 | 13,628 |
| Deferred tax assets | 6,924 | 10,000 |
| Other non-current assets | 4,011 | 5,470 |
| 924,165 | 877,860 | |
| Current assets: | ||
| Inventories | 335,862 | 321,642 |
| Trade receivables | 174,724 | 175,196 |
| Receivables and other assets | 85,349 | 73,230 |
| Tax refund claims | 5,880 | 5,100 |
| Cash and cash equivalents | 140,009 | 160,864 |
| 741,824 | 736,032 | |
| 1,665,989 | 1,613,892 |
| EURk | 06/30/2020 | 12/31/2019 |
|---|---|---|
| Equity and liabilities: | ||
| Equity: | ||
| Share capital | 22,539 | 22,539 |
| Capital reserves | 9,949 | 9,949 |
| Other reserves including retained earnings | 295,719 | 305,829 |
| Equity of the owners of the parent company | 328,207 | 338,317 |
| Non-controlling interests | 261,547 | 280,316 |
| 589,754 | 618,633 | |
| Non-current liabilities: | ||
| Financial liabilities | 473,172 | 470,309 |
| Liabilities for employee benefits | 29,837 | 29,347 |
| Deferred tax liabilities | 77,116 | 79,464 |
| Other non-current liabilities | 9,403 | 9,537 |
| 589,528 | 588,657 | |
| Current liabilities: | ||
| Financial liabilities | 156,242 | 86,358 |
| Trade payables | 224,652 | 222,628 |
| Provisions | 18,767 | 16,957 |
| Tax liabilities | 4,313 | 2,957 |
| Other current liabilities | 82,733 | 77,702 |
| 486,707 | 406,602 | |
| 1,665,989 | 1,613,892 | |
| EURk | H1 2020 | H1 2019 |
|---|---|---|
| Revenue | 599,995 | 754,881 |
| Production costs of the services provided to generate the revenue | -458,699 | -542,381 |
| Gross profit from sales | 141,296 | 212,500 |
| Selling and racing expenses | -90,127 | -99,925 |
| Research and development expenses | -4,453 | -16,621 |
| Administration expenses | -44,477 | -48,760 |
| Other operating expenses | -154 | -138 |
| Earnings from at-equity holdings | -336 | -469 |
| Result from operating activities | 1,749 | 46,586 |
| Interest income | 738 | 1,127 |
| Interest expenses | -8,715 | -8,895 |
| Other financial and investment income (expenses) | -1,047 | -503 |
| Result before taxes | -7,275 | 38,315 |
| Income taxes | -2,276 | -8,978 |
| Profit or loss for the period | -9,552 | 29,337 |
| thereof owners of the parent company | -4,797 | 14,823 |
| thereof non-controlling shareholders | -4,755 | 14,514 |
| Undiluted (=diluted) earnings per share (EUR) | -0.21 | 0.66 |
| EURk | H1 2020 | H1 2019 |
|---|---|---|
| Profit or loss for the period | -9,552 | 29,337 |
| Items reclassified to profit or loss or which can be subsequently reclassified | ||
| Foreign currency translation | -1,272 | 506 |
| Valuation of cash flow hedges | 745 | -1,556 |
| Deferred tax on valuation of cash flow hedges | -186 | 389 |
| -713 | -661 | |
| Items not reclassified to profit or loss | ||
| Revaluation of net debt from defined benefit plans | -4 | -1,955 |
| Tax effect | 1 | 489 |
| -3 | -1,466 | |
| Other net result after tax | -716 | -2,127 |
| Total comprehensive income | -10,268 | 27,210 |
| thereof owners of the parent company | -5,409 | 13,723 |
| thereof non-controlling shareholders | -4,859 | 13,487 |
| EURk | H1 2020 | H1 2019 |
|---|---|---|
| Operations | ||
| Profit or loss for the period | -9,552 | 29,337 |
| + (-) Interest expenses / interest income | 7,977 | 7,768 |
| + Tax expenses | 2,276 | 8,978 |
| + Depreciation/amortization of property, plant and equipment and intangible assets | 62,460 | 51,943 |
| + (-) Other non-cash expenses (income) | -29,743 | -5,055 |
| + Interest received | 731 | 1,126 |
| - Interest payments | -9,019 | -9,188 |
| - Tax payments | 0 | -1,650 |
| + Dividends received | 0 | 893 |
| Gross cash flow | 25,130 | 84,152 |
| + (-) Increase (decrease) in the net current assets | 16,400 | -37,893 |
| Cash flow from operations | 41,530 | 46,259 |
| Investing activity | ||
| - Payments for the acquisition of intangible assets and property, plant and equipment | -69,427 | -72,026 |
| - Payments for the acquisition of companies accounted for using the equity method | 0 | -6,000 |
| + Receipts from the sale of intangible assets and property, plant and equipment | 46 | 194 |
| + Receipts from the disposal of financial assets accounted for using the equity method | 0 | 5,676 |
| + (-) Changes to the scope of consolidation | 290 | -1,040 |
| + (-) Payments/receipts from other assets | 921 | -4,319 |
| Cash flow from investing activity | -68,170 | -77,515 |
| Free cash flow | -26,640 | -31,256 |
| EURk | H1 2020 | H1 2019 |
|---|---|---|
| Financing activity | ||
| - Dividend payments to third parties | -26,251 | -20,168 |
| - Acquisition of own shares | -4,569 | 0 |
| + (-) Disposal/acquisition of non-controlling interests | -796 | -202 |
| + Taking out non-current interest-bearing liabilities | 0 | 119,880 |
| - Repayment of lease liabilities | -9,202 | -7,195 |
| - Repayment of non-current interest-bearing liabilities | -5,217 | -14,478 |
| + (-) Change in other current financial liabilities | 54,090 | -36,906 |
| + (-) Increase (decrease) from other financing activities | -1,366 | 276 |
| Cash flow from financing activity | 6,689 | 41,207 |
| Total cash flow | -19,951 | 9,952 |
| + Opening balance of liquid funds within the group | 160,864 | 89,347 |
| - Effect of foreign currency fluctuations | -904 | -538 |
| Closing balance of liquid funds within the group | 140,009 | 98,761 |
| EURk | Equity of the owners of the parent company Share Capital Reserves Reserve in Adjustment Reserves for Total Shares capital reserves including accordance items own shares of non |
|---|---|
| total with IFRS 9 currency controlling earnings translation shareholders |
|
| Balance as of January 1, 2020 | 22,539 9,949 310,986 -140 203 -5,220 338,317 280,316 |
| Profit or loss for the period | 0 0 -4,797 0 0 0 -4,797 -4,755 |
| Other comprehensive income | 0 0 -2 47 -657 0 -612 -104 |
| Total comprehensive income | 0 0 -4,799 47 -657 0 -5,409 -4,859 |
| Transactions with shareholders | |
| Dividends to third parties | 0 0 0 0 0 0 0 -13,246 |
| Acquisition/disposal of shares to subsidiaries | 0 0 -132 0 0 0 -132 -664 |
| Acquisition of own shares | 0 0 0 0 0 -4,569 -4,569 0 |
| Balance as of June 30, 2020 | 22,539 9,949 306,055 -93 -454 -9,789 328,207 261,547 |
| EURk | Equity of the owners of the parent company |
| Share Capital Reserves Reserve in Adjustment Reserves for Total Shares |
|
| capital reserves including accordance items own shares of non total with IFRS 9 currency controlling |
|
| earnings translation shareholders |
|
| Balance as of January 1, 2019 Profit or loss for the period |
22,539 9,949 264,556 699 -322 0 297,421 253,355 0 0 14,823 0 0 0 14,823 14,514 |
| Other comprehensive income | 0 0 -758 -603 261 0 -1,100 -1,027 |
| Total comprehensive income | 0 0 14,065 -603 261 0 13,723 13,487 |
| Transactions with shareholders | |
| Dividends to third parties | 0 0 -6,762 0 0 0 -6,762 -13,406 |
| Acquisition/disposal of shares to subsidiaries | 0 0 -83 0 0 0 -83 -119 |
| First-time consolidation of Avocodo GmbH | 0 0 0 0 0 0 0 177 |
| Miscellaneous | 0 0 39 0 0 0 39 -48 |
| Balance as of June 30, 2019 | 22,539 9,949 271,815 96 -61 0 304,338 253,446 |
| Equity of the owners of the parent company | |||||||
|---|---|---|---|---|---|---|---|
| Shares Total of non consolidated controlling equity shareholders |
Total | Reserves for own shares |
Adjustment items currency translation |
Reserve in accordance with IFRS 9 |
Reserves including total earnings |
Capital reserves |
Share capital |
| 280,316 618,633 |
338,317 | -5,220 | 203 | -140 | 310,986 | 9,949 | 22,539 |
| -4,755 -9,552 |
-4,797 | 0 | 0 | 0 | -4,797 | 0 | 0 |
| -104 -716 |
-612 | 0 | -657 | 47 | -2 | 0 | 0 |
| -4,859 -10,268 |
-5,409 | 0 | -657 | 47 | -4,799 | 0 | 0 |
| -13,246 -13,246 |
0 | 0 | 0 | 0 | 0 | 0 | 0 |
| -664 -796 |
-132 | 0 | 0 | 0 | -132 | 0 | 0 |
| 0 -4,569 |
-4,569 | -4,569 | 0 | 0 | 0 | 0 | 0 |
| 261,547 589,754 |
328,207 | -9,789 | -454 | -93 | 306,055 | 9,949 | 22,539 |
| Shares Total of non consolidated controlling equity shareholders |
Total | Reserves for own shares |
Adjustment items currency translation |
Equity of the owners of the parent company Reserve in accordance with IFRS 9 |
Reserves including total earnings |
Capital reserves |
Share capital |
| 253,355 550,776 |
297,421 | 0 | -322 | 699 | 264,556 | 9,949 | 22,539 |
| 14,514 29,337 |
14,823 | 0 | 0 | 0 | 14,823 | 0 | 0 |
| -1,027 -2,127 |
-1,100 | 0 | 261 | -603 | -758 | 0 | 0 |
| 13,487 27,210 |
13,723 | 0 | 261 | -603 | 14,065 | 0 | 0 |
| -13,406 -20,168 |
-6,762 | 0 | 0 | 0 | -6,762 | 0 | 0 |
| -119 -202 |
-83 | 0 | 0 | 0 | -83 | 0 | 0 |
| 177 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| -48 | 39 | 0 | 0 | 0 | 39 | 0 | 0 |
| 253,446 557,784 |
304,338 | 0 | -61 | 96 | 271,815 | 9,949 | 22,539 |
The PIERER Mobility Group is the largest European motorcycle manufacturer specializing in highly innovative sports motorcycles and electric mobility. Its world-famous motorcycle brands KTM, HUSQVARNA Motorcycles, and GASGAS make it a technology and market leader, especially in the premium motorcycle segment. With the complete takeover of PEXCO GmbH in December 2019, a further growth step was taken in the field of two-wheel electric mobility in order to participate in the attractive market growth in the e-bicycle segment. The development into a major international player in this segment is being promoted by the HUSQVARNA E-Bicycles and R Raymon brands.
PIERER Mobility AG has its registered office at 4600 Wels, Edisonstraße 1, and is registered in the commercial register of the Provincial Court as Commercial Court of Wels under the number FN 78112 x.
The shares of PIERER Mobility AG are listed on the "Swiss Performance Index (SPI)" of the SIX Swiss Exchange in Zurich and, since March 3, 2020, also on the regulated market of the Frankfurt Stock Exchange. In addition, the company is also listed on the Vienna Stock Exchange in the standard market auction segment.
The condensed interim consolidated financial statements for the reporting period from January 1 to June 30, 2020 of PIERER Mobility AG were prepared in accordance with the International Financial Reporting Standards (IFRS), as applied in the EU, applying IAS 34 (Interim Financial Reporting).
These condensed interim consolidated financial statements for the first half-year of 2020 have not been audited or reviewed by an auditor.
The condensed interim consolidated financial statements do not include all of the notes and disclosures required for year-end consolidated financial statements and should therefore be read in conjunction with the consolidated financial statements as of December 31, 2019.
The interim consolidated financial statements are prepared in euros, which is the functional currency of the parent company. Unless specifically indicated, all amounts are rounded to the nearest 1,000 euros (EUR k), which may give rise to rounding differences. The use of automated calculating tools may result in rounding differences with accumulation of rounded figures and with percentages.
The accounting policies applied as at December 31, 2019 were unchanged, with the exception of the IFRS, the use of which is mandatory from January 1, 2020. Due to the COVID-19 pandemic, the accounting policies have been reviewed and re-evaluated. The financial reporting of the companies included in the condensed interim consolidated financial statements is subject to uniform accounting principles, and these principles were applied by all consolidated entities.
The income tax expenses for the interim consolidated financial statements have been estimated, in accordance with IAS 34, using the average annual tax rate expected for the entire financial year. The transfer price concept is reviewed on an ongoing basis, with appropriate adjustments being made in accordance with OECD principles and the functions and risks within the group.
The provisions for obligations for severance pay and anniversary bonuses were measured according to the years of service method (projected unit credit method). Actuarial reports for the measurement are generated as of the end of the reporting period. These values are adjusted for the interim consolidated financial statements. If significant changes to the parameters occur during the year, the net debt is revalued. The parameters were checked as of June 30, 2020. The change in the interest rate was below the materiality limit, which is why no revaluation was carried out.
The table below shows the standards and interpretations mandatorily applied for the first time that had also already been endorsed by the European Commission as of January 1, 2020:
| First-time application | New standards and interpretations | Published by the IASB |
|---|---|---|
| January 1st 2020 | ||
| Amendments to IAS 1 and IAS 8 – Definitions of Materiality | October 31st 2018 | |
| Amendments to IFRS 3 – Definitions of a Business | October 22nd 2018 | |
| Amendments to the References to the Conceptual Framework for Financial Reporting | March 29th 2018 | |
| Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest Rate Benchmark Reform | September 26th 2019 | |
The PIERER Mobility Group assumes that there will be no material effects on the consolidated financial statements due to the standards to be applied in the fiscal year of 2020.
The business development in the first half of 2020 was substantially extent by the COVID-19 pandemic. Due to the interruption of production, especially at the Mattighofen site of KTM AG, revenue reduced in comparison to the previous year (see notes to the consolidated income statement).
As a result of the global COVID-19 crisis, support measures in terms of short-time work were taken up from March 2020 and recorded in the amount of round EUR 13 million in the result. The Austrian companies in the KTM Group took advantage of the Austrian federal government's short-time work scheme from mid-March to the end of May. The prerequisites for this were checked accordingly in advance. Most of the resulting compensation had already been received by June 30, 2020 and has been recorded as income in the income statement. Furthermore, deferrals of social security contributions and non-wage labor costs for the months of April and May were taken up and settled in July 2020.
At various subsidiaries abroad, short-time work was also requested for some employees. The fulfillment of the local requirements was checked in advance to ensure that there was sufficient certainty to be able to utilize this. Cost reimbursements or payments were recorded accordingly in the income statement. In some countries, support was also provided to ensure liquidity, such as the temporary deferral of tax and duty payments. Insofar as the local conditions were met, KTM made use of these reliefs at home and abroad.
Due to the global COVID-19 pandemic, the liquidity situation was also improved by taking up a special COVID refinancing line (KRR) of EUR 60 million from Oesterreichische Kontrollbank AG (OeKB) and the prolongation of the partial maturities of two long-term loans. The OeKB credit facility was not used as of June 30, 2020.
To a certain degree some estimates and assumptions must be made in the consolidated financial statements. These influence the recognized assets and liabilities, the disclosure of contingent liabilities as at the reporting date and the presentation of income and expenses for the respective financial year. These estimates are based on the past experience of the Executive Board. The amounts actually arising may differ from the estimates if assumed parameters develop contrary to expectations. If new conditions become known, they are duly taken into account and previous assumptions are revised.
Estimates and uncertainties in judgments and assumptions are explained in the consolidated financial statements of PIERER Mobility AG as of December 31, 2019 under Point 5. "Estimates and uncertainties in judgments and assumptions". As of June 30, 2020, these parameters were reviewed based on the impact of the COVID-19 pandemic, with particular reference to the following aspects:
Assumptions were made to assess the recoverability of goodwill and intangible assets with an indefinite useful life. As of June 30, 2020, goodwill of EUR 130.7 million was recognized. The group's goodwill is divided between the two main cash-generating units (CGUs): KTM in the amount of EUR 109.7 million and PEXCO in the amount of EUR 19.5 million.
Since the development of the KTM CGU was below budget in the first half-year, it was tested for impairment as of June 30, 2020, the half-year reporting date. The key parameters in the measurement are the discount rate and the planned cash flows. These were reviewed in view of the current impact of the COVID-19 pandemic and adjusted accordingly (see notes to the consolidated statement of financial position and statement of changes in equity). The impairment test still showed significant surplus cover, as was the case on December 31, 2019.
As the development of the E-Bicycles segment exceeded planning, there was no event-related impairment test of the PEXCO CGU as of June 30, 2020. The estimates compared to December 31, 2019 remain unchanged as of June 30, 2020.
Seasonal effects occur due to the different seasonality of offroad and street motorcycles. In the street segment, there are higher revenues in the first half of the year, whereas in the offroad segment, the main focus is on the second half of the year. Due to the increasing importance of the street segment in total revenues, seasonal effects are smoothed out over the year to a large extent.
All subsidiaries that are either legally or de facto under the control of PIERER Mobility AG are included in the present interim consolidated financial statements as of June 30, 2020.
The number of companies included in the scope of consolidation changed in the first half-year 2020 as shown below:
| Fully consolidated companies | At-equity companies | |
|---|---|---|
| Balance as of 12/31/2019 | 63 | 3 |
| Additions to the scope of consolidation | 5 | 0 |
| Elimination of the scope of consolidation | -1 | 0 |
| Balance as of 06/30/2020 | 67 | 3 |
| thereof foreign companies | 46 | 2 |
PIERER Mobility AG – as the parent company of the PIERER Mobility Group – was not included in this list.
In the first half of 2020, KTM Immobilien GmbH acquired 80% of the shares in KTM MOTOHALL GmbH, Mattighofen from PIERER IMMOREAL GmbH, Wels. The stake in KTM MOTOHALL GmbH was 90% as at the reporting date of June 30, 2020. The following assets and liabilities were acquired:
| Non-current assets | 41,335 |
|---|---|
| Current assets | 1,351 |
| Non-current liabilities | -16,111 |
| Current liabilities | -24,990 |
| Net assets | 1,584 |
| Addition of non-controlling interests | -158 |
| Fair value of shares previously recognised in the balance sheet | -1,455 |
| Goodwill | 110 |
| Consideration | -80 |
| Acquired cash and cash equivalent | 403 |
| Net cash inflow on acquisition | 323 |
Within the KTM Group in the current financial year, Red Bull KTM Factory Racing GmbH, Mattighofen and GASGAS Motorcycles Espana S.L.U. (formerly: Canepa Investments. S.L.). Terrassa, Spain, were also newly founded and fully consolidated. In addition, WP Components GmbH, Munderfing was merged with WP Immobilien GmbH, Munderfing with effect from January 1, 2020.
In the E-Bicycles segment, Husqvarna E-Bicycles GmbH (now: PIERER E-Bikes GmbH) was newly founded in the first half of the year with effect from February 25, 2020. In the first half-year 2020, bikes&wheels 2 Radhandels GmbH, Wels (formerly: (4) SPORTS Gesellschaft mbH, Wels) was acquired. The further restructuring and integration of PEXCO GmbH within the newly founded PIERER E-Bikes GmbH is planned and is currently being implemented. PIERER E-Bikes GmbH is wholly owned directly by PIERER Mobility AG.
The business activities of PIERER Mobility AG are managed on the basis of the two corporate segments Motorcycles and E-Bicycles. The individual segments are managed separately and report to PIERER Mobility AG in accordance with IFRS accounting regulations. The main decision-maker for the segment report is the Executive Board of PIERER Mobility AG. Segment reporting is based on the internal reports of the segments Motorcycles (formerly: KTM), E-Bicycles (formerly: Husqvarna E-Bicycles) and other.
The KTM Group engages in the development, production, and distribution of motorized vehicles for recreational purposes (power sports), in particular under the KTM, Husqvarna Motorcycles, GASGAS, and WP brands. As of June 30, 2020, the KTM Group includes in its consolidated financial statements 56 companies located in Austria, the USA, Japan, South Africa, Mexico, India, Australia, and New Zealand, as well as in various other countries in Europe and Asia. In addition, the KTM Group has equity holdings in assembly companies in the Philippines and China.
Husqvarna E-Bicycles GmbH (now: PIERER E-Bikes GmbH), which was newly founded in 2020, forms a separate segment together with PEXCO GmbH, which was fully acquired in December 2019, together with its subsidiaries. The integration of PEXCO GmbH into the newly founded company PIERER E-Bikes GmbH is currently being implemented. In total, the segment comprises 6 fully consolidated companies. The focus of the two brands Husqvarna E-Bicycles and R RAYMON is on developing, manufacturing and trading e-bikes and bicycles. As the initial consolidation of the e-bicycle segment took place on December 31, 2019, the result from operating activities of the previous year relates to the current at equity consolidation of the first half of 2019 (40% share in PEXCO GmbH in the previous year).
In addition to the holding company PIERER Mobility AG, the segment "Other" includes KTM E-Technologies GmbH, KTM Innovation GmbH, and Avocodo GmbH.
Segment information for the first half-year 2020 and first half-year 2019 can be divided into the described segments as follows:
| H1 2020 EUR million |
MOTORCYCLES | E-BICYLCES | Other | Consolidation | TOTAL |
|---|---|---|---|---|---|
| Revenues (including revenues within the segments) | 530.2 | 68.3 | 16.3 | -14.8 | 600.0 |
| External revenues | 529.4 | 68.3 | 2.3 | 0.0 | 600.0 |
| Result from operating activities | -2.5 | 3.5 | 0.7 | 0.0 | 1.7 |
| Investments | 71.9 | 0.9 | 0.1 | 0.0 | 72.9 |
| Depreciation and amortization | 59.7 | 2.1 | 0.7 | 0.0 | 62.5 |
| Share in the result of companies accounted for using the equity method |
-0.4 | 0.0 | 0.0 | 0.0 | -0.3 |
| Balance sheet total | 1,546.4 | 66.1 | 317.5 | -264.0 | 1,666.0 |
| Equity | 568.6 | 15.9 | 251.7 | -246.5 | 589.8 |
| H1 2019 EUR million |
MOTORCYCLES | E-BICYLCES | Other | Consolidation | TOTAL |
|---|---|---|---|---|---|
| Revenues (including revenues within the segments) | 749.9 | 0.0 | 18.5 | -13.5 | 754.9 |
| External revenues | 749.9 | 0.0 | 5.0 | 0.0 | 754.9 |
| Result from operating activities | 46.2 | -0.7 | 0.6 | 0.5 | 46.6 |
| Investments 1) | 78.8 | 0.0 | 1.3 | 0.0 | 80.1 |
| Depreciation and amortization | 51.3 | 0.0 | 0.6 | 0.0 | 51.9 |
| Share in the result of companies accounted for using the | -0.3 | -0.7 | 0.0 | 0.5 | -0.5 |
| equity method | |||||
| Balance sheet total | 1,427.1 | 0.0 | 292.4 | -257.2 | 1,462.3 |
| Equity | 551.2 | 0.0 | 241.1 | -234.5 | 557.8 |
1) excluding IFRS 16 first-time adoption effect of € 38.9 million as at 01/01/2019
The PIERER Mobility Group generated revenue of EUR 600.0 million in the first half-year. Due to the COVID-19 pandemic and the associated interruption to production at the Mattighofen site of KTM AG, revenue in the group as a whole decreased by around EUR 155 million for the same period of the previous year. Around 95% of the revenue was generated outside Austria. The breakdown of external revenue by geographical region is based on the location of the customers. The revenue by geographical region is composed of the following:
| EUR million | H1 2020 | H1 2019 |
|---|---|---|
| Europe | 406.9 | 462.2 |
| North America (incl. Mexico) | 92.4 | 159.1 |
| Other | 100.7 | 133.6 |
| 600.0 | 754.9 |
Due to the decrease in revenue, the EBIT of EUR 1.7 million for the first half of 2020 is below the previous year's figure of EUR 46.6 million as a result of the impact of COVID-19. The EBIT margin is 0.3% (previous year: 6.2%). At EUR 64.2 million, the EBITDA is 34.8% below the previous year's level. The result for the period was EUR -9.6 million (previous year: EUR 29.3 million). The earnings per share were EUR -0.21 in the first half of 2020 (previous year: EUR 0.66).
In the reporting period, the cash flow hedge reserve increased the equity by EUR 0.6 million (previous year: EUR -1.2 million). Changes to the foreign currency translation reserve resulting from currency translation of EUR -1.3 million (previous year: EUR 0.5 million) were also recorded. In the previous year, actuarial losses of EUR -1.5 million were recognized as a result of the reduction in the interest rate used for the measurement of the obligations for employee benefits. All values are inclusive of non-controlling interests.
Non-current assets increased in the first half of the year by 5.3%. The increase is primarily due to the initial consolidation of KTM MOTOHALL GmbH and the resulting acquisition of the property, plant, and equipment. Current assets remained almost unchanged with a slight increase of 0.8%.
On the liabilities side, current liabilities increased by 19.7% in the first half of the year, mainly due to the increase in current financial liabilities. This increase is largely due to the factoring and supplier finance program completed between group companies. From the point of view of the PIERER Mobility Group, no exchange of services took place; it merely made use of external financing, which is reported under current financial liabilities. In addition, current and non-current liabilities also increased due to the initial consolidation of KTM MOTOHALL GmbH and the associated assumption of bank liabilities.
The consolidated equity decreased during the first six months by EUR 28.9 million to EUR 589.8 million. Dividend payments of the operating KTM AG to the minority shareholders in the amount of EUR 13.2 million, the half-year result of EUR -9.6 million and the purchase of treasury shares of EUR -4.6 million were the main reasons for the reduction in equity. The dividend, which KTM AG paid out to minority shareholders, will be returned by shareholders to KTM AG to strengthen liquidity. PIERER Mobility AG itself did not pay a dividend in the first half of 2020 (previous year: EUR 6.8 million). As of the reporting date, the equity ratio was 35.4% (December 31, 2019: 38.3%).
The receivables and inventories were tested for impairment. No extraordinary impairment was identified which could be attributed to the COVID-19 crisis.
The impairment of goodwill of the CGU KTM was also tested in relation to COVID-19 as at the half-year reporting date. The cash flow forecasts were analyzed and the forecast for the current fiscal year was adapted. The derivation of the WACC still does not take into account any growth discount on the discount rate in the perpetual annuity. There were no material changes with regard to the surplus cover compared to December 31, 2019. Sensitivities are at a similar level as in the prior year.
Certain financial ratios must be met for certain credit agreements. In the first half of the year, there was no failure to comply with contractually agreed financial covenants. Compliance with the covenants is also expected for the 2020 financial year.
At the end of the reporting period on December 31, 2019, property, plant, and equipment amounting to EUR 58.7 million was secured by pledge agreements recorded in the land register and deposited pledge certificates, primarily for liabilities owed to credit institutions. As of June 30, 2020, there were no changes.
In the first half of 2020, the liquid funds of the group decreased by EUR 20.9 million to EUR 140.0 million. The change consists of the cash flow from operating activities of EUR 41.5 million, the cash flow from investing activities of EUR -68.2 million and the cash flow from financing activities of EUR 6.7 million. Foreign exchange effects of EUR -0.9 million also arose.
Free cash flow in the first half of 2020 improved by EUR 4.6 million compared to the same period in the previous year and amounted to EUR -26.6 million as of June 30, 2020. Despite the decline in earnings due to COVID-19, the free cash flow remained at the previous year's level, partly due to the significant reduction in net working capital and lower investing activity compared to the same period of the previous year.
The dividend payments in the amount of EUR -26.3 million shown in the cash flow from financing activities relate to dividends from the operating KTM AG to its minority shareholders in the amount of EUR 13.2 million as well as the recapitalization of KTM MOTOHALL GmbH in the course of the initial consolidation of the company at KTM AG level in the amount of EUR 13.0 million. PIERER Mobility AG did not pay a dividend in the first half of 2020 to its shareholders.
The measurement categories of IFRS 9 were used to classify and measure the assets side. The fair value of a financial instrument is determined by means of quoted market prices for identical instruments in active markets (Level 1). If no quoted market prices in active markets are available for the instrument, the fair value is determined by means of measurement techniques for which the material inputs are based exclusively on observable market data (Level 2). In all other cases, the fair value is determined on the basis of measurement techniques for which at least one input is not based on observable market data (Level 3).
The table below shows the carrying amounts and fair values of financial assets (financial instruments shown on the assets side), broken down by class and IFRS 9 measurement category. However, it does not provide any information in relation to financial assets not measured at fair value where the carrying amount is a reasonable approximation of fair value.
| EURk | |||
|---|---|---|---|
| Carrying | Classification | Fair value | |
| amount | under IFRS 9 | 06/30/2020 | |
| 06/30/2020 | |||
| Financial assets measured at fair value | |||
| Other current assets - derivatives with positive market value that have already been | 873 | FVPL | 873 |
| assigned to receivables | |||
| Other current assets - derivatives with positive market value (cash flow hedge) | 5,315 | FVOCI | 5,315 |
| Trade receivables | 16,922 | FVPL | 16,922 |
| Other non-current financial assets | 1,263 | FVOCI / FVPL | 1,263 |
| Total | 24,373 | ||
| Financial assets not measured at fair value | |||
| Cash and cash equivalents | 140,009 | AC | - |
| Trade receivables | 157,802 | AC | - |
| Other financial assets | 41,298 | AC | - |
| Total | 339,109 | ||
| Total | 363,482 | ||
| EURk | |||
| Carrying | Classification | Fair value | |
| amount 12/31/2019 |
under IFRS 9 | 12/31/2019 | |
| Financial assets measured at fair value | |||
| Other current assets - derivatives with positive market value that have already been | 131 | FVPL | 131 |
| assigned to receivables | |||
| Other current assets - derivatives with positive market value (cash flow hedge) | 1,422 | FVOCI | 1,422 |
| Trade receivables | 6,209 | FVPL | 6,209 |
| Other non-current financial assets | 2,873 | FVOCI / FVPL | 2,873 |
| Total | 10,635 | ||
| Financial assets not measured at fair value | |||
| Cash and cash equivalents | 160,864 | AC | - |
| Trade receivables | 168,987 | AC | - |
| Other financial assets | 31,172 | AC | - |
| Total | |||
| 361,023 | |||
| Total | 371,658 |
| Carrying amount 06/30/2020 | Fair value | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Fair Value - Hedging Instruments |
FVPL Fair Value through P&L |
FVOCI Fair Value through OCI (without recycling) |
FVOCI Fair Value through OCI |
AC Amortised Cost |
Total | Level 3 | Level 2 | Level 1 | |
| 873 | - | - | - | - | 873 | - | 873 | - | |
| 5,315 | - | - | - | - | 5,315 | - | 5,315 | - | |
| - | 16,922 | - | - | - | 16,922 | 16,922 | - | - | |
| 1,047 | 216 | - | - | 1,263 | 216 | - | 1,047 |
| 140,009 AC - |
- | - | - | - | 140,009 | - | - | - | - |
|---|---|---|---|---|---|---|---|---|---|
| 157,802 AC - |
- | - | - | - | 157,802 | - | - | - | - |
| 41,298 AC - |
- | - | - | - | 41,298 | - | - | - | - |
| 339,109 |
| Carrying amount 12/31/2019 | Fair value | ||||
|---|---|---|---|---|---|
| AC FVOCI FVOCI FVPL Fair Value Total Amortised Fair Value Fair Value Fair Value - Hedging Cost through OCI through OCI through P&L Instruments (without recycling) |
Level 3 | Level 2 | Level 1 | ||
| 131 - - - - |
- | 131 | - | ||
| 1,422 - - - - |
- | 1,422 | - | ||
| 6,209 - - - 6,209 |
6,209 | - | - | ||
| 2,873 - - 1,676 1,197 |
1,676 | - | 1,197 | ||
| - 160,864 - - - - 168,987 - - - |
- - |
- - |
- - |
||
| - 31,172 - - - |
- | - | - |
The table below shows the carrying amounts and fair values of financial liabilities (financial instruments shown on the liabilities side), broken down by class and IFRS 9 measurement category. However, it does not provide any information in relation to financial liabilities not measured at fair value where the carrying amount is a reasonable approximation of fair value.
| EURk | |||
|---|---|---|---|
| Carrying | Classification | Fair value | |
| amount 06/30/2020 |
under IFRS 9 | 06/30/2020 | |
| Financial liabilities measured at fair value | |||
| Other financial liabilities - derivatives with negative market value that have already been assigned to receivables |
131 | FVPL | 131 |
| Other financial liabilities - derivatives with negative market value (cash flow hedge) | 3,988 | FVOCI | 3,988 |
| Total | 4,119 | ||
| Financial liabilities not measured at fair value | |||
| Interest-bearing liabilities | 570,757 | AC | 584,230 |
| Lease liabilities | 58,657 | AC | - |
| Trade payables | 224,652 | AC | - |
| Other financial liabilities (current and non-current) | 25,251 | AC | - |
| Total | 879,317 | ||
| Total | 883,436 | ||
| EURk | |||
| Carrying | Classification | Fair value | |
| amount 12/31/2019 |
under IFRS 9 | 12/31/2019 | |
| Financial liabilities measured at fair value | |||
| Other financial liabilities - derivatives with negative market value that have already been assigned to receivables |
312 | FVPL | 312 |
| Other financial liabilities - derivatives with negative market value (cash flow hedge) | 1,598 | FVOCI | 1,598 |
| Total | 1,910 | ||
| Financial liabilities not measured at fair value | |||
| Interest-bearing liabilities | 494,535 | AC | 509,601 |
| Lease liabilities | 62,132 | AC | - |
| Trade payables | 222,628 | AC | - |
| - | |||
| Other financial liabilities (current and non-current) | 38,124 | AC | |
| Total | 817,419 |
In relation to the valuation technique, please refer to Note 43 (Classification and Fair Value) of the consolidated financial statements of PIERER Mobility as of December 31, 2019.
| Fair value | Carrying amount 06/30/2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Carrying Classification Fair value amount under IFRS 9 06/30/2020 06/30/2020 |
Level 1 | Level 2 | Level 3 | Total | AC Amortised Cost |
FVOCI Fair Value through OCI |
FVOCI Fair Value through OCI (without recycling) |
FVPL Fair Value through P&L |
Fair Value - Hedging Instruments |
| 131 | - | 131 | - | 131 | - | - | - | - | 131 |
| 3,988 | - | 3,988 | - | 3,988 | - | - | - | - | 3,988 |
| 570,757 | 584,230 | 584,230 | - | - | |
|---|---|---|---|---|---|
| 58,657 | - | - | - | - | |
| 224,652 | - | - | - | - | |
| 25,251 | - | - | - | - | |
| Carrying amount 12/31/2019 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Fair value 12/31/2019 |
Level 1 | Level 2 | Level 3 | Total | AC Amortised Cost |
FVOCI Fair Value through OCI |
FVOCI Fair Value through OCI (without recycling) |
FVPL Fair Value through P&L |
Fair Value - Hedging Instruments |
| 312 | - | 312 | - | 312 | - | - | - | - | 312 |
| 1,598 | - | 1,598 | - | 1,598 | - | - | - | - | 1,598 |
| 509,601 | - | - | 509,601 | 509,601 | 494,535 | - | - | - | - |
| - | - | - | - | - | 62,132 | - | - | - | |
| - | - | - | - | - | 222,628 | - | - | - | - |
Other financial liabilities (current and non-current) 38,124 AC - - - - - 38,124 - - - -
In January 2020, KTM Immobilien GmbH acquired 80% of the shares in KTM MOTOHALL GmbH, Mattighofen from PIERER IMMOREAL GmbH, Wels. PIERER IMMOREAL GmbH is a subsidiary of Pierer Konzerngesellschaft mbH, Wels. For further information, please refer to "Changes in the scope of consolidation".
All business transactions with related companies and individuals, as stated in the consolidated financial statements as of December 31, 2019, were carried out at arm's length. As of June 30, 2020, there were no further material changes.
In July 2020, a 35% equity holding in DealerCenter Digital GmbH was acquired from Pierer Industrie AG. The company develops digital consulting and sales systems especially for the two-wheeler retail trade and is expected to play an important role in the transformation of the stationary retail sector to create the digitally integrated shop of the future. The purchase price was EUR 1.4 million.
In addition, 100% of the shares of GASGAS Motorcycles GmbH were acquired ahead of schedule in July 2020. The PIERER Mobility Group has thus positioned GASGAS as the group's third brand in the off-road motorcycle segment for ambitious beginners and as the global market leader in the trial segment. GASGAS is also expanding its product range by including a sporty selection of high-end e-mountain bikes. The 40% stake held by Black Toro Capital as part of the industrial cooperation launched in October 2019 was acquired for a purchase price of around EUR 9 million.
There have been no further material events since June 30, 2020 that require inclusion in the reporting.
We confirm that to the best of our knowledge the condensed consolidated interim financial statements, which have been prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position, and profit or loss of the PIERER Mobility Group. Furthermore, that the interim group management report gives a true and fair view of the assets, liabilities, financial position and profit or loss of the group in relation to the important events that occurred during the first six months of the financial year and their impact on the condensed interim consolidated financial statements in relation to the principal risks and uncertainties for the remaining six months of the financial year and in relation to material transactions with related companies and persons requiring disclosure.
Wels, August 31, 2020
The Executive Board of PIERER Mobility AG
Stefan Pierer Friedrich Roithner Hubert Trunkenpolz Viktor Sigl
| February 1, 2021 | Announcement of preliminary annual results 2020 |
|---|---|
| March 30, 2021 | Publication of annual financial statements 2020 |
| April 19, 2021 | Record date annual general meeting |
| April 29, 2021 | 24th annual general meeting |
| n/a | Ex-dividend date |
| n/a | Record date "dividends" |
| n/a | Dividend payment date |
| August 30, 2021 | Report on the 1st half-year 2021 |
Owner and publisher PIERER Mobility AG Edisonstrasse 1 4600 Wels, Austria FN 78112 x / Wels Provincial and Commercial Court
Michaela Friepess Investor Relations Telefon: +43 7242 69 402 E-Mail: [email protected] Website: www.pierermobility.com
Concept and design: Grafik-Buero Elena Gratzer, 4600 Wels, www.grafik-buero.at
Photos: KTM archive, Husqvarna archive, WP archive, Husqvarna E-Bicycles-/PEXCO-Archiv, GASGAS-Archiv, Cover: Red Bull KTM MotoGP Team Presentation 2020 / Foto: ©Sebas Romero.
The present half-year report has been prepared with the utmost care and the correctness of the data was checked. Nevertheless, slight differences in the calculations may arise as result of the summation of rounded amounts and percentages, and typographical and printing errors cannot be ruled out.
References to persons such as "employees" or "staff members" are intended to be gender-neutral and insofar as the contrary appears this is solely for purposes of legibility.
This half-year report and the forward-looking statements it contains were prepared on the basis of all the data and information available at the time of going to press. However, we are must point out that various factors may cause the actual results to deviate from the forward-looking statements given in the report.
AMA 450SX Supercross World Champion Cooper Webb (USA) FIM 85cc Junior Motocross World Champion Valerio Lata (ITA) FIM MX2 Motocross World Champion Jorge Prado (ESP) FIM Cross-Country Rallies World Champion Sam Sunderland (GBR) FIM Junior Cross-Country Rallies Luciano Benavides (ARG) FIM Women's Cross-Country Rallies Laia Sanz (ESP) WESS Enduro World Championship Manuel Lettenbichler (GER)
FIM SuperEnduro World Championship AMA Supercross 450SX FIM 85cc World Championship FIM MX2 World Championship Cross-Country Rallies World Championship
FIM SuperEnduro World Championship Cody Webb (2nd) Taddy Blazusiak (3rd)
Dakar Rallye Toby Price (1st) Matthias Walkner (2nd) Sam Sunderland (3rd)
MotoGP Pol Espargaro (11th)
Moto2 Brad Binder (2nd)
Moto3 Aron Canet (2nd) Celestino Vietti (6th)
Jorge Prado – MX2 (1st) Tom Vialle – MX2 (4th) Glenn Coldenhoff – MXGP (3rd)
FIM Motocross of Nations Glenn Coldenhoff – Team Netherlands (1st) Jeffrey Herlings – Team Netherlands (1st)
French Beach Race Series Nathan Watson (1st)
FIM International Six Days Enduro Kailub Russell – Team USA (1st) Taylor Robert – Team USA (1st) Josep Garcia – Team Spain (4th)
AMA 450MX Pro Motocross Championship Marvin Musquin (3rd) Cooper Webb (6th)
FIM SuperEnduro World Champion Colton Haaker
FIM 125cc Junior Motocross World Champion Mattia Guadagnini
FIM SuperEnduro World Championship Colton Haaker (1st) Alfredo Gomez (5th)
FIM Cross Country Rallies World Championship Andrew Short (2nd) Pablo Quintanilla (7th)
FIM Motocross World Championship Thomas Kjer Olsen – MX2 (2nd) Jed Beaton – MX2 (12th) Pauls Jonass – MXGP (6th) Arminas Jasikonis – MXGP (7th)
FIM Motocross of Nations Zach Osborne – Team USA (6th) Jason Anderson – Team USA (6th) Pauls Jonass – Team Latvia (8th) Thomas Kjer Olsen – Team Denmark (10th)
World Enduro Super Series Alfredo Gomez (2nd) Graham Jarvis (5th) Billy Bolt (9th)
Graham Jarvis (1st) – Erzbergrodeo Hare Scramble, AUT Graham Jarvis (1st) – Hixpania Hard Enduro, ESP Alfredo Gomez (2nd) – Hixpania Hard Enduro, ESP Alfredo Gomez (2nd) – Romaniacs, RO Graham Jarvis (3rd) – Romaniacs, RO Alfredo Gomez (2nd) – GetzenRodeo, GER
AMA 450SX Supercross Championship Dean Wilson (6th) Zach Osborne (14th)
AMA 250SX Supercross Championship Michael Mosiman (6th) 250SX West Jordan Bailey (10th) 250SX East
AMA 450MX Pro Motocross Championship Jason Anderson (4th) Zach Osborne (5th) Dean Wilson (13th)
AMA 250MX Pro Motocross Championship Michael Mosiman (8th) Jordan Bailey (15th)
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