Bad times for KTM. Although the company is a sales leader in Europe, your financial situation is critical. The increase in its net debt, of more than 3,000 million euros, has pushed the company to close its factory in Austria, as well as to face non-payment of the salaries of its workers.
Closures begin. This past Friday, the KTM factory in Mattighofen closed. This is expected to happen this week, but the process has been brought forward. Pierer Industries, parent company behind KTM, Husqvarna, MV Augusta and GasGas, among others, declared bankruptcy from the company on November 29, ensuring that stock will not be manufactured again until March.
Unpaid workers and many layoffs. The closure, which translates into 750 layoffs, leaves salaries up in the air. The Austrian Chamber of Workers recognized that the company “is apparently not in a position to make the promised transfers.”
The company hopes to be able to make payments “normally” starting next January, but non-payments on these critical dates call into question what will be done in the near future.
In order to reduce costs, the company moved part of its production to Asia and India, starting a wave of layoffs that is far from over. In total, since the restructuring plans began, layoffs have reached close to 10% of the workforce.
Viktor Sigl, financial director of Pierer Mobility, explained that manufacturing a motorcycle is about 30% more expensive in Europe than in Asia.
“Over the last three decades, we have grown to become the largest motorcycle manufacturer in Europe. With our products we inspire millions of motorcyclists around the world. Now it’s time to make a pit stop to prepare for the future. The KTM brand is my life’s work, and I will fight for it.” Stefan PiererCEO of KTM AG
A debt that seems unpayable. KTM’s debt has grown unstoppably in recent years. This amounts to more than 3,000 million euros, with an accumulation of stock of more than 100,000 unsold motorcycles.
The expansion of factories to conquer emerging markets, investment in new models, reduction in global demand and overproduction problems are some of the factors that have led to this crisis. KTM sells a lot, but the operating margin does not depend solely on sales.
Big restructuring. KTM’s restructuring comes hand in hand with a significant number of layoffs. The first meeting of creditors will be held on December 20 and the general audit hearing on January 24, 2025.
These are decisive dates, in which the restructuring plan will finally be voted on on February 25.
Nothing changes for customers. According to KTM, nothing will change for the buyers of its motorcycles. The company guarantees the supply of motorcycles, spare parts and accessories under normal conditions, indicating that the restructuring is necessary to “adapt the company to current market demand”, but that in no case will they disappear.
The company already has important renovations prepared in its Duke and Adventure families, and faces 2025 as a year of key changes for its continuity.