Ladies and Gentlemen,
Another successful year has gone by. As an organisation, we have met our targets, not only being able to keep our leading position in Poland in the passenger cars and truck segments, but also consistently expanding in other markets where we are present. In the Europe, Inter Cars has maintained an excellent second position and can boast seventh place worldwide.
The Inter Cars Group generated record results, with sales revenues of over PLN 15 billion (EUR 3.2 billion) and a record consolidated net profit of PLN 745 million.
In 2021, the battle was about overcoming the effects of the pandemic. In 2022, it was about facing unrest and upheaval caused primarily by the Russian hostilities against Ukraine. The war conflict gradually turned into an economic and energy crisis. Despite this, distributors of parts successfully avoided the dangers of shortages, supply chain disruptions and irregular supplies to ultimately achieve better results in the following year.
In 2022, we successfully continued with our strategy and mission "Together we create, support and deliver". Our customers are well aware that we have the most comprehensive range of parts on the market and the same day delivery service. We are constantly working to strengthen our competitive advantages by also showing customers the tangible benefits of solutions we offer to help in the day-to-day running of their car garages, and our activities are based on a strategy of sustainable development.
We can still see room for growth in the year ahead, primarily in the organic development of the segments in each country. Developing on the basis of segmented strategies gives us the agility and flexibility to manage the business and increases our competitiveness, resulting in recording higher sales growth in many countries compared to local competitors.
We are developing modern electronic tools necessary for the efficient running of the spare parts sales and assembly business. In the Polish market, we are increasingly implementing Inter Cars e-catalogue, a comprehensive tool without which it is difficult to imagine the work of a modern garage. The application is gaining new functionalities month by month, thanks to which it is used by an increasing number of our customers.
For years, we have been building a company based on values in the social and economic areas. The partnership that is strongly emphasised in our organisational culture is most fully manifested in the franchise system, which we have successfully implemented since the company's establishment and which has allowed us to build such a strong market position. At the end of 2022, we were present in 19 countries across Europe with ground sales using branches. Globally, we export our products to over 30 countries.
Yet another challenges are still ahead of us. The entire automotive industry will need to re-examine its business model to prepare for the change that is coming: electrification and 'connectivity', of course. This will require a review of existing business models and the search for new ways to monetise opportunities as new market trends emerge.
Until now, the independent market has been able to rely on a slow turnover of the vehicle fleet over many years, allowing it to assimilate changes in technology and customer behaviour. It seems that the situation is becoming more and more dynamic, particularly for manufacturers of new vehicles and parts, who do not have as much time at their disposal for the first time in their history, primarily due to the planned ban on the sale of cars with combustion engines as of 2035.
Independent distributors, in our opinion, still have more time to adapt to the upcoming changes Primarily because of the time required to adapt the vehicle fleet in Europe, which currently stands at almost 360 million cars, of which 75% is older than five years, with the average age of vehicles in Europe being approx. 13 years. In addition, there are constraints on the development of electro mobility due to the lack of preparation of infrastructure, e.g. charger networks, despite the ambitious targets proclaimed by some countries. This market inertia means a slow transition towards electro-mobility for our industry.
To sum up, with a favourable market environment for our industry, we are assuming that this situation will continue in the coming years, and the automotive parts distribution industry appears to be a safe harbour.
In the near future, geographical expansion will not be our priority. We are concentrating on the markets on which we are already present and we want to strengthen our leadership position in each segment there. Our business management strategy, through specialisation within selected areas, improves speed and translates into greater flexibility and thus more efficient implementation of segment strategies. At the same time, this allows us to achieve synergies not only in terms of costs, but also in terms of revenue through cross-selling our products. In 2023, we plan to open more than a dozen new subsidiaries in the countries in which we operate. In Poland, we will focus on the development of our logistics infrastructure, in particular the expansion of the central warehouse in Zakroczym and robotisation of logistics processes at home and abroad.
From the perspective of the "automotive aftermarket", the year 2023 promises to be optimistic; we assume a further upward trend. Problems with availability of new cars, high demand for parts in garages resulting from accumulation of savings by families during the pandemic and realisation of expenses postponed during the pandemic - all this is working in our favour. In most countries, we are growing faster than our competitors, which is possible due to advantages resulting from our vast product range and availability of parts.
Further development of the conflict in Ukraine is an element of uncertainty, in addition to high inflation in the region and increasing cost of doing business, which forces business owners to seek savings and reduce investment. This results in a tendency to extend the life of vehicles owned by current owners. We are therefore seeing an increasing demand for parts and, consequently, an improvement in our sales dynamics.
The way we do business is as important to us as its scope. We are placing an increasing emphasis on ESG issues. In 2022, we launched a review of our sustainability strategy. We want to prepare the Group for upcoming regulatory changes, such as the European Green Deal, while enabling us to deliver on our ambitious commitments in all three areas - environmental, social and governance. We involve our stakeholders in this process, and it is overseen by key executives.
We are also observing an increase in expectations for sustainable, environmentally friendly products and services, particularly noticeable among the younger generation. The transformation of the automotive industry is fundamental to achieving the goals of the Paris Agreement. We realize this fact and, while we strive to minimise the company's negative impact on the environment, we are constantly setting ourselves new and even more ambitious targets. We are aiming for climate neutrality and the new ESG strategy will define the company's decarbonisation targets.
As an integral part of the ESG strategy, we are taking initiatives to remanufacture used parts. For years, we have been proving to drivers and mechanics that a properly remanufactured part is just as good as a new one. I am pleased that our activities in this area are attracting increasing interest. Remanufacturing means less waste, less use of raw materials and energy - the benefits for the environment, the economy and consumers are numerous, and we can give parts a 'second life'. We have therefore launched the Inter Cars Marketplace platform, which enables our verified partners to offer used (second-hand) spare parts for sale.
I am also pleased that the public recognises our commitment to ESG issues. This is evidenced by the prestigious awards we have been granted - such as the CSR Leaf from the Polityka magazine and the title of a Climate Aware Company, which we treat as confirmation that we have chosen the right direction.
Although our company is growing steadily, it retains the character of a family business in which relationships are the most important. We are open, we promote direct contact and the exchange of experience, and we foster a culture of open discussion, which is a source of inspiration and new ideas. I believe that the constant professional development for employees is an indispensable condition for the company's development. In our industry, the saying "to stand still is to move backwards" takes on particular meaning. We also take care of our relations with the environment - for years we have been gaining the trust of commercial and institutional partners and thanks to this we have maintained our credibility.
Our social commitment - is also the activity of the Inter Cars Foundation, which last year ran interesting programmes for young people, developing the necessary qualifications and teaching them responsibility for the environment. These included the 'Accelerator' scholarship programme, 'Clean River Operation' and the 'Be.Eco' educational project. Several thousand students and teachers took part in these projects. Thanks to the foundation, we can use the skills we have for the benefit of society and bring about lasting, positive change. A detailed description of the activities of the Inter Cars Foundation is presented in one of the chapters of the sustainability report. I am aware of the importance of reliable and transparent reporting in this area.
Our aim remains the ambition to grow faster than the market and in each of the countries in which we operate. This is the business direction for the coming years. I would also very much like us to continue to cultivate a partnership approach to business - with our employees, suppliers and other stakeholders. I am sure that dialogue, honesty and trust are the foundations on which even the most powerful building will stand and survive. Without them, there would be no Inter Cars as we know it.
Therefore, on behalf of myself, the Management Board and the entire team of Inter Cars Capital Group Employees, I would like to thank our Customers and Partners for their cooperation, and our Stakeholders for their trust and motivation, which drives us every day to act effectively.
Respectfully yours,
Maciej Oleksowicz
President of Inter Cars S.A.