In a surprising turn of events, the Munich-based agricultural trader and conglomerate BayWa has informed its shareholders that it does not intend to pay out a dividend for the past fiscal year. Although the company's operating business delivered solid results, high interest rates and tax burdens significantly dented the group's earnings, prompting the board to take the drastic step of suspending dividend distribution in order to strengthen the company's equity base.

This decision caused a sharp drop in BayWa AG's share price: After the start of trading on Friday, the share fell by up to 7 percent but was later able to reduce losses to around 3.5 percent. This decline accentuates the stock's downward trend, which has already fallen by more than 11 percent since the beginning of the year and by almost 30 percent over the last twelve months.

For the year 2022, BayWa had distributed a dividend of 1.10 euros per share plus a special dividend of 10 cents. Although analysts and investors had expected a cut, they had anticipated a payout of 44 cents per share for the past year.

The corporation, which was originally mainly active in the agricultural sector, has diversified its business in recent years and is now also engaged in building materials trade and particularly in the renewable energy sector. Yet the general economic situation, characterized by falling prices for raw materials, operating resources, building materials, along with rising interest rates and high inflation, has weighed on BayWa's performance. After the first nine months of the year 2023, the group even reported losses.

Despite this, CEO Marcus Pöllinger remained optimistic in November, particularly with regard to pending sales of projects in the alternative energy sector for the last quarter. With over 24,000 employees and an annual turnover of 27 billion euros, as well as a profit of 168 million euros in 2022, BayWa represents a significant player in its markets. The final business figures for 2023 will be published on March 28 as planned.