Dear Shareholders, Employees, Friends,
Another good year have gone by. Inter Cars generated sales revenue of over PLN 3.9bn and a profit of PLN 177 million, an increase by 20% in comparison to previous year. The whole Management Board is much satisfied with these above average results. We were also appreciated by the investors, which was seen in the share price, which at the end of 2014 reached the level of PLN 220.
We are growing faster than our competitors on most geographical markets. Our subsidiaries, which are located in 12 countries, are either already market leaders or will become ones in a couple of years.
Below we are presenting the main events which had influence on the result in the previous year.
Sales increase in the main segment of operations, i.e. domestic sales of automotive spare parts, grew by 11.7%. It was higher than increase of other distributors declared in the same segment, i.e. 5.3%. Data of the Central Vehicle Registry shows that vehicle fleet in 2014 grew by 3%. This means that the market of automotive spare parts and repairs in 2014 was a growing one. The average age of a car is still 11 years, which shows that we do not differ much from the average European or World age of a car, and also proves that the market environment favours the development of our Company.
Starting from the previous year we are recording increased competition in the segment of passenger cars. This situation is a result of decrease in export sales to such countries as Russia, Byelorussia and Ukraine, caused by the "Ukrainian crisis". As a result, the distributors offer most of their products on domestic market, what increases the market pressure.
The success in 2014 is mainly due to development of the product range. According to our estimates, we have the widest automotive product range in Europe. Constant development of the product range, by adding new segments, ensures Inter Cars with dynamic growth and builds potential for the future, which is best confirmed with our current results. For instance, the tyre segment. On a non-growing market, many small, monoculture distributors (specializing mostly in tyres) have more and more problems competing with fast-reacting companies, such as Inter Cars. The example of tyres and spare parts for heavy goods vehicles show that, constant analysis of market environment, modification of the strategy and determination in operations based on solid foundations of the company - efficient logistics and financial stability, speeds up the market consolidation.
Verysoon we can become an important market player in the country, and very soon also abroad, in the segments which till now were only additional business.
The average growth of foreign distribution subsidiaries is over 25%. They do not only take advantage of growth on local markets, but also win the market share from their competitors. This leads directly to strengthening the company as a market leader in the countries of Middle and Eastern Europe.
Entering other geographical marketswas a form of businessdiversification and a part of development strategy which characterized with higher increase than the increase of competitors in Western Europe.
We are much pleased with the results of all our distribution companies recorded in 2014. It is a good forecast for the coming years.
Because of further development of distribution chain, we are constantly increasing our warehousing premises. These investments build up our competitive advantage. The main investments in the coming year are: construction of the new Logistics Centre in Zakroczym, implementation of the new Warehouse Management System ("WMS") in logistics.
The Logistics Centre in Zakroczym will be launched in the middle of the next year. Investment expenditure for this purpose, this and the following year, shall reach over PLN 150 million, of which over a half shall be spent on modern inner-warehouse logistics. The system of sorters used in the new Logistics Centre is an innovation in automotive distribution industry in this part of Europe.
InterCars continues to grow and develop the main part of its “One Stop Shop” strategy, aimed at providing a comprehensive offer to garages. We started with distribution of mechanical parts, developing the product range with another goods and a wide range of advantages for the Customers. Servicing garages development support using investment and marketing contracts, the Young HR programme for young mechanics, modern training centre or the Bio-Service programme offering comprehensive waste management and disposal, are just some of the operations with which we are supporting our business environment.
Motointegrator is another project creating our competitive advantage. It is a telephone and Internet service designed for individual drivers and fleet owners, which helps to realize the purchase of automotive goods and services in repair garages, authorized by Inter Cars SA. The project is realized on the basis of almost 5,000 garages with Motointegrator Partner quality mark. Currently it is the biggest in Middle and Eastern Europe automotive programme.
Inter Cars is not only distribution of automotive parts and products, but also manufacturing operations, closely connected with the automotive industry, which increases our added value chain. Lauber, dealing in remanufacturing of automotive spare parts and components and Feber, manufacturing semi-trailers, are companies, which additionally contribute to results of Inter Cars.
Looking at the perspectives, in the whole year 2015 we are expecting an increase higher than the market, in the main product categories and expansion in assortment categories, such as tyres, spare parts for heavy goods vehicles.
The year 2015 is a very special year for our Company. We are celebrating the 25th anniversary of establishment. Iam sure that it will be an occasion of communicating very good results as well as new ideas for further development of our business in the following years.
On behalf of my own, the Management Board and staff of Inter Cars S.A., I would like to assure youthat your trust inspires and encourages us to work even harder.
Yours faithfully,
Robert Kierzek
President of the Management Board