2024 promises to be a difficult year for Pierer Mobility. The Austrian motorcycle and sports car manufacturer, which controls KTM, Husqvarna, GasGas and MV Agusta, among others, is expected to end the current year with financial results below expectations and an overall drop in sales of between 10 and 15%.
Already in 2023, the first cracks can be glimpsed, with the group’s turnover increasing by 9.2% to 2,661.2 million euros (the previous year it was 2,437.2 million euros), but operating profit before financial charges and taxes (EBIT) down -32% to 160 million euros (in 2022 it was 235.3 million euros).
Despite the investments put on the table to relaunch operations (284 million), Pierer Mobility had to contend with still very high interest rates in the United States and a volatile market in Europe: a double brake on top of the difficulties encountered in the e-bike business, which is slowing down sales of two-wheeled vehicles.
The group itself has put down on paper its impressions for a 2024 during which the dynamics in Pierer Mobility’s main motorcycle markets (USA and Europe) have slowed down considerably.
By the end of the year, sales forecasts for American and European customers – which have not yet been quantified – are by no means optimistic.
Overall, after three years of above-average success, Pierer Mobility’s sales figures will be below expectations this year,” reads an official statement from the company.
In concrete terms, this means that dealers will have to reduce their stocks and tie up large amounts of capital, which, together with longer payment terms and higher discounts, will have “a significant negative impact on EBIT and the financial result for the current financial year”.
In more detail, for the 2024 financial year, the Group’s Executive Committee forecasts a drop in sales of between 10% and 15% for both the motorcycle and bicycle divisions. With regard to the first division, the company explained that the cost savings introduced in the current financial year should offset the negative effects of the drop in sales “in such a way that it will be possible to generate a balanced to slightly positive EBIT”. With regard to the bicycle division, on the other hand, a significantly negative EBIT of between -110 and -130 million euros has been budgeted, mainly due to “extraordinary impairment and restructuring needs” in the division.
Weighing on Pierer Mobility’s operational plans is the increase in production costs, especially in Europe, due to high wage agreements, regulations and bureaucracy. Add to that the economic tensions that are shaking the entire continent – grappling with a possible trade war with China – and the picture is complete.
As far as motorcycle production is concerned, the group has made it known that vehicle production volumes have been reduced at the Mattighofen site and that cost management – which is being stepped up – is under the remit of the entire holding company.
The cost-cutting program has meanwhile led Pierer Mobility to lay off several hundred European workers (the Austrian press is talking about 500) from its KTM subsidiary.
The reasons? Cost disadvantages in Europe, a slower pace of development in the region than in Asia and unstable demand in the United States. Speaking of Asia, in 2024, the group will presumably aim to increase efficiency in product development, avoid falling victim to the fragile European supplier industry and focus on the Asian option.
Pierer Mobility will therefore seek to strengthen its research and development partnerships in China and India with CFMoto (the Chinese company in which KTM is a partner) and Bajaj Auto (the Indian giant that has acquired a minority stake in KTM).