German diversified group BayWa AG has announced impairment losses of EUR 171.5 million (USD 191.3 million) within its renewable energy business for the first half of 2024. This decline is primarily attributed to changes in valuation assumptions resulting from lower electricity price forecasts and increased capital costs.
The majority of the write-downs, totaling EUR 114.4 million, are linked to non-current assets within the independent power production (IPP) business unit, which encompasses the company's own wind and solar power plants. Impairment losses were recognized on both goodwill and non-current assets, with some of the write-downs already being factored into ongoing and planned restructuring measures aimed at optimizing BayWa r.e.'s portfolio.
“These write-downs have no negative impact on the BayWa Group's ongoing reorganization efforts and the implementation of the restructuring concept currently being developed,” the company stated.
BayWa's renewables unit reported a challenging operating performance in the first half of 2024, with revenues falling 40.6% to nearly EUR 1.81 billion, down from approximately EUR 3.05 billion in the same period last year.
Excluding impairment losses, the company experienced a loss of EUR 102.8 million during the reporting period, compared to earnings before interest and taxes (EBIT) of EUR 98.4 million in the first half of 2023. Including the impairment charges, total losses for the period are estimated at EUR 274.3 million.
The disappointing financial results were largely driven by a continued decline in the prices of solar modules and inverters, which led to negative trading margins and inventory write-downs. The IPP business unit also faced a significant drop in earnings from energy trading following the expiration of profitable short-term power purchase agreements (PPAs).
