Mifa said it has incurred a prospective net loss for the year 2013 of around €15 million. The company, which is Germany's largest bike manufacturer, attributed the loss to a failure to meet sales forecasts. The company added that it incorrectly recorded inventory levels while introducing a new accounting system in the second quarter of 2013, leading to an underestimation of inventory costs.
Since Mifa does not conduct inventory-taking during the course of the year, the company failed to identify the erroneous bookings until the preparation of its annual financial statements.
The preliminary loss for financial 2013 is said to have no impact on the company's operating performance. The company expects to break even at the after-tax level in the first quarter of 2014.
In the same announcement, Mifa also said that it has signed a letter of intent to sell a stake to India's Hero Cycles for €15 million. Hero is the world's largest bike manufacturer in terms of revenues. Besides an equity investment, the strategic partnership between the two firms will include extensive cooperation in the purchasing and product purchasing areas, especially in the case of e-bikes. Legally binding agreements are expected to be finalized over the next few weeks.
In addition, Mifa's supervisory board appointed Hans-Peter Barth with immediate effect, and, initially, until the year-end, as a new member of the management board, with responsibility for finance and administration. Barth will also take over the responsibilities of former director Peter Wicht, who is currently unavailable due to illness, until further notice. Barth is a certified accountant and has held management board functions in the past at auditing and consulting companies.
