For Delticom 2011 was again a successful year. According to preliminary figures, revenues in the fiscal year increased by 14.4% to € 480.0 million and EBIT by 9.6% to € 52.2 million. Earnings per share grew 8.4% to € 2.99.
The harsh 2010 winter had resulted in a superior business performance for the European tyre trade. Last season, though, the business was hurt by very mild winter weather conditions. At present, industry experts believe that winter tyre sales have dropped substantially below prior-year levels.
After taking the new warehouse into operations in Q211, Delticom stocked up ahead of the season. As a result, the company was able to offer attractive prices to its customers throughout the fourth quarter. Despite the very strong base, Delticom sold more tyres than in Q410. Quarterly revenues increased by 12.1% to € 182.3 million (Q410: € 162.6 million).
While the 2010 winter had seen massive price hikes driven by market-wide scarcities, Q411 prices developed in a more orderly fashion, as expected. Consequently, gross margin (trade margin ex other operating expenses) retracted to a less inflated 28.4% (Q410: 30.6%). The Q411 EBIT margin came in at 13.2% (Q410: 15.2%).
Fiscal year 2011
Over the course of the year, selling prices developed favourably, the mix was stable and volumes were fairly satisfactory. All in all, Delticom was able to generate revenues of € 480.0 million, a plus of 14.4% from prior-year’s € 419.6 million. Revenues in the E-Commerce division were up year-on-year by 12.9%, from € 403.7 million to € 455.6 million. The revenues of the Wholesale division lifted by 53.4% to € 24.4 million, after prior-year revenues of € 15.9 million.
The cost of goods sold increased in the reporting period by 16.3%, from € 300.1 million in 2010 to € 349.1 million. Delticom generated 2011 a greater share of revenues with own inventories, compared to the previous years. In an environment of rising purchasing prices, the company was therefore able to cushion the hikes by early purchasing to a good extent. Thanks to the increased volume Delticom also benefited from economies of scale in the procurement function. Still, the full-year gross margin came down from 28.5% to 27.3%, primarily due to the closing winter quarter.
EBIT improved from € 47.6 million by 9.6% to € 52.2 million. Due to the extraordinarily margin-strong closing quarter 2010, the management had expected a deterioration of year-on-year profitability for 2011. In the end, the EBIT margin showed only minor decline from 11.3% to 10.9%. The continually low Euro money market rates led to flat financial income of € 0.1 million. This was balanced by almost the same amount of financial expenses arising from provisions as well as interest costs for the short-term utilisation of credit lines.
Outlook
Over the preceding months, economists have gradually revised growth estimates for Europe. The general expectation is that austerity measures and rising unemployment is going to depress consumer sentiment further. Industry experts believe that the European tyre trade will not remain unaffected.
Independent of those short-term developments, the share of online sales in the tyre market continues to be comparatively low. More and more drivers are turning to the Internet in search of lower-priced alternatives. Delticom as the leading online tyre dealer will be able to capitalise on this trend. Even for a scenario where market and weather do not improve over 2011, Delticom management regards a revenue growth of 10% as achievable. Assuming margins at prior-year levels, earnings should grow in line with revenues.
The full report for the fiscal year 2011 will be published on 22 March 2012 within the “Investor Relations“ section of the website www.delti.com