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I have experience sourcing molds in China. It's not possible to make complex Die casting or permanent mold tooling in 2 weeks. Please do not post information you obviously know nothing about.
I live in the off-road racing world - most of us could care less If KTM and Chase win. We want a quality, dependable, competitive machine and KTM nails that. I’m more concerned about KTM as a going concern than a Win on Sat night in front of a crowd where maybe 25% even buy bikes. Sure I would hate for anyone to lose their job in racing but you have to save the ship first.
They have produced a lot of the product and now it is kinda causing a problem for them, they need to move it.
Maybe the company was already going under and KTM had to buy it to make sure that the part supply wouldn't dry up
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They should have idled the factory many moons ago. Of course the lowered guidance would have impacted the share price and dividend payments for Pierer inc. and Bajaj as they own 75% of the shares..
I'd like to know if KTM has ever really made any money over the past 10 years...even during their big years. How the eff do you get $3,000,000,000 in debt without someone getting involved and putting a stop to it long before now? That kind of debt doesn't happen overnight. Where were the auditors who review the F/S's every year? I've audited lots of companies over my career and we went over the financials with a fine tooth comb to report to the BOD's, banks and high level creditors. Their balance sheet must have looked crazy.
They built the Huoshenshan Hospital in about a week during the pandemic 🤷♂️
I would imagine the underwriters and authorities are asking the same.
Just does not add up. The debt to income ratio is insane.
Debt tripled in 2023 then doubled again in the first half of 2024, that's debt multiplied by 6 over 18 months. If this trend did continue to reach the quoted value of 3B that would be debt multiplied by 12 in 2 years.
The risks were plainly exposed in the financial reports but obviously the mitigation measures were too little too late.
Financial reports are here, have fun
https://www.pierermobility.com/en/investor-relations/publications
As mentioned in the past, other motorcycle brands use PMG companies for parts such as Rieju, Beta, and Sherco to name a few (there may be more). I know that Rieju sourced frames, swingarms, and radiators from WP in their recent history as has Beta and Sherco. It looks like Sherco has a new swingarm design for 2025 so maybe they knew something was coming and pivoted to a new design of their own. So, it appears to be possible that there now may be a potential problem for Rieju and Beta as their swingarms look like they may have been made by WMG.
It seems they went from relatively healthy to crazy very quickly. I'm not inclined to think they were terribly unhealthy a few years ago and the auditors just didn't notice. So, it would seem, they made some colossal blunders. If I had to guess (and I can't do any better than to guess), these blunders probably were made out of hubris - surely someone was advising them to be more prudent.
Any more word on which depts were affected in NA?
Just a thought:
Here in the USA, if you don't have enough money to buy an expensive house, you finance with a "balloon mortgage" expecting to have more money in the future. This allows you to pay little or no payments for an agreed term and then you have to pay it all back at once on a pre-determined date once you get more money or can re-finance the debt. The rapid acceleration of debt looks like they used the same philosophy in that they have just been rolling debt forward (via another "balloon loan" for years and finally lost the ability to get financing on their terms to continue.
edited: Balloon loans are considered sub-prime. Reminds me of 2008-2009 which is the timeframe that KTM dominance really started.
Well, someone had to approve this debt. Most companies have ceilings or debt limits that must be approved by the BOD or consulting group. And, if they were somewhat profitable prior to 2023 (although 7-9% EBIT isn't horrible, it isn't anything to write home about), why did they need to increase debt so drastically and quickly and wtf did they spend it on? Their Depreciation expense was basically the same % as their EBIT. They ain't building rocket ships over there, so they spent money on something in huge chunks.
I wouldn't worry too much, there are plenty of swingarm manufacturers in Europe in the road racing segment that can most likely step in as a partner.
The Official Letter of Engagement for the Auditing/Accounting Firm might be an interesting read?
I have little knowledge in finance but if you're curious take a look at the financial reports.
They specifically identify risks associated to significant part of the loans having variable rates. Financial liabilities also ramped up real fast. I'm not saying that's all there is to it, but that must have played a big role in this.
You have to believe it revolves around the MotoGP effort. SX/MX has been pretty linear the last 5 yrs.
Pit Row
Most eng ltrs are pretty standard reading. It would be nice to know if the outside auditors (assuming there were any) actually did an audit expressing an opinion on the accuracy of the financials or if they were only engaged in a review or compilation which doesn't express any opinion the accuracy of the financials. More likely than not it was a full blown audit every year or every other year at a minimum as required by the banks and creditors.
Here's the 2022 full report. KPMG is the auditor.
https://reports.pierermobility.com/epaper/2023/epaper-en/index.html#102
It would not. It will be basically the same engagement letter they send to all of their audit clients. They have a template and they slightly tweak it for the client.
For 2023 the entire racing program was 95M euros, including 46M euros for Grand Prix racing, it's not what turned 255M into 776M debt that year. Nor is it what added 2B debt in 2024.
I'd think it rather expensive to have 3 brands from 3 separate companies instead of one, and to have the same bike basically replicated in each brand across the whole product line seems utterly ridiculous. You're not going to sell 3 times as many bikes - if you sell more overall at all (they probably do - slightly). You're basically just going to cannibalize sales from your own brands.
So would have it not a reasonable decision to just side line the HUS and GG teams this season? KTM would still be represented and hell those other 2 brands may not survive anyway.
The really screwy thing is that given the way they've utilized those brands, they're either stuck with them or they die. Since they're utilizing KTM technology, you can't just sell them to someone else. Just a disastrous idea however you look at it to buy those brands and use them the way they did.
This is what I can't get my mind around. How did they add $2,000,000,000 in debt in 2024? And what did they spend that on?
Even if they sold off Husky and Gas Gas mx lines to stream line the company, are they even worth anything? They are basically KTM's in sheep's clothing.
Exactly. There's a reason they sold their stake in MV Augusta: Because they could. I have little doubt they would sell these brands if it were possible, but I don't see how it would be possible when they are using KTM technology.
This is prob true but mobilizing 3 different race teams each weekend for essentially the same bike doesn’t make a whole lot of sense in this situation.
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