Delticom increases revenues in 2013, but bottom line shrinks again

Consolidated net income at online tyre dealer Delticom has decreased for the second consecutive year, falling 47.9 per cent year-on-year to €11.6 million for 2013. This is 67.8 per cent lower than the 15-year old company’s best ever net income of €36.0 million, which it achieved in 2011. Nevertheless, upon releasing its 2013 Annual Report the company defended this result by claiming its business model “has once again proven its resilience” and that Delticom ran a profitable business last year despite an “adverse” market environment.

During the course of last year, more than a million people made purchases through portals operated by Delticom and by its September 2013 acquisition, Tirendo. These gave revenues of €505.5 million, a 10.8 per cent increase over 2012. Delticom notes that as in previous years, revenue growth was predominantly driven by an increasing willingness among customers to buy online. The company’s core E-Commerce segment revenues came in at €493.1 million, up 11.7 per cent year-on-year.

EBITDA for the reporting period dropped 37.2 per cent to €22.2 million. EBIT amounted to €17.8 million, 45.3 per cent lower than a year earlier. This equates to an EBIT margin of 3.5 per cent, down from 7.1 per cent in 2012. Depreciations on intangible assets identified as part of the Tirendo takeover burdened EBIT by €1.5 million in the period under review. The € –6.9 million EBIT generated by Tirendo from the 16 September 2013 acquisition date reduced Group EBIT even further.

Had the takeover of Tirendo not taken place last year, Delticom would have generated revenues of €484.8 million (2012: €456.4 million) and an EBIT of €26.3 million (2012: €32.6 million), reflecting an 5.4 per cent EBIT margin, compared with 7.1 per cent in the previous year.

Q4 2013

After a decline in the European tyre replacement business in the first nine months, the winter tyre business failed to pull off the hoped for turnaround at the end of the year. Despite the mild winter weather, Delticom succeeded in increasing sales 11.7 per cent year-on-year in the final quarter, to €196.5 million. Of this amount, €17.8 million came through Tirendo.

Fourth quarter EBIT saw a decline of 46.2 per cent to € 8.1 million, or 4.1 per cent of revenues (Q4 2012: 8.6 per cent). Tirendo’s EBIT in the fourth quarter was € –5.8 million. Excluding both Tirendo and all expenses and depreciations incurred in connection with the takeover and also those extraordinary expenses incurred in the ‘old’ company, Delticom would have achieved €15.1 million of EBIT in the final 2013, 2.2 per cent less than the €15.4 million reached in the fourth quarter of 2012. In relation to fourth-quarter revenues of €178.6 million (excluding Tirendo, Q4 2012: €175.9 million), Delticom achieved an 8.4 per cent EBIT margin before extraordinary expenses in the fourth quarter, as opposed to 8.8 per cent a year earlier.

Outlook

Revenues are expected to increase by ten per cent in the 2014 financial year, even if market and weather conditions do not improve compared with last year. In terms of overall earnings before interest, tax, depreciation and amortisation (EBITDA), Delticom aims to be at least on par with the financial year 2013.

Key 2013 figures. Source: Delticom AG