On Friday, KTM AG will submit an application for restructuring proceedings with self-administration. The parent company Pierer Mobility announced this on Tuesday afternoon. The subsidiaries KTM Components and KTM R&E will also file for bankruptcy.
This means that KTM and its boss Stefan Pierer have not managed to secure the necessary cash injection. As reported, there were discussions with core shareholders and creditors about a three-digit million amount. The company reports: “KTM AG’s financing needs currently amount to a high three-digit million amount. Management is now not assuming that it will be possible to secure the necessary interim financing in a timely manner.”
“Pierer’s empire is wavering,” says Florian Beckermann, head of the investor association (IVA): “The restructuring with self-administration for the subsidiary KTM will not leave Pierer Mobility unscathed.” At the same time, the announced European restructuring process was opened at Pierer Industrie AG , which involves extending bond debts over time, as reported by the creditor protection associations KSV1870 and AKV.
“The big picture is at stake,” says Beckermann. The Pierer Mobility share price fell by around 29 percent on Tuesday.
With KTM, a large, prominent company is struggling because of global challenges and domestic failures, says Gerhard Weinhofer, head of the creditor protection association Creditreform: “This has to be a wake-up call for politicians to make companies more crisis-proof.” Of course, certain management errors always played a role.
Pierer Mobility is around 1.5 billion euros in debt, and motorbikes and bicycles worth almost a billion euros are in stock.
Pierer says: “We have grown into Europe’s largest motorcycle manufacturer over the last three decades. We inspire millions of motorcyclists around the world with our products. Now we’re making a pit stop for the future. The KTM brand is my life’s work and I’m fighting for it.”
The restructuring process with self-administration (instead of without) provides the opportunity to continue to manage the assets under supervision and to restructure the KTM Group independently, it is said. All other subsidiaries, in particular all sales companies, are not affected by this.
Massive loss this year
The aim of the procedure is to agree a restructuring plan with the creditors within 90 days. “By resizing the group, the aim is not only to secure the existence of the KTM Group, but also to create the basis for coming out of the process stronger,” says Pierer Mobility.
Production is to be massively reduced in order to reduce overfull warehouses. “This will result in a reduction in operating performance at the Austrian locations totaling more than one billion euros in 2025 and 2026,” it says.
Image: VOLKER WEIHBOLD
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Image: VOLKER WEIHBOLD
The restructuring process therefore results in additional loss potential, for example due to one-off expenses such as devaluations and costs for employee reductions as well as the undercoverage of fixed costs due to the reduced operating performance and other costs that arise as a result of the restructuring process.
The company therefore expects a negative annual result “in the very high three-digit million range” for the current 2024 financial year.
According to Pierer Mobility, around 3,670 people are employed in the three companies that are filing for bankruptcy. KTM does not pay the wages and salaries for November or the Christmas bonus; the insolvency compensation fund steps in here. Chamber of Labor President Andreas Stangl advises: “Under no circumstances should you end your employment relationship hastily. This could result in claims being lost.” There will be company meetings from Monday.
The restructuring plan will show what happens next with the number of employees. Most recently it was said that up to 300 more jobs would be lost. The amount of assets and liabilities will not be known until Friday.
Since September 2024, Gottfried Neumeister has been co-chief executive officer of KTM AG. He “brought a lot of fresh air and made a significant contribution to dealing with the current situation. I am convinced that, together with me, he will lead the company back on the road to success,” says Pierer.
“We build our motorcycles reliably and robustly for every race, for every surface. Now it’s about making the company robust,” says Neumeister.
