MUNICH (dpa-AFX) - 2023 was a difficult year for agricultural trader and conglomerate Baywa. After the boom year of 2022, earnings and sales plummeted, with the bottom line even showing a loss. The company had already announced in mid-March that it would be cutting its dividend. Baywa pushed back its medium-term targets by one year. The news was not well received on the financial market. The share, which is listed in the small-cap segment SDax, lost around three percent on Thursday afternoon.

Baywa blames the negative development on a deterioration in the overall economic environment and the "rapid rise in interest rates", among other things. The latter had a negative impact on earnings across all business areas, it said. There were also a whole series of one-off effects: BayWa counts damage caused by a cyclone in New Zealand, the drastic slump in construction activity or consequences of the fall in prices for solar modules among these. In addition, the Group's 100th anniversary cost around €30 million - most of it in the form of special bonuses for employees.

The bottom line for 2023 was therefore a loss of 93 million euros, as the company announced in Munich this morning. In the record year of 2022, Baywa had posted a profit of just under €240 million. Earnings before interest and taxes (EBIT) fell from €504 million to €304 million, falling short of the target of €320 million to €370 million. It was also below analysts' expectations. Turnover fell by 11.5 percent to 23.9 billion euros.

However, the belt is now being tightened: "We are using the year 2024 to consolidate," announced Baywa CEO Marcus Pollinger. "To this end, we are currently looking at each of our more than 500 holdings and defining growth areas, optimization areas and business areas that BayWa wants to divest." In future, each unit must be profitable in its own right. As a result, there will be sales and the number of locations in the agricultural sector will be reduced somewhat.

"I see a need for optimization in the Agriculture and Building Materials Segments. We are tackling this with determination," said Pollinger. The Agriculture sector had suffered from falling fertilizer prices in 2023, among other things. Pollinger ruled out a sale of the construction business on Thursday. However, it is possible that short-time work could be introduced there in the second half of the year if the market continues to fail to pick up.

"The Board of Management's goal is to return BayWa to profitability in 2024," emphasized Pollinger. The fact that the Group intends to reduce its debt by around €500 million and thus curb interest expenses should also contribute to this. Then there should also be a dividend again. However, the Management Board intends to suspend this for the past financial year so as not to pay out of the company's assets.

The Group expects positive development in the medium term, but has postponed its earnings targets originally set for 2025 by one year. "Our major growth areas are international grain and specialty trading and renewable energies. We are investing sustainably in these areas," said Pollinger.

The previous evening, the Supervisory Board of the agricultural trader and conglomerate had once again expressed its unreserved confidence in the new CEO Pollinger. An investigation by an external law firm had found "explicitly no misconduct on the part of the CEO or members of the Board of Management", Baywa had announced. For the Supervisory Board, this was the end of the discussion. "The entire Board of Management enjoys the full confidence of the Supervisory Board."

In mid-January, the then Chief Supervisor Klaus Josef Lutz resigned from office with immediate effect. The manager had led the Group for 15 years. Prior to this, the Supervisory Board had "discussed in detail the allegation of a suspected compliance breach" by Pollinger and then "expressed its unreserved confidence in him". The nature of the alleged breach of the rules of good corporate governance was not disclosed at the time or on Wednesday./ruc/DP/nas/mis