Delticom increases turnover significantly
- good start for the tyre comany in new financial year
Profit for online shop: "E-commerce works after all"
Turnover tripled in first quarter / Turnover expected to increase more than four times for second quarter / Projected turnover of 30 Million DM for 2001 realistic / 4 Million DM alone in April 2001
Hanover, 06.06.2001. The Hanover-based tyre trader Delticom AG has registered strong increases in the first four month of this year. The turnover for the international wholesale and online business increased in the first quarter by 200 percent to six million DM. In 2001 Delticom will try to reach a total turnover of 30 million DM. The highest sales in the tyre sector are made in October and December. During this time about 46 percent of all tyres are sold. "We are expecting 9 million for the second quarter", explained Managing Director Rainer Binder(43). This corresponds with an increase of 340 percent in comparison to the second quarter of 2000. In July, Delticom will celebrate its second year of business.
Development above industry average
The company completed last year - its first full financial year - showing similar successes. Whilst the tyre replacement business - consumer business - announced a decrease of 10 percent for small and commercial vehicles, business was increasing at Delticom. Despite a mild winter 2000, increased petrol prices and less new vehicles registered, the newly founded company passed its own projected goal of 10 million DM by a third, earning a total of 13.4 million DM. The relation between wholesale and e-commerce is two thirds wholesale (9,7 million DM/5 million Euro), one third e-commerce (3,7 million DM/1,9 million Euro). Delticom has attained a profitable market position in the process chain between production and end-customers. Due to the concentration on core competencies in tyre trading and the efficient company processes, resulting from a thorough use of the Internet, costs were kept low. On average, four employees were working for Delticom in year 2000, the number increasing to twelve by the end of the year. Currently, Delticom has 21 employees.
Online tyre shops defy negative trend
In sharp contrast to the bad news surrounding the e-commerce sector, Delticom, the first internet tyre supplier, is making profit. Since January 2000 the company sells - with increasing success - tyres, rims and complete wheels via its online shop www.reifendirekt.de. In September the Hanover-based company went online in Austria, and from March 2001 onwards the lower-priced tyres are also available in Switzerland.
Delticom offers consumers around 40 tyre brands and more than 7000 tyre types at prices up to 25 percent lower than competitors. In addition, the company has a constantly increasing network of more than 900 tyre fitting service partners spread throughout the German-speaking area. Dr. Andreas Pruefer (38), Managing Director responsible for e-commerce wonders: "Is Delticom the only mid-sized e-business company already in the black?"
Wholesale trade basis for E-Commerce - Old Economy enables New Economy
Using its business unit International Wholesale, Delticom offers its own tyre brands supplied by well-known producers acting as a so-called virtual manufacturer, buys and sells tyres in bulk quantities and procures the range of products for Delticom's online shop. Due to these intensive international contacts and its international supplier network, Delticom is in the position to offer lower prices for its internet customers. Delticom sells its 12 own tyre brands in over 40 countries. In return, this network enables the establishment of online tyre shops in each of these countries. "It is important to know the corresponding market as closely as possible and to establish logistic bases. If you are not able to do so alone, you need the best possible partner in each market", Binder emphasized.
Positive balance - everything in the black
Delticom has no factories, machines or warehouses, and as a result low fixed costs. This coupled with the more conservative economic approach of the two managing directors - "earn the money first, spend it second" - lead to the fact that no loans were raised, all investments made have been paid for using own earnings and that the balance for the year 2000 has a plus sign in front of it.
In August 2000, the company carried out an increase in capital, resulting in an increase of own capital from eleven percent in 1999 to 70 percent in 2000. Due to the positive business results, Delticom had at year's end liquid assets of 6.7 million DM (3.4 million Euro).
With future prospects in mind, Delticom has again set up accruals for later acquisition of moulds, which being liabilities - so-called Anspar-Abschreibungen - reduce the earnings. As a result, the annual net profit increased only moderately from 2.100 DM (1.100 Euro) to 2700 DM (1.400 Euro), while profit before tax and accrued liabilities increased by 87 percent to TDM 140 (TEUR 71) and the cash flow by 162 percent to TDM 212 (TEUR 108). CFO Dr. Peter Loeschner (48) explained: "Cash flow measures the net flow of assets in the operative business and for Delticom it is the measurement of growth, by which we would like to be measured also in future."