The dynamic development of the company’s sales chain is beginning to bear fruit.
Amid increasing unease at the Warsaw Stock Exchange, the stocks of Inter Cars SA – Poland’s biggest automotive spare parts distributor – have increased by nearly 50 per cent, from PLN 84 at the beginning of the year, to the current PLN 124. Last time the company’s stocks were worth this much was nearly six years ago, at the dusk of the memorable boom of 2003-2007. It looks like investors are beginning to appreciate the efforts of the company’s management resulting in improved financial results. And they expect the favourable trend to continue in the years to come.
| Poland’s biggest automotive spare parts distributor is doing increasingly better each year. 2012 has been the company’s best year in history in terms of sales revenues, which went up 9 per cent to reach PLN 3 b. By contrast, in 2006 the group’s sales amounted to PLN 1 billion. | |
It looks like in terms of sales results this year is going to be equally successful. During the first 5 months of the year, the company’s total sales increased by 12 per cent, reaching PLN 1.3 b. Inter Cars owes the growth to the dynamic increase in the sales generated by its overseas subsidiaries. Between January and May, their revenues soared by 22.5 per cent year-to-year, compared to 11.5 per cent recorded in Poland. The Polish market still accounts for 70 per cent of the group’s total sales; however, its share has been gradually decreasing.
Inter Cars has been developing its sales chain outside Poland in order to become independent of the situation on the domestic market. The company believes the Romanian market to be the most prospective (being the company’s second most important market after Poland), but it has high hopes connected with Ukraine as well. Inter Cars estimates that by 2017 the sales of its overseas subsidiaries will account for 50% of the company’s total spare parts sales.
Encouraged by the good sales results in April and May, Inter Cars expects the 2013 domestic market revenues to increase by at least 7 per cent, and believes that its foreign subsidiaries will keep their sales growth at no less than 20 per cent.
Inter Cars is trying to increase its profit margin by implementing a programme entitled “Efficient Purchasing,” expected to translate into higher discounts from suppliers. The company is also working on improving its logistics and stock management (e.g. the company’s logistics has been transferred to a new entity by the name of ILS). In this case, the company is also aiming at increasing its profitability.
Despite a margin decline anticipated this year due to a market downturn, a gradual improvement is expected to start at the beginning of Q2, due to a more favourable discount policy introduced by the company’s suppliers, and a reversal in market trends throughout the region anticipated in the second quarter of the year.
According to DM IDMSA’s forecasts, in 2013 Inter Cars will generate a net profit of PLN 129 m – compared to PLN 100 m last year. The operating profit is expected to grow to PLN 178 m, compared to PLN 146 m in 2013, while the revenue is anticipated to increase to PLN 3.23 b from PLN 3 b last year. An improvement is forecasted also by analysts of Trigon DM, who expect a PLN 122 m net profit at sales revenues of PLN 3.3 b. In turn, Ipopema Securities analysts said at the beginning of the year that in 2013 the net result would be PLN 121 m, with sales reaching PLN 3.17 b.
“The near future looks very promising. The sales of motor vehicle spare parts are stable, and it appears that the number of cars in Poland will increase in the years to come,” says Krzysztof Kuper of Ipopema Securities.
According to Kuper, as people buy more and more advanced cars, the unit cost of spare parts will increase. “Inter Cars boasts the most effective logistics in the market, making it an unquestionable leader with regard to the range of spare parts it offers and their availability. In addition, the company has been expanding its operations in Central and Eastern Europe, where, in many cases, it is the leading distributor, and, consequently, the leader in the entire region” – says Kuper.
Over the past several weeks, the company’s index has exceeded the target prices quoted in this year’s recommendations. -jacek.mysior@parkiet.com
Inter Cars is the leader in the domestic market of new spare parts supplied to independent garages. According to the data provided by the Automotive Parts Distributors Association, this market segment comprises 50 per cent of the entire automotive spare parts market in Poland. Despite consolidation processes (e.g. in 2008 Inter Cars acquired JC Auto), the Polish automotive spare parts distribution market is dominated by smaller companies.
Inter cars accounts for 20 per cent of the passenger cars spare parts market, followed by Fota, AD Polska, Group Auto Union Polska. The biggest spare parts distribution companies in the utility cars market are Opoltrans, Suder & Suder, Autos and Inter Cars -- holding 10 per cent of the market share. But from the point of view of the company’s results, the passenger cars market is more important as it accounts for 80 per cent of the entire automotive spare parts market. Inter Cars has set itself an ambitious goal of a creating a strong and dominant distribution chain in Poland, and at the same time aims at marking its presence in Europe by acquiring other distribution and logistics companies. The company’s ultimate goal is to hold 25-30 per cent of the market share. Inter Cars has been developing its sales chain mainly in Central and Eastern Europe (Czech Republic, Slovakia, Ukraine, Hungary, Croatia, Romania, Lithuania, Latvia and Bulgaria). Last year, the company began building a sales network in Italy (Europe’s largest automotive market), and plans further expansion. According to the management board, in 2013 Inter Cars is expected to start its operations in Slovenia.. -jim
Strengths
- Leading position in Poland and dominant position in Central and Eastern Europe.
- Diversified sales markets.
- A share in the purchasing group ATR (access to cheaper goods).
- Broad range of easily available products.
- Strong and predictable management.
Weaknesses
- Impact of the economic situation on the demand for spare parts, translating into poorer financial results.
- Seasonality of sales.
- Risk of negative exchange rates differences.
Opportunities
- Improvement of the economic situation in markets throughout the region starting in Q2.
- A big growth potential of markets throughout the region.
- Favourable changes to regulations (guaranteed access to spare parts of comparable quality)
Threats
- Unfavourable changes to foreign exchange rates.
- Risk related to the market being penetrated by large automotive spare parts wholesalers.
- Possibility of changes to regulations limiting imports of used cars.
| Inter Cars’s index has been on a slow increase since may 2010. In mid January the prices began to rise and have continued to do so until present. In mid May they went above the level of PLN 110 marked by the previous boom, which can be interpreted as a potential buy signal, confirmed by the directional movement index – directional indicator +DI crossed up through – DI, while Adx began to grow.
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The company’s shares went up 2.8 per cent to PLN 123.9 yesterday midday. They are expected to reach PLN 130 in the near future, and in the long run, even as much as PLN 173. The nearest support zone that should prevent potential changes stretches between PLN 111.5 and 108. The growth will remain unthreatened as long as the price stays above the trend line, currently PLN 87. -pz
source: parkiet.com and Parkiet Warszawa 12-06-13
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