“Under certain conditions” the agricultural trader BayWa can be restructured. The banks apparently believe that too. A renovation report should be available soon.
The ailing agricultural giant BayWa has until the end of the year to get its finances in order. The most important creditor banks made a further 500 million euros available in bridging loans by the end of December, the group announced on Sunday evening. It was only in mid-August that the banks and major shareholders supported the heavily indebted BayWa with a total of 547 million euros.
Now the long-awaited renovation report appears to be ready soon. BayWa AG announced its first results last Tuesday. A first draft of the report by management consultancy Roland Berger then comes to the conclusion that the agricultural retailer can be restructured under certain conditions and that competitiveness can be restored in the medium term.
Roland Berger was unexpectedly commissioned by BayWa AG to carry out the restructuring report in July 2024. The renovation is expected to take several years. Hard cuts such as job cuts and the sale of company divisions are necessary. BayWa needs to reduce costs and improve margins in many business areas.
BayWa crisis could also affect fruit growers on Lake Constance
The hop harvest is in full swing at farmer Hubert Bernhard’s farm from Kressbronn on Lake Constance. BayWa is an important contractual partner for him and the other farmers in the area – and not just for hops: he is dependent on BayWa and doesn’t know what to do with his harvest if the agricultural dealer no longer accepts it, says the farmer. The 61-year-old fears that he would not find another buyer overnight, especially in the area of special crops such as hops.
Many apples and pears come from farmers in the region and are sold by BayWa across Europe. Since this year, however, some farmers have taken over sales themselves through their cooperative, the Württembergische Obstgenossenschaft. Their supervisory board chairman Hubert Bernhard is relieved that they decided to do this before the BayWa crisis. This means that farmers will receive money for their harvest this year directly from the cooperative.
However, farmers continue to rely on BayWa’s storage capacity and sorting system. If the agricultural giant falters, the 230 farmers would not know what to do next.
From record profits to economic difficulties
BayWa AG has expanded worldwide, particularly since 2009. The group entered new business areas such as the solar and wind energy sectors and invested in agricultural projects in New Zealand and South Africa. This strategy helped the group achieve a record profit of almost 240 million euros in 2022.
But then came crises such as the war in Ukraine and increasing competition in the solar industry from Asia. In 2023 there was an annual deficit of around 93 million euros in the books. The debt grew to 5.6 billion euros. The ECB’s interest rate increases made refinancing significantly more expensive. The group now reported a further loss of 290.5 million euros for the first half of the year.
Renovation report will be available soon
The restructuring report will show how BayWa can proceed. This should be available in October. According to the expert on corporate governance and regulatory law, Manuel Theisen from the LMU Munich, the management of the agricultural group is responsible for the imbalance. Cosmetic corrections alone, such as a few sales, additional investments or the closure of some locations, are not enough, according to the expert. In his opinion, BayWa needs to be massively and completely scrutinized.
BayWa was not only an important partner for farmer Hubert Bernhard for decades. He would never have thought that the traditional company could get into such trouble. He hopes for a rescue – somehow.