Tag Archive | "Sales"

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HELLA SIGNIFICANTLY GROWS SALES IN FISCAL YEAR 2015/2016


HELLA_Logo_3D_Background_4C_300dpiPROMOTIONAL ARTICLE ON BEHALF OF HELLA

HELLA KGaA Hueck & Co., a globally leading supplier of lighting technology and electronic products for the automotive industry, increased Group sales by 8.9 per cent to about EUR 6.4 billion in fiscal year 2015/2016 ending on 31 May 2016 (previous year: EUR 5.8 billion). Adjusted operating earnings (EBIT) also increased by 7.1 per cent year on year from EUR 445 to EUR 476 million. The adjusted EBIT margin was 7.5 per cent (previous year: 7.6 per cent). Special items with negative impacts on earnings – which include particularly the effects of the extraordinary supplier failure in China in September 2015 – pushed EBIT down by approximately 2.3 per cent year on year from EUR 430 million to EUR 420 million. At the reporting date on 31 May 2016, HELLA had about 34,000 permanent employees, almost 5.7 per cent more than in the previous year.

“We have again grown strongly in 2015/2016 in what has been a challenging market environment,” says CEO Dr Rolf Breidenbach. “We are especially proud that HELLA could improve sales across all three segments – Automotive, Aftermarket and Special Applications. This confirms us in our belief that our focused product portfolio and our broad global footprint have put us on the road to success. We intend to continue down this route going forward.”

Sales increase across all segments – Automotive remains growth driver

The Automotive segment again recorded significant growth in fiscal year 2015/2016 on the back of new products and a strong automotive market. External segment sales grew by 10.1 per cent to EUR 4.8 billion (previous year: EUR 4.4 billion). Due to an exceptional, non-recurring charge of EUR 47 million from the failure of a Chinese supplier in September 2015, the earnings of the segment declined by EUR 11 million to EUR 343 million. Growth was driven predominantly by new product launches – including complex LED technologies, electronic systems and components for energy management, driver assistance and electronic steering. HELLA’s broad regional presence was also beneficial.

The Aftermarket segment generated robust sales growth in fiscal year 2015/2016. External segment sales increased by 5.9 per cent to EUR 1.2 billion (previous year EUR 1.1 billion). Operating earnings grew by EUR 7 million to EUR 80 million. Growth was driven mainly by the wholesale business in Denmark and Poland, the garage equipment business and the tangible recovery of the independent spare parts market in Europe.

The Special Applications segment succeeded in stabilising in spite of the still weak demand in the agriculture sector. Sales in the segment grew by 2.0 per cent to EUR 315 million (previous year EUR 308 million). EBIT declined from EUR 19 million to EUR 5 million which resulted from the operating development in the Industries and Airport Lighting sub-segments and the sale of these activities. HELLA has sold these sub-segments in May of the past fiscal year in the context of its portfolio optimisation.

Emphasis on research & development ensures technology leadership

Research & development expenditures in fiscal year 2015/2016 increased by EUR 80 million year on year to EUR 623 million or 9.8 per cent of Group sales, up from 9.3 per cent in the previous year. They resulted mainly from the development of complex innovative product generations and investments in the global development network. The number of employees working globally in research and development increased to about 6,400 in fiscal year 2015/2016. By now, almost every fifth HELLA employee works in research and development.

“Technology leadership is a key differentiator for HELLA,” says Dr Breidenbach. “The passion to innovate and investments in new technologies are integral parts of HELLA’s DNA and the cornerstone of additional global growth.” Today, HELLA‘s development activities in the lighting business focus inter alia on so-called high-definition headlights that improve visibility with several hundred thousand of lighting spots each of which can be activated individually and which result in a significantly higher resolution. In electronics, HELLA supports its clients in the development and implementation of advanced functions that correspond to global market trends including autonomous driving, connectivity and energy efficiency. HELLA continuously adds to its already extensive know-how in these areas.

Solid financing

HELLA continues to rely on its solid long-term financing as the foundation for profitable organic growth. As of 31 May 2016, the equity ratio reached 40 per cent, up one percentage point year on year from 39 per cent. Liquidity (cash and short-term fiscal assets) amounted to about EUR 914 million.

Growth also driven by international networking strategy

In addition to its core business, HELLA also follows a cooperation approach: its international networking strategy has been designed to drive growth further through partnerships with other companies in joint ventures, mainly in order to gain access to complimentary technologies, tap into new markets or client segments and benefit from economies of scale. Overall, external sales of companies recorded at equity amounted to EUR 3.3 billion, out of which EUR 1.3 billion were attributed to HELLA. The pro rata at equity result reached EUR 53 million.

Proposed dividend of EUR 0.77 per share

The management will ask the annual general meeting to approve a dividend of EUR 0.77 per share for fiscal year 2015/2016. This dividend will remain in line with the previous year in spite of the non-recurring charges. Based on 111,111,112 no par value shares, the total dividend payment would amount to EUR 86 million.

Outlook for fiscal year 2016/2017

HELLA also anticipates positive business performance in fiscal year 2016/2017. This outlook is supported by the Group’s three strategic approaches: HELLA will continue to focus strongly on building its own market position based on its significant technological know-how and innovative product solutions that cater to the key mega trends environment and energy efficiency, safety and styling and comfort. HELLA also intends to further advance its global expansion, mainly in China and North America (NAFTA) where the company has identified promising opportunities. The objective is to further strengthen HELLA‘s position as a core vendor and solutions supplier to the automotive industry. In addition, HELLA seeks to further increase its own operational excellence in the global HELLA network.

For fiscal year 2016/2017, the HELLA Group expects sales and adjusted EBIT growth in the middle single-digit percentage range and an adjusted EBIT margin that is more or less at the prior year’s level.

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HALFORD’S RETAIL PERFORMS WELL, BUT CYCLE SALES DEFLATE

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HALFORD’S RETAIL PERFORMS WELL, BUT CYCLE SALES DEFLATE


Halfords_CEO

CEO of Halfords Jill McDonald

There are mixed results for big-box retailer Halfords as it announced a small overall rise in sales across it’s accessories, consumables and technology and another small rise in servicing and parts, but a decline in cycling revenue.

Most of the rise is due to a swell in sales of child seats, which enjoyed double-digit YOY growth. Car accessories overall rose by 4.4 percent, although ‘enhancement’ products such as sat-navs fell, although this was offset by a rise in dashcam sales.

The wet first half of the year also contributed to a 2.3 percent YOY rise in wiper and bulb sales. Perhaps surprisingly given the mild conditions, the group also posted steady results from battery sales.

However, the performance of car accessories couldn’t hide the fact that sales of bikes and related parts were down. Bikes make up around a third of Halfords’ total revenue and the company blamed the wet weather for a drop in sales. “Casual cyclist don’t like the wet weather, and there is not a lot we can do about that” CEO Jill McDonald was quoted as saying by the Daily Telegraph. The company plans to give bikes a shot in the arm with a 20 percent discount in August and new ranges branded by Olympians Laura Trott and Bradley Wiggins.

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USING TECHNOLOGY TO BOOST PROFITS


Paul Black –  We all know that aftermarket deals are closed with a firm handshake and a game of golf… but is this a very old fashioned methodology?

Paul_BlackNew car registrations are up, used cars are changing hands quickly and the parts and service aftermarket is generally in rude health with the sector being worth hundreds of millions of pounds to the economy.

Nonetheless, we would be wise to remember that the sales process is for the greater part, guided by salespeople. In recent years, we’ve seen a radical (and necessary) shift in mind-set and methodology. A chap named Ken Krogue describes a technique known as ‘inside sales’ which he describes as “professional sales, done remotely or virtually.” It’s not a one-and-done script reading process conducted from a call centre: it’s about nurturing a positive, productive, and mutually beneficial business relationship – with the very real possibility that neither client nor employee will ever meet in person.

This may well sound at odds with the traditional practices of the automotive aftermarket, where face-to-face meetings have for so long been the dominant approach to sales. Nonetheless, inside sales strategies have a number of advantages over the field method. Here are just a few:

UNBURDENED SALESPEOPLE
Being a salesperson in the aftermarket is by no means an enviable position. It often involves flitting from client to client and place to place, struggling to fit meetings, admin, research, and training – amongst many other things – into an overstuffed itinerary. A lead that turns out to be a dead end can add up to hours of wasted effort.

The inside sales method is designed to minimise physical effort wherever possible (bar the great exertion of picking up the phone or using the keyboard). The idea is that, upon finding a viable prospect,the salesperson should have the time they need to prepare and strategise: they shouldn’t feel like they’re reheating a sales pitch because they’re overburdened with unprofitable tasks, and they shouldn’t feel like they’re giving undue attention to timewasters – possibly the automotive industry’s single greatest scourge.

By using technology to automate essential but time- consuming administrative work, the salesperson can concentrate on solid leads and give them the attention they deserve. Databases allow them to access fresh leads with relative ease, and with a variety of communication methods available, some analogue (there’s a lot to be said for a good old-fashioned phone call), some digital (someone out there is undoubtedly already selling via Snapchat), it’s easier to reach a wider range of customers within the automotive supply chain.

POWER TOOLS
Of course, the humble database is but one weapon in the inside salesperson’s arsenal. Using the right tools, it’s possible to take pre-emptive action.

Technology makes it possible to gain visibility into up selling and cross selling opportunities – on a macro and micro level. If a customer typically buys hubcaps and tyres together, for example, the system may recommend offering them as a package deal. If there’s a wider, seasonal trend for a certain kind of vehicle or accessory, the system will let you know how to capitalise on it.

Whether they’re attempting to begin a relationship, preserve it, or take it to the “next level”,the inside salesperson uses technology wherever they can. It’s far less awkward than the in-person hard sell – and far more effective.

LONGEVITY
We’ve all been there: someone walks up to you, shakes your hand, asks how you’re doing, how the kids are, whether or not you’re all caught up with your favourite TV shows…and you draw a total blank. You can’t connect their face to a name. All you can say is “Hello…you.”

For the average person, it’s a bit awkward. For the salesperson, it can be lethal. The face-to-face approach requires you to mentally juggle faces, names, preferences, habits, and inside jokes. You have to know milestones and data points: when a customer likes to buy; when they don’t like to be bothered; how many kids they have and how old they are. Building customer loyalty quite literally depends on it – especially for a small dealership, where larger, predatory competitors tend to siphon most new business.

The inside salesperson uses technology to sustain long-term relationships. A good CRM will be able to provide quick, convenient access to vital information about existing and potential customers: behaviours, preferences, and more. If customer X buys tyres for their car every winter, you’ll have the opportunity to offer them better rates and add-ons, thereby giving them an incentive to keep buying from you. If Customer Y doesn’t respond to texts, but enthusiastically buys brake fluid and engine oil after mid – afternoon phone calls, you’ll be able to act on this information.

The field methodology survives – albeit in diminished form – because the sales profession is historically technophobic and a little self-romanticising. Deals have always been secured with a drink and a handshake. Why mess with a winning formula?

It’s true that the human touch is still important. Inside sales isn’t going to change that. Modern consumers, however, are a little different, and they expect a little more. They’re technologically equipped, they do independent research, and they see no need to meet you in person if they don’t have to. They’re suspicious of rehearsed, artificial sales pitches: they appreciate a little care and personalisation. Inside sales, when augmented by the right technology, is one of the most reliable ways to provide it.

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ECONOMIES OF SCALE


Neil Pattemore The giant factors are beginning to specialise – are there any business lessons from this?

Neil Pattemore

NEIL PATTEMORE
Business analyst at XEN Consultancy for the aftermarket

You may have noticed in last month’s magazine that there has been a spate of acquisitions in the parts distribution sector recently.

Andrew Page has acquired Solid Auto, whose reputation for sourcing hard to find parts and expertise in Japanese and Korean vehicles is well renowned and provides an obvious expansion to the range and expertise of Andrew Page’s portfolio. Page also added 21 sites from the collapsed Unipart Automotive in July 2014.

Elsewhere, The Parts Alliance has bought SAS Autoparts, who have several branches in the Leeds area as another of the parts groups expands still further.

There are several ‘levels’ in terms of the size and of the international trading profile of the various companies, including the U.S. car parts giant LKQ Corp (owners of ECP) acquiring Italy’s Rhiag Group from private equity firm Apax Partners LLP, through to Equistone Partners Europe SAS (a private investment company) acquiring control of French car parts maker Mecaplast Group, all the way up to the German giant ZF acquiring the international TRW Automotive Holdings Corporation. So why this rash of recent take –overs? What’s the big attraction and what’s in it for the smaller parts distributors?

SCALE
Perhaps the obvious answer is the economies of scale which occur not only for the enlarged organisation being able to benefit from the synergies of reduced internal costs, but also to their suppliers who can benefit from reduced customer numbers whilst maintaining, or even increasing their supply volumes. All this should lead to the enlarged organisation benefiting from increased profits, increased competitiveness or lower prices to their customers.

It can also create brand differentiations, as is the case with the acquisition of Solid Auto. Being able to expand the range of products available, especially when there is a niche or high level of
knowledge and expertise involved, can create added value to the wider product range on offer. This can in turn help protect a product or service from the competition and encourage loyalty.

As companies grow in size, they can become more difficult to challenge as they acquire even greater abilities to fight their competitors on a variety of issues, such as price or choice of products. However, conversely, big is not always best and smaller, more ‘nimble’ businesses can often provide an excellent local service tailored to the needs of their specific customers.

Equally, with the increased buying and distribution volumes, larger organisations can defend their market share more aggressively against not only existing competitors, but also as a barrier to new entrants to the market. This becomes especially important in the international arena where global competitors serving a global market are using acquisition and consolidation to gain a competitive advantage.

As distributors get larger, they can also start to exert increased pressure on suppliers to achieve better control of distribution channels to achieve some form of ‘exclusivity’ of product or ‘preferred supplier’ status – either way gaining an advantage over their competitors.

However, as companies consolidate and get ever larger, there comes a point where the legislator or regulator becomes interested to ensure that a monopoly situation is not created. In the parts
distribution sector, this may be a difficult issue to address, as there are both high-level supplier agreement elements, as well as the highly fragmented local issue of competition at the point of delivery to a workshop.

COMPETITION
This is where the real day-to-day competition exists, as workshops are interested in the key elements of parts distribution – the right part at the right price at the right time. Local distributors certainly understand their local market requirements and can deliver in every sense of the word, but unless they belong to a larger buying group, they may struggle to compete on price. Perhaps this is where the key issue comes to light – not just having the right stock on the shelf, but being able to buy this stock at the right price.

This leads into another developing part of the sector – on-line selling of replacement parts. This appears to be an attractive proposal to some parts suppliers, but has the fundamental risk of alienating their own trade customer base, whilst creating the problem of consumers buying products at lower prices, but still needing a workshop to fit them – creating conflicts of interest and potential liability issues for both the parts supplier and workshop. Not exactly a win- win situation.

That isn’t to say that smaller businesses should not have a consumer-facing an internet presence, but remember that the ‘net these days means far more than just having an erratically updated web page.
Instead, forming an all- encompassing social media outlook is the way to do it – just remember that it takes resource to keep it going.

So at the higher level, it makes sense to look at acquisitions or mergers and the advantages this will bring, but at the level of supporting the local workshop, small may well remain a distinct advantage for some time to come – discuss!

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