Amid all the EICMA flutter, releasing new models and showing off concept bikes, other news came out: KTM’s financial troubles are reaching crisis point.
KTM has apparently been having money problems since its partnership with MV Agusta; the first serious signs of trouble came last fall, when KTM’s parent company, Pierer AG, announced major cuts to its Euro workforce, moving jobs abroad. KTM’s position at the time was that mainly menial work was lost in the factory, so it didn’t amount to much.
But the cuts continued; the factory rally motorsport team, the most dominant team in motor racing history, saw stars like Toby Price without contract extensions and young talents like Mason Klein find themselves without the contracts they thought were secured. In MotoGP, the focus was again placed 100% on KTM and the GASGAS activities were canceled in all racing classes
As 2024 progressed, KTM’s stock price continued to decline and the company announced further financial difficulties and consequently additional reorganizations. Stefan Pierer attributes the situation to the global economic situation, the sharply increased interest rates and the large stock of engines at dealers.
Just before the EICMA, Pierer announced that he had reduced the Board of Directors of Pierer Mobility AG from 6 to 2 people, and then the EICMA came with a somewhat disorganized presentation. Perhaps they were not fully up to date due to budget cuts? Makes sense, because a few days later Pierer AG posted this on their website:
PIERER Mobility AG: Major restructuring and additional liquidity needs at KTM AG
As part of the liquidity planning for the 2025 financial year, PIERER Mobility AG must cover additional liquidity needs at the level of KTM AG. As of June 30, 2024, the KTM AG group was responsible for more than 95% of PIERER Mobility AG’s revenues.
The Board of Directors is currently working to secure financing for KTM AG, in particular a bridge financing in the order of three-digit million. To this end, discussions are being held with core shareholder Pierer Bajaj AG and with existing financial creditors. The aim is to conclude a standstill agreement with the relevant financial creditors for the duration of these discussions as a basis for the financial restructuring.
Negotiations and discussions are currently at an early stage. It is therefore not yet possible to make concrete statements about the outcome of the negotiations, the conditions and the extent of additional financing.
In addition to securing liquidity, the Board of Directors is committed to putting KTM AG back on a stable operational and financial basis. Against the backdrop of a challenging economic environment, an even more far-reaching operational restructuring is being implemented with the aim of reducing inventories at both KTM AG and the dealers to an economically sustainable level by significantly reducing production volumes. In addition, overhead costs must again be significantly reduced.
The aim is to stabilize costs and sales at a redefined level from the 2025 financial year and thus lay the foundation for a sustainable competitive position and profitability.
Pierer explained to the Austrian business publication Oberösterreichische Nachrichten what steps will be taken to significantly reduce production volumes. KTM appears to want to completely halt production during the first two months of 2025, which will have major consequences for approximately 1,000 employees, in addition to the previously announced rounds of layoffs if the shift system is canceled.
The situation in Mattighofen apparently looks even darker than we thought. Basically what it means is that Pierer AG is running out of money and KTM is their only real productive asset. Husqvarna and GasGas only seem to cost money. We wouldn’t be surprised if Bajaj takes a majority stake in KTM soon and Pierer is sidelined.
– Thanks for information from Motorfreaks.