Insolvency filed

How KTM explains the billions in debt

From the road to success to the crash pilot: KTM AG filed for insolvency.

(Bild: AFP)

More than 3600 employees are affected, more than 2500 creditors, the mountain of debt more than two billion euros high - the insolvency filing of KTM AG and two companies shows the extent of the financial difficulties of the motorcycle manufacturer from Mattighofen (Upper Austria). This is how the company explains its problems.

At 2.66 billion euros, Pierer Mobility AG, the parent company of KTM AG, had reported a profit of 9.2 percent for the previous year. Earnings after tax showed a profit of 76.4 million euros, which was more than half that of 2022 - the figures published by the motorcycle manufacturer at the end of March 2024 gave no indication that the company would be a restructuring case eight months later, even if net debt had already skyrocketed at the time.

Now that the insolvency applications for KTM AG, KTM Components GmbH and KTM Forschungs & Entwicklungs GmbH have been filed, the figures have been on the table since Friday afternoon: more than 3,600 employees are affected by the insolvency of the three companies, as well as more than 2,500 creditors and the mountain of debt is more than two billion euros high, and is even estimated by experts to be up to three billion euros.

In the insolvency petitions, KTM explains the reasons for the difficulties and also how it came to have such high debts. Until the end of 2023, production and sales volumes had been steadily increasing, which was also due to the fact that sales to external authorized dealers were growing. However, they were already unable to sell the hoped-for quantities of motorcycles in 2023.

Around 250,000 motorcycles sold this year
Around 250,000 motorcycles have been sold so far this year, which KTM classifies as a good year, as reported by Kreditschutzverband 1870. However, the stock level is proving to be too high, at around 130,000 motorcycles, which ties up an enormous amount of capital. The weakening demand in the USA in particular is said to have had an impact here. On the other hand, the high production costs in Austria are cited.

In mid-November, the company therefore began to examine whether an out-of-court restructuring was possible. This would have required 650 million euros in fresh money, interim financing for KTM AG. Talks with key stakeholders apparently could not be realized within the short deadline, so the decision was made to file for insolvency.

KTM Components GmbH and KTM Forschungs & Entwicklungs GmbH, as companies directly affiliated with KTM, are directly affected by the insolvency, which is why a petition for restructuring proceedings with self-administration was also filed for them.