KTM in financial trouble, and announces restructuring.

Big Orange A.K.A KTM, the Austrian Giant has been flooding the NZ market, and in fact the world with motorcycles for years. They have been known to force motorcycle stock down the pipeline from the factory, to the distributor, to the dealer like theyre force feeding a python. The issue now is all the warehouses around the world are full, the markets are saturated with new unsold bikes, and the factory needs money.

A couple of days ago they came clean to the media with a press release, declairing them selves to be "Insolvent Due to Financial Crisis" and announced a major restructue.

From the press release:

(November 26, 2024) KTM AG, a wholly owned subsidiary of PIERER Mobility AG, will apply for the initiation of judicial restructuring proceedings with self-administration on November 29, 2024. The financing requirements of KTM AG currently amount to a high three-digit million figure. The management now does not expect to be able to secure the necessary interim financing in time.

The Executive Board of KTM AG therefore decided today to file the application for the initiation of judicial restructuring proceedings with self-administration over the assets of KTM AG and its subsidiaries KTM Components GmbH and KTM F&E GmbH. The proceedings give the opportunity to continue to manage the assets under supervision and to reorganize the KTM Group independently. All other subsidiaries of KTM AG, in particular all sales companies, are not affected.

The aim of the proceedings is to agree a reorganization plan with the creditors within 90 days. Redimensioning the group should not only secure the continued existence of the KTM Group in the long term, but also create the basis for emerging stronger from the proceeding.

A redimensioning of production should lead to a gradual adjustment in excess stock at KTM and its dealers over the next two years. This will result in a reduction in operating performance at the Austrian sites totalling over EUR 1 billion in the years 2025 and 2026.

The restructuring process will result in additional potential losses, for example due to one-off expenses such as necessary write-downs (e.g., for capitalized development costs) and costs for staff reductions as well as the shortfall in fixed costs due to the reduced operating performance and other costs arising from the restructuring process.

“Over the past three decades, we have grown to become Europe’s largest motorcycle manufacturer,” said Stefan Pierer, CEO of KTM AG. “We inspire millions of motorcycle riders around the world with our products. Now we are taking a pit stop for the future. The KTM brand is my life’s work, and I will fight for it.

“Gottfried Neumeister has brought impressive experience and a breath of fresh air and has made a significant contribution to addressing the current situation. I am convinced that together we will get the company back on track for success.”

“The enthusiasm of our employees is our most important competitive advantage,” said Gottfried Neumeister, co-CEO of KTM AG. “Their passion is the reason why KTM is globally synonymous with peak performance. We build our motorcycles reliably and robustly for every race, for every terrain. Now it’s about making the company robust. Robust for the future. So that we can quickly focus again on what we do best: building the coolest motorcycles in the world.”