In the third quarter, the company generated revenues of € 129 million (2016: € 117 million, +9.8%). Delticom Group thus reported revenues of € 426 million in the first nine months of the current financial year. This corresponds to a year-on-year increase of 8.5% (9M 16: € 393 million). In its core business – online tire retailing in Europe – Delticom Group increased revenues as planned in 9M17. In the USA, the growth trend of the first half of the year was continued in Q3. The positive development in the new eFood and Logistics Services divisions as well as in the used car trade also contributed to the increase in group revenues over the nine-month period.
Earnings before interest, taxes, depreciation and amortization (EBITDA) at the end of the first nine months were on a par with the previous year. In order to encourage motorists to buy new winter tires at an early stage, Delticom began offering more attractive prices as early as September.
Market experts believe that sales of replacement passenger car tires from retailers to consumers were down slightly again in Germany in the first nine months of the current fiscal year at -1%. The revenue growth achieved by Delticom in its core business not only underscores the steadily increasing online acceptance among motorists, but also the high level of e-commerce expertise of the Hanover-based company. Although experts believe that internet penetration for tires in the USA is still significantly lower than in Europe, more and more motorists there are also discovering the advantages of buying tires online. Thanks to the conversion to a new store system and increased multi-channel marketing, Delticom is increasingly tapping into new customer groups in the USA and accordingly recorded a significant year-on-year increase in revenues in the first nine months of the current fiscal year.
In September of this year, Delticom’s expertise in online retail and automotive was confirmed by consumers: ReifenDirekt.de landed in the top 3 in the automotive accessories category in a major survey conducted by the German news channel n-tv and the German Institute for Service Quality (DISQ), making it the winner of the “Germany’s Best Online Shops 2017” award.
Delticom’s customers will continue to benefit from comprehensive service offerings in the future. In order to make buying tires even easier and more convenient for them, the company has already been successfully relying on the assembly partnership concept for many years. With the aim of linking the offline and online worlds even more closely, Delticom has developed the MobileMech franchise concept for mobile tire and car service and handed over the first vehicles to selected German franchisees in October. By the end of the year, regional coverage in this country is to be further increased thanks to additional partners.
With AutoPink, a French-based online provider of used cars, Delticom completed its automotive product range in November last year by acquiring the key assets. At branches or at the customer’s home, selected experts inspect the vehicle on the basis of information previously provided online by the customer and then prepare a purchase offer. AutoPink’s network of branches was expanded to around 20 in France in the first nine months of the current fiscal year. Customers benefit from a comprehensive and free evaluation of the vehicles by the car experts as well as fair and market-oriented purchase prices.
Delticom’s expertise in small parts logistics is also impressive: the company already successfully operates the online store alnatura-shop.de on behalf of its customer Alnatura. Since August 1 of this year, DeltiLog GmbH (formerly ES Food GmbH, a 100% subsidiary of Delticom AG) has also been handling the cost-efficient shipping of the dry goods assortment of Bünting’s online grocer Mytime.
Gourmondo, the online store for delicatessen, fine foods, wine and high-quality food, further increased its sales year-on-year in the first nine months of 2017. This shows that awareness of high-quality food is becoming increasingly widespread among the Internet-savvy clientele. In preparation for Christmas, and thus for the weeks of the year with the highest sales, the selection of gourmet foods and spirits on Gourmondo was additionally expanded.
Business in the fourth quarter
October 2017 was one of the ten warmest October months across Germany since the start of nationwide temperature records in 1881. In the second decade, a strong high-pressure area ensured unusually warm temperatures across Germany, with temperatures locally reaching 28 degrees Celsius (°C). It was not until the end of the month that a change in the weather brought cooler temperatures again across the country. Initial estimates say that October 2017 sales of replacement passenger tires from retailers to consumers in Germany were just over 10% lower than last year. Last year, temperatures in this country already dipped into the freezing range at night in some areas during the final days of the first half of the month. (Source: German Weather Service, DWD). Thanks to active pricing in its online stores, the Delticom group was nevertheless able to revive its winter tyre business and increase its revenues in October compared to the previous year.
Although there has been no snowfall in Germany so far, even in the event of a mild winter, we will very likely exceed our originally forecast full-year revenue target of €650 million (2016 revenue: €606.6 million). The ongoing consolidation effect continues to weigh on price levels in the European tire trade. Should the snow stimulus largely fail to materialize this year, further price measures may become necessary in the coming weeks in line with market developments. Attainment of our full-year EBITDA forecast of €16 million is therefore subject to a certain degree of uncertainty at the present time. This results both from the weather trend, which cannot be forecast until the end of the year, and from the unclear development of the market, prices and volumes. These four influencing factors – weather, market, price and volume – can only be assigned probabilities with a high degree of susceptibility to error. Accordingly, the extent to which any additional sales will be sufficient to offset a possible cost and margin effect cannot be estimated at present.
Delticom AG is an e-commerce company operating primarily in Europe and the USA, with expertise in setting up and operating online stores, acquiring Internet customers, Internet marketing, setting up partner networks and sophisticated and highly efficient goods picking and delivery logistics.
Delticom AG is a leader in the online distribution of tires and automotive accessories. The online used car trade and eFood round off the product range. Delticom has extensive experience in international store design and many years of expertise in cross-border e-commerce. In addition to design, its expertise also includes the provision of product descriptions and extensive customer service in the local language. The establishment of efficient warehousing and logistics processes are not only used in tire retailing, online used car sales and e-food business, but are also offered to third parties as a service.
Since its founding in 1999, the Hanover, Germany-based company has built up extensive expertise in the design of efficient and fully system-integrated ordering and logistics processes. The company’s own warehouses, including a fully automated small parts warehouse, are among its key assets.
In 2016, Delticom AG generated revenues of more than €600 million and achieved EBITA of €15.1 million. The e-commerce specialist operates more than 430 online stores and sales platforms in 71 countries and serves over 11.4 million customers. In the tire business alone, the product range for private and business customers comprises more than 100 brands and over 25,000 models of tires for cars, motorcycles, trucks, commercial vehicles and buses, as well as complete wheels. Customers can also have the ordered products sent to one of Delticom AG’s more than 43,000 service partners worldwide for fitting.
More than 300,000 car parts and accessories, including engine oils, snow chains and batteries, round off the range. Delticom’s entry into the online used car trade completes the company’s offering in the automotive segment. As a result, Delticom AG has evolved from a traditional online retailer to an online solutions provider in this area. In the eFood segment, Delticom AG offers a comprehensive range of around 20,000 different food products.
On the Internet at: www.delti.com