Extremely successful financial year 2011: BayWa raises EBIT significantly and achieves revenues of almost EUR 10 billion

Extremely successful financial year 2011:
BayWa raises EBIT significantly and achieves revenues of almost EUR 10 billion

'An exceptionally successful financial year with renewed significant growth in revenues and EBIT in comparison with 2010', stated Klaus Josef Lutz, BayWa AG's Chief Executive Officer, taking stock of the annual figures presented for 2011. Consolidated revenues came to around EUR 9.6 billion in the past year, which is approximately 21 percent higher year on year. EBIT climbed to around EUR 151.4 million (2010: EUR 128.9 million). Lutz views the current year with confidence and has plans for achieving profit in a similar dimension in 2012. He commented further that, although it is difficult to assess how the eurozone debt crisis will impact the economy, 'from today's standpoint, we assume that the development of all our business units will remain stable'. BayWa's shareholders are to have the possibility of participating in the company's success. With this in mind, a proposal will be put to the Annual General Meeting of Shareholders to pay 60 cents per share, which is 20 percent more in dividend than in 2010.

All three segments contributed to the success of the year 2011. Agriculture, Energy and Building Materials all exceeded their year-earlier EBIT. The lower grain harvest volumes triggered greater demand which caused a depletion of inventories. Producer prices remained stable which allowed trading in operating resources to expand, despite higher prices, and business with agricultural equipment to pick up momentum.

The fruit business also developed very well as, despite the high harvest volumes of dessert fruit, prices remained stable. Through the acquisition of Turners & Growers, one of the world's largest fresh fruit traders, BayWa has taken another step towards internationalising its business. 'We expect considerable contributions to profit from New Zealand in the future and greater selling opportunities for our German farmers', explained Lutz. The process of internationalisation progressed in the renewable energies business as well. With an EBIT of around EUR 27 million from this business alone, the result even marginally surpassed expectations. 'The purchase of companies in the US, the UK and Italy has broadened our basis, making us more independent of individual domestic trends', stated Lutz. He does not exclude the possibility of further acquisitions in this area and in the Agricultural Segment, although the focus will be on the consolidation of the newly acquired companies

The development of the Building Materials Segment was also pleasing: The Building Materials Business Unit almost trebled EBIT in a year-on-year comparison, thereby delivering the greatest leap forward in profit of all the business units. For the first time in quite a while, it was also able to earn its cost of capital again. The DIY & Garden Centres Business Unit also improved significantly. 'The integration of this business unit into a joint venture with Hellweg is decisive for this line of business to develop well in the BayWa Group', affirmed Lutz. The DIY and garden centres will now be able to concentrate consistently on their business under the operational management of a pure retail company.

Agriculture Segment: driver of the outstanding overall result of BayWa AG
The Group achieved revenues of EUR 4.3 billion in its Agriculture Segment in 2011 (2010: EUR 3.5 billion), which is an increase of more than 21 percent. EBIT climbed by around 22 percent to EUR 78.0 million (2010: EUR 63.9 million).

The Agricultural Trade Business Unit, with its agricultural produce and operating resources, lifted revenues by almost 20 percent to EUR 3.0 billion (2010: EUR 2.5 billion). EBIT rose by 13.5 percent to EUR 56.1 million (2010: EUR 49.4 million).

The revenue growth is mainly price induced as average harvest volumes fell short of the year-earlier levels. In addition, BayWa benefited from strong business in subsequent grain collection and storage, and an increase in the demand for fertilisers and feedstuff.

The Fruit Business Unit increased its revenues by around 26 percent to EUR 129.7 million (2010: EUR 102.8 million). EBIT advanced to EUR 4.0 million (2010: EUR 3.7 million). BayWa is a leading supplier of dessert fruit for the food retail industry and the largest supplier of organically produced pome fruit. The takeover of Turners & Growers will enable BayWa to extend its supply activities to cover the whole year due to the different harvest periods, and to benefit from the high-growth markets in Asia.

The Agricultural Equipment Business Unit generated revenues of around EUR 1.1 billion in 2011 (2010: EUR 873.3 million), achieving an increase of almost 26 percent. EBIT climbed 67 percent to EUR 18 million (2010: EUR 10.8 million). The business unit benefited from its customers' great willingness to spend on the back of farmers' improved income situation. The realignment of the Claas and AGCO/Fendt brands and the expansion of the sales territory had a positive impact.

Energy Segment: positive development due to renewable energies
The Energy Segment generated revenues of EUR 3.1 billion in 2011 (2010: EUR 2.4 billion). EBIT stood at EUR 33.4 million (2010: EUR 30.3 million). The sales increase of almost 32 percent was driven primarily by the extremely high price of oil. At the same time, these price levels dampened demand in the heating oil business which remained modest, causing margins to contract because of numerous, but low-volume orders. This is also reflected by the figures for the conventional energy business: Although the revenues from trading in heating oil, pellets, fuels and lubricants rose sharply by more than 33 percent to EUR 2.8 billion (2010: EUR 2.1 billion), EBIT declined to EUR 6.3 million (2010: EUR 9.3 million).

In contrast, the renewable energy's business developed well: Revenues increased by around 20 percent to EUR 306.0 million (2010: EUR 254.8 million), and EBIT came to EUR 27.1 million (2010: EUR 21.1 million). Revenues were boosted by organic growth as well as by acquisitions. The three segments of solar, wind and biomass all contributed to this result. 'The strategy of planning, building, operating and then selling projects has paid off. Major projects were sold in the last quarter of 2011, as planned', explained Lutz. Following modest demand in Germany, accompanied by tumbling module prices, there was a boom in solar plants and systems trading in the fourth quarter in the run-up to further curtailments of the feed-in tariffs on 1 January 2012. In December 2011 alone, 3,000 megawatts (MW) were installed in Germany, which is almost 50 percent of the 7,500 MW capacity installed in the whole year. 'We also benefited from this trend in our solar trading', said Lutz. He would welcome more reliable promotion policies to avoid strong fluctuations in the market and uncertainty on the part of customers. 'There are many factors in the energy policy which must be successful if the move towards alternative energies is to be achieved and energy production in Germany secured in the long term. Predictable promotion policies are among them', stated Lutz.

Building Materials Segment: EBIT doubles on the back of favourable economic climate and structural measures
The Building Materials Segment's revenues climbed by 8.5 percent to EUR 2.1 billion in 2011 (2010: EUR 1.9 billion). EBIT soared by almost 99 percent to EUR 36.5 million (2010: EUR 18.3 million).

The revenues of the Building Materials Business Unit were raised by 10 percent to EUR 1.5 billion in 2011 (2010: EUR 1.4 billion). Compared with the previous year, EBIT almost trebled to EUR 24.7 million (2010: EUR 8.5 million). The business unit benefited from the favourable weather conditions and brisk construction activities in the financial year ended: Building permits alone in Germany rose by 6 percent, and investment in residential construction climbed by 5.9 percent.

The DIY & Garden Centres Business Unit¹ was also positively impacted by the economic environment and healthy business in the new and refurbished centres: Revenues increased by 4.7 percent to EUR 557.1 million in 2011 (2010: EUR 532.3 million), and EBIT advanced by more than 20 percent to EUR 11.8 million (2010: EUR 9.8 million).

¹The DIY and garden centres of BayWa AG were integrated into a joint venture with the Hellweg Group with effect from 1 January 2012 and, as of this date, are recognised at equity in the financial statements. In future, they will only be disclosed through the equity result under Other Activities.