Foreign markets still have the potential for growth

 

ROBERT KIERZEK: We are pleased with the sales results for the 1H 2016. In Poland we reached an increase of 23%, and foreign daughter companies went up by 42%.  The forecast for the 2H is also good.  The favourable factor is surely the increase of import of used cars.  This year a record number is sure to be reached - one million imported cars.  The sale of new vehicles is also growing. 

 

JM: How do you manage to keep such growth? 

 

RK: First of all we are constantly working on development of our distribution chain.  Currently there are 215 branches in Poland, of which almost 30 were open in 1H, and almost double the number abroad.  In total we have over 400 branches, and the chain is still growing.  These activities will be bringing results in the second half of the year.  Our share in domestic market of automotive spare parts for passenger cars – in reference to data published by Association of Distributors and Manufacturers of Automotive Spare Parts – we estimate at the level of approx. 20 %. But it is not satisfactory for us; we are aiming this share to grow systematically.   That is why it is so important for us to increase sales and not leave too much space for development of competition.  We want to use effectively our distribution and logistics advantage by the scale of our activities. 

 

JM: Will the high rate of sales growth be reflected in reported results? 

 

RK: We are sure that this year's results will be better than in 2015. Weak 4Q resulting from increase of logistics costs arising from intensive development and not precise enough allocation of marketing costs had negative influence on last year's results.  We quickly jumped into conclusions of the situation and those mistakes shall not be made again.  This year, all the quarters will be working for the results equally. 

 

JM: Your business is developing much faster overseas than in Poland.  Which markets show the biggest potential for growth? 

 

RK: The share of export in revenue for 2015 amounted to 38% and is still growing.  This is mainly a result of sales growth in foreign branches, which this year shall reach at least 40%.  At home, despite relatively high base and “mature” market, we are still growing fast, and we are growing in all segments.  In foreign branches the base is still much lower, that is why the rate of growth is much bigger.  Regarding the volume of trade, the second biggest market, after Poland, is Romanian one.  Another important market for us is Lithuania.  In other countries, where we are running our business activities, the sales reached approx. PLN 70-90m. An exception is emerging markets of Slovenia and Italy, where the turnover was lower.  In none of the markets we have said our last word and we can still see the potential for dynamic growth outside Poland. 

 

JM: The Central European spare parts distribution market is systematically growing. Which categories of products are the most important regarding potential for growth? 

 

RK: Our business is not only distribution of spare parts for passenger cars and trucks. Our portfolio of products include also tyres, after-crash repair parts, spare parts for motorcycles, tools and devices belonging to group of garage equipment.  In different countries the share of those segments in total sales is different.  We want to develop those segments equally abroad, just like in Poland.  Heavy goods vehicles are an extensive area for dynamic growth.  In many markets, the share of truck parts in total sales is much smaller than in Poland. 

 

JM: What is the phase of development of the key investment in Logistics Centre in Zakroczym?  When will it start working? 

 

RK: Currently we are running internal tests of logistic systems, in December we are planning first deliveries to be replenished.  The new centre is to reach its full operating capacity in January-February 2017. Costs of the investment, within the two-year period shall reach almost PLN 180m.  It is worth mentioning that ultra-modern logistics inside the warehouse, based on sorter system, was designed and delivered by a German company - Beumer, and many constructional solutions were created together with specialists from ILS.  Thanks to this investment the total warehousing area of the Group will increase from current 127.5 thousand sq.m to 165.5 thousand sq.m in 2017. 

 

The investment in Zakroczym is not the only logistics investment this year.  We are also preparing to open three regional warehouses in Pruszcz Gdański, Szczecin and Lublin, mainly for mass goods, such as tyres, batteries or oils, which will help to take the load off the central logistics.  We are also planning to open a regional distribution centre in Budapest at the end of 2016.  We assume that modern, efficient and effective logistics, combined with developed distribution chain is the key point for further development of the Group in Poland and abroad. 

 

JM: Are you planning any bigger expenditure on development in the nearest future? 

 

RK: Next year we are not planning any bigger expenditure regarding investments.  We are constantly developing our distribution chain in Poland and in other countries.  And this shall be the biggest number in costs.  We assume that opening one distribution outlet is the cost of approx. PLN 1m, of which the biggest share is stock replenishment. 

 

source: Parkiet
18.08.2016