Pierer Mobility in Crisis – KTM Path to Recovery Under Pressure!

As expected, turning around the challenging situation  for motorcycle manufacturer KTM is a long-term effort. Last night, Pierer Mobility AG, the holding company, announced an urgent need for a financial boost of “a nine-figure sum in dollars.”

At the end of last month, we highlighted the difficulties that KTM, along with its sister brands Husqvarna and GasGas, are currently facing.

Two days ago, Pierer Mobility AG issued an emergency statement, revealing the need for fresh funds to support KTM AG’s liquidity planning for the 2025 financial year. As of June 30, 2024, the KTM AG Group accounted for more than 95% of Pierer Mobility AG’s revenue.

 

This urgent financial restructuring is being discussed with core shareholder Pierer Bajaj AG and KTM AG’s key financial creditors, though the identities of these creditors remain undisclosed.

Over 100 Million Euros Needed

The Board of Management is currently working on securing bridge financing for KTM AG, estimated in the “nine-figure” range. While an exact amount hasn’t been specified, sources suggest it involves at least 100 million euros. The goal is to reach a standstill agreement with creditors during negotiations as a foundation for the financial restructuring process.

Negotiations are still in the early stages, so no specific details about the outcome, conditions, or the scale of the additional financing are available at this time.

Cold Response from the Stock Market

In addition to addressing liquidity, the Board of Directors must re-establish a solid operational and financial footing for KTM AG. A significant restructuring plan has already been put into motion, with Pierer Mobility announcing a reduction in production to help clear dealer inventories. The primary objective is to align costs and sales by the 2025 financial year.

No additional layoffs were mentioned. To say that Pierer Mobility’s stock, listed on the SIX Swiss Exchange, has struggled would be an understatement. Following three consecutive profit warnings, the stock is facing severe pressure.

At the recent EICMA trade fair in Milan, the company made a strong showing with a large booth and the announcement of several new models.

A Battle for Survival

Today, Pierer Mobility AG’s share price dropped by over 30% (down to CHF 7.77 just before the market closed). Compared to its all-time high of CHF 95.00 on January 14, 2022, the stock has plummeted by 86.27%.

Coverage of KTM in the Austrian media underscores the gravity of the situation. Despite the past successes of industrialist Stefan Pierer, the upcoming months are critical for the  motorcycle manufacturer’s future.

For some longtime KTM dealers and former distributors, the current crisis is reminiscent of the creditor takeover and restructuring of KTM Sportmotorcycle GmbH back in 1991—struggles that preceded KTM’s most prosperous era.

Now, all eyes are on Pierer Mobility AG’s next crucial quarterly report, set to be released on Tuesday, January 28, 2025.