Just after I finished the video about this there was an officiall announceemt.
Details at the end.
Amidst all the fanfare and a big pile of new models at Eicma, there is another story still emerging about KTM and the seemingly doomed Pierer Mobility Group the story is constantly evolving but you asked me what the latest was and its not good.
I have been trying to piece together the news around the KTM group and each day brings a new revelation it seems.
From court cases shrouded in mystery to accusations of insider trading and the blocking of a Bajaj group rescue package with Red Bull being called in to bolster the finances, the news is not good at all from KTM.
So, where to start?
Before this month had even begun there had been over 300 job losses in Austria this year, and the financial death spiral had continued until shares were at an all time low of just 4 Euros per share.
We got the news that KTM were seeking in the three-digit millions of Euro’s in financing and were reducing inventories even further, and reducing the number of bikes built to clear dealer stock.
Prices on bikes at dealers were at ridiculous discounts to try and clear stock and dealers were on their knees.
Then we heard that Bajaj, might not being allowed to increase its shares
Speculation is that Mateschitz joined the Upper Austrian fire equipment supplier Rosenbauer together with Pierer Industries to retain a 50.1% shareholding which led to speculation that the Robau consortium headed by Mateschitz could put together a rescue package.
It was announced by Pierer Mobility that a decline in revenues across all the brands of the KTM AG group and the segments they operate in, saw the Pierer Mobility Groups share price fall by 27 per cent just in the first half of the 2024 financial year.
This amounted to an operating loss of just under € 200 million Euro’s at the time, so that figure could easily have doubled by now.
At this point another 300 staff were laid off and there was a major Board restructuring. Leaving Steffan Pierer in sole control of the board with his closest ally.
Then KTM made a statement to the financial markets indicating that the forecast rebound had not happened.
The Statement Read.
“The difficult macroeconomic conditions are lasting longer than expected.
“The second half of the year at PIERER Mobility is generally characterized by a high-margin product mix, especially in the offroad segment. However, the available registration data for the overall motorcycle market in the USA shows a decline of 6.3% from January to September 2024 with September’s decline up to a massive 14.6%, meaning that a rapid recovery cannot be expected.”
further destocking remains an important objective. However, PIERER Mobility remains clearly committed to supporting dealers and suppliers as a strategic partner in these difficult times.”
The balance sheet restructuring will be completed in 2024. This will involve an additional extraordinary impairment requirement that is higher than originally assumed.”
“The reduction of the cost structure in the core business will result in a reduction in the headcount and the consolidation of all R&D activities for the Group brands”
“As a result of these circumstances, PIERER Mobility will fall short of expectations in terms of revenue and earnings, as well as with regard to the reduction in working capital and net debt in the current financial year, and is revoking its guidance for the 2024 financial year.”
“In the course of the reorientation of PIERER Mobility, the Executive Board of the listed holding company will be reduced from six to two members: Stefan Pierer (CEO) and Gottfried Neumeister (Co-CEO).”
Steffan Pierer was clinging onto his last grip of power in the company and he was holding on facing a grim death.
Then we began to get a wider picture and heard that PIERER Mobility AG were seeking a standstill agreement & bridged financing agreement for the whole KTM AG group, so KTM, Husky, Gas Gas and MV Agusta.
Then on November 12th , PIERER Mobility AG issued another update to financial markets that the company was working to secure financing “in the three-digit million € range” and that the Executive Board was in discussions with core shareholder Pierer Bajaj AG, and existing financial creditors, for a standstill agreement for the duration of these discussions.
This corporate gobbledigook was their way of saying we are broke, badly broke, and this was the basis for the financial restructuring.
So either PMG have been rebranded or a new company Pierer Bajaj AG has been set up within the existing corporate web.
To hide what you might ask?
More Information
All this, at a time when there is a court case happening that I am simply not able to tell you about. There is a gagging order in place while the case is heard and I am in no doubt that there will be a non disclosure agreement when it is done, but it is happening, and KTM have already been found to have lied directly to the judge.
Sadly, for now, that is all I can say.
In his Fight for Survival Amid Massive Cash Crunch and Brutal Job Cuts Steffan Pierer announced that KTM are in urgent need of upwards of a staggering nine-figure sum to prevent the collapse of the entire company.
As a major part of the Pierer Mobility Group, KTM faces an economic nightmare, with swift and aggressive restructuring measures as it tries to tackle the drop in demand across key markets in the United States and Europe.
In another statement it was revealed KTM were scrambling to secure financing, negotiating with shareholders and creditors to shore up its cash flow and stabilize operations, and KTM’s parent company Pierer Mobility is still relying on the bikes for 95% of its annual revenue.
In short, the cash KTM needs isn’t just a buffer; it’s a lifeline for the brand’s continued existence.
Painful Restructuring
KTM’s remedy? An even more painful restructuring plan.
With a ballooning inventory clogging up dealerships and sales falling off a cliff, KTM has slashed production, aiming to align production costs and sales in an effort to balance the books,
KTM began the year by cutting over 300 jobs, but the lay-offs didn’t stop there. August brought more grim news, with an additional 200 employees given their notice.
Yet these cuts are just the tip of the iceberg, as another 300 lay-offs are to follow.
That will push KTM’s total job cuts to a staggering 800 people thrown out in the trash in this year alone.
They call this restructuring, but it is reshaping KTM’s production model at its core.
The company’s Austrian factory will work on a single-shift operation, directly impacting roughly 1,000 production-line workers, and the misery continues.
KTM then announced a complete production pause for January and February 2025, as part of the move to cut its inventory to a more manageable level.
So, we have a complete stop to production in Austria for at least January and February.
Employees caught in this production freeze will retain a pay-check, but only after they agreed to a reduced 30-hour working week in an agreement hammered out between KTM and workers representatives.
CEO Steffan Pierer said it was a “Necessary Pause” to Control KTM’s Overloaded Inventory. He went on to say that “these drastic steps will help KTM’s inventory levels sync up with realistic market demand, which has nose-dived from expectations.”
Then we just got piles of corporate waffle.
But then the latest news gets interesting,
Contradictions And Insider Trading
To prevent Bajaj from getting more shares it was announced that KTM is now “working” with red bull to get more cash and that talks have been underway for a week now.
The e-bike catastrophe was a huge money burning project and they are now giving e-bikes away for free to the employee and friends because the costs for storage are so huge that they worked out it was cheaper to just give the bikes away free to the employees.
After we got the message that red bull could step in, the stock price went up 15%.
The whole day the stock was on massive buy with only one big sell at the end of the day, so someone made a lot of money.
It does all point to insider trading and market manipulation as you can see from the stories in the pictures.
Pic 1 and 2
In what seems like the dying throes of a wounded animal, now we get another announcement. All KTM approved reporting in the magazines. You can see the infighting in the slides.
One ex KTM board member says “we (KTM) are destroying the brand ourself”,
another ex KTM board member says “he won’t let his life’s work be destroyed”.
So we have war with shareholders, a possible rescue package from Bajaj on the table, but a desperate Steffan Pierer trying to use Red Bull cash, or anyone else’s, to stay in a position of control, while the dying pieces of the once great KTM empire crumbles into ruins beneath him.
I have no doubts the KTM name will survive in some form, but in what form that is is anyone’s guess right now.
Both Red Bull and Bajaj Group have much to loose, so it is likely that they will be a part of the solution, but in my humble opinion, Until Steffan Pierer goes there will be a cloud over the company which has lost the trust of its core customers.
What that means for Husqvarna, Gas Gas and MV Agusta is anyone’s guess right now.
What do you think the future holds for KTM and the Pierer Mobility Group?
Latest News
The day after I published the video, Pierer Mobility Group posted official notice that KTM were going into administration.
I will find out what I can and keep you informed.