Austria-based KTM, a division of Bajaj Auto-owned Pierer Mobility, will seek judicial restructuring procedures after failing to obtain the “high three-digit” million necessary to stay solvent. The goal is to reorganise the KTM group independently. Through its wholly owned subsidiary Bajaj Auto International Holdings BV, Bajaj Auto owns 49.9% of Pierer Bajaj AG, which owns 74.9% of the publicly traded company Pierer Mobility. Under the KTM brand, KTM AG, a subsidiary of Pierer Mobility, manufactures bikes and accessories.
In the first half of 2024, Pierer Mobility’s revenues fell 27% year over year, but its gross profit fell by about 82%. Compared to 13% during the same time previous year, the earnings before interest, tax, depreciation, and amortisation (Ebitda) margin was down 10%. By June 30, 2024, the company’s net debt had quadrupled to €1.46 million, up from €0.77 million on December 31, 2023, in just six months.
The process aims to reach a 90-day agreement with the creditors on a reorganisation plan. According to the corporation, redimensioning is meant to ensure the KTM Group’s continued existence in a sustainable manner. Over the following two years, this should result in a progressive correction of surplus stock at KTM and its dealers. As a result of the operating performance at the Austrian locations, over €1 billion will be lost in 2025 and 2026.
KTM AG stated that as its management does not anticipate being able to get the required finances, it will seek on Friday to begin judicial restructuring processes with self-administration. The procedures allow the business to restructure the group independently and continue managing KTM AG’s assets under supervision. KTM AG’s other businesses, especially its sales firms, are unaffected.
Additional possible losses will result from the restructuring process, for instance, because of one-time costs like necessary write-downs (for capitalised development costs, for example) and staff reduction costs, as well as a shortfall in fixed costs as a result of lower operating performance and other costs brought on by the restructuring process.
Because of the factors mentioned above, the firm anticipates a negative annual net result in the “very high three-digit million” range for the current fiscal year 2024. “We have developed into Europe’s largest motorcycle manufacturer over the last three decades,” stated Stefan Pierer, CEO of KTM AG, in a statement. With our goods, we motivate millions of motorbike riders worldwide. We are now making a stopover for the future. My life’s work is the KTM brand, and I will fight to protect it.
Together, Pierer and Rajiv Bajaj, MD of Bajaj Auto, have effectively strengthened the KTM brand and made it the biggest premium motorbike brand in Europe. Since the Pune-based business acquired stock in KTM in 2007, the two businesses have been working jointly. This was followed by a number of bikes that were created, developed, and produced entirely by both parties and exported from India. “The primary stockholders support KTM and Pierer Mobility. The objective is clear: KTM should come out of this challenging period stronger,” Pierer continued.
