Despite Q1 revenue drop, Delticom maintains H1 growth projection
Revenues at online tyre retailer Delticom fell 4.9 per cent year-on-year in the first quarter of 2013 to 81.3 million euros, the company reports. Delticom suggests this drop in sales is linked to many motorists’ decision to delay purchasing summer tyres due to the persistent snowfall experienced in many parts of Germany and elsewhere right through to the end of March.
Within the company’s core E-Commerce division, revenues were down 4.2 per cent year-on-year to 77.5 million euros, while the drop in sales generated through the B2B wholesale business reached 17.0 per cent, to 3.8 million euros. “On the back of sluggish sales, many dealers were evidently not yet willing to fully replenish their stocks for the upcoming summer tyre business,” Delticom commented. “As a result of the difficult market climate, sales in B2B- E-Commerce were down substantially year on year in the first quarter of 2013.”
Delticom says that in order to achieve sales targets it “continues to offer its customers more attractive prices”. This has led to gross margin decreasing from 25.8 per cent to 24.9 per cent, while the cost of goods sold decreased 3.7 per cent in the reporting period to 61.1 million euros. EBIT fell 25.9 per cent year-on-year to 2.5 million euros; this occurred despite a 122 per cent increase in other operating income, up to 1.5 million euros.
The company’s outlook for the first half of 2013 is nevertheless positive; the second quarter’s focus on summer tyre sales leads Delticom to expect year-on-year growth of up to ten per cent in its core E-Commerce segment. Assuming a satisfactory course of business for the full year, Delticom believes it should be able to exceed the previous year’s revenues. Management anticipates company growth will once again “clearly outperform” the industry as a whole in 2013, regardless of broader sector developments.
Commenting on Delticom’s figures, DB Equity Research Automotive analysts said the company’s 4.9 per cent decline in revenues was “probably a decent outperformance versus the market” but conceded they “lack data to quantify” this assessment. The analysts, however, believe Delticom’s drop in revenues to be “less than the comparison to the German sell-out market would suggest”, a figure they give as circa 40 to 50 per cent. And although the second quarter could see a more condensed summer tyre season taking place, the analysts “regard the higher end of Delticom’s guidance as very ambitious as it would require 20 per cent revenue growth despite lower prices.”