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Baywa's Sales and Earnings Decline, Including Renewable Energy Sector

The conglomerate is reporting declines in sales and profits, and the renewable energy segment is no exception. The reasons given are generally weak demand and competitive pressure from China.


Baywa AG has published its results for 2023 and, as expected, reports significant losses compared to the extraordinarily good 2022 financial year. Overall, the conglomerate, which is primarily active in the agricultural sector as well as in fossil and renewable energies and in the construction business, has achieved sales of 23.9 billion euros and thus recording an operating result before interest and taxes (EBIT) of 304 million euros, a decrease of 11.8% compared to the 27.1 billion in the previous year. Although that is quite decent, it still represents a decrease of 39.7% compared to the 504.1 million euros achieved in 2022. And the bottom line is that it leads to an annual deficit of 93.4 million euros; In 2022, the group had a surplus of 239.5 million euros after interest and taxes.


The EBIT also remains significantly behind the forecast of 320 to 370 million euros announced last November . At that time, the expectation was based primarily on the renewable energy business, where Baywa expected support for the Group EBIT through project sales that were still outstanding at the time. However, the renewable energies segment ended the 2023 financial year with sales of 5.8 billion euros (previous year: 6.5 billion euros) and a still quite respectable EBIT of 193.8 million euros, even if this was a decrease of almost 19 Percent percent compared to the previous year (239.1 million euros).


According to Baywa, important reasons for the declining sales and earnings development were “a general weakness in demand in the solar module trade and the increased competitive pressure caused by the import of cheaper solar modules from China” - a somewhat surprising explanation given the fact that the photovoltaic wholesaler Baywa re Solar Trade last year This year, for the first time in its history, sales exceeded 10 gigawatts and its range largely relies on solar modules from Chinese manufacturers - namely JA-Solar, Jinko, Longi and Trina.


The IPP (Independent Power Producer) business unit, which also belongs to the renewable energy segment, further expanded its portfolio of generation systems compared to the previous year and at the end of the year had 31 wind and solar parks in Europe, North America and Australia with a total output of 800 megawatts. In addition, the foundation has been laid for a significant expansion of the portfolio; 500 megawatts are currently under construction or about to begin.


Baywa expects its renewable energy segment to “continue its growth path in international markets in 2024”. Plans to sell the solar trading business announced last spring will “continue and be completed in 2025.” The expected proceeds are to flow “both into debt reduction and into the core business” at the renewable energy subsidiary Baywa re. Specifically, this means use for “the further growth of the wind and solar project pipeline, the IPP portfolio and the expansion of the energy solutions and services business”.


The entire group wants to use the 2024 financial year for consolidation, explained CEO Marcus Pöllinger: “To do this, we are currently looking at each of our over 500 investments and defining growth areas, optimization areas and business areas from which BayWa wants to divest. In the future, each unit must be profitable on its own.”



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