Weak summer tyre sales drag Delticom revenues down
Traditionally, financial news from Delticom has centred on unprecedented growth and increased revenues. Not so today. The European online tyre retailer has issued a statement outlining preliminary figures for the first half of 2012, and for once the news isn’t as good as anticipated. Against what the company refers to as a “backdrop of weak summer tyre markets,” Delticom took in revenues of 193.3 million euros in the first half of 2012, a 2.5 per cent year-on-year decrease. Earnings before interest and taxes (EBIT) amounted to 13.2 million euros, down 30.9 per cent from the 19.1 million euro EBIT in the first half of last year.
Delticom says the season had already experienced a difficult start due to poor weather conditions, and this was followed by sales of summer tyres falling “significantly short of tyre trade expectations” in the second quarter. The company didn’t explore the factors behind this poor sales performance in great detail, yet noted the reasons for this market weakness go beyond just low consumer sentiment in crisis crisis-ridden European countries. Delticom says it has cut back its summer tyre stocks in recent months and now holds fewer summer tyres in stock than in preceding years.
“The European summer tyre markets are in distress,” stated Delticom co-CEO Rainer Binder. “This does not leave us unaffected. Still, Delticom’s business model has proven to be flexible and resilient. We are winning market share.” Management plans for volumes and gross margins to be higher year-on-year in the second half, on the back of “attractively priced” winter tyre stocks.
“For the months ahead, we will continue to strengthen our fulfilment capabilities even further,” added CFO Frank Schuhardt. “As a result, our earnings position will be burdened with higher fixed costs, like in the first half of the year.” Visibility for the further course of business remains very low, though, in particular with regards to the winter tyre sales in the fourth quarter. “Business has lagged behind our expectations so far,” said Schuhardt. “We have therefore decided to reduce the growth target for full-year revenues to +5 per cent. EBIT margins above 9 per cent are attainable only in the event of very favourable winter weather.”
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