EANS-News: Delticom publishes preliminary figures for FY 2012

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Financial Figures/Balance Sheet

23 January 2013 - For Delticom (German Securities Code
(WKN) 514680, ISIN DE0005146807, stock market symbol DEX), Europe's leading online tyre dealer, 2012 was a challenging year. In a difficult market environment the company generated revenues of EUR 456.4 million, according to today's preliminary figures (2011: EUR 480.0 million). EBIT amounted to EUR 32.5 million (2011: EUR 52.9 million). Earnings per share were EUR 1.86 (2011: EUR 3.04).

Q4 12: Successful quarter despite poor market conditions

During the first nine months of 2012 the European tyre trade showed growing signs of a cyclical downturn. Weak tyre demand in the final quarter confirmed the trend. As a result, industry experts indicate that winter tyre sales disappointed in 2012, dropping below the already weak 2011 levels.

This did not leave Delticom's Q4 12 business with commercial customers unaffected. Both B2B sales in the E-Commerce division as well as wholesale revenues shrunk double-digit. Total quarterly revenues amounted to EUR 175.9 million (Q4 11: EUR 182.3 million, -3.5 %). Due to robust sales to end-customers, divisional E-Commerce revenues for Q4 12 stood at EUR 172.7 million, only slightly below last year (Q4 11: EUR 176.5 million, -2.1 %).

In an environment characterised by mild winter conditions and increasing competitive pressure, Delticom was yet again able to grow its business with private end-customers (B2C). More than 80 % of the revenues in the E-Commerce division came from B2C sales. The company was therefore able to at least partially insulate itself from the overall weak market conditions.

In order to increase volume Delticom had to offer more attractive prices for its customers. According to the German tyre trade association (BRV), selling prices for winter tyres had to be reduced by a few percentage and thus forfeiting profits, as weak demand met fully stocked warehouses. Consequently, Delticom's Q4 12 gross margin (trade margin ex other operating expenses) of 25.0 % came in significantly lower than in the prior-year period (Q4 11: 28.8 %). This was compounded by the planned increase in fixed costs, resulting in a Q4 12 EBIT margin of 8.5 % (Q4 11: 13.6 %).

Fiscal year 2012

Revenues

Across all divisions, Delticom was able to generate revenues of EUR 456.4 million, 4.9 % less than prior-year's EUR 480.0 million. Due to the difficult market conditions, sales in the more cyclical business segments decreased significantly. Wholesale revenues for 2012 collapsed by 38.6 % to EUR 15.0 million, after prior-year revenues of EUR 24.4 million.

Also in the E-Commerce segment with commercial customers (B2B) revenues came under significant pressure. Thanks to the stable sales to our private end customers (B2C) the total sales in the E-Commerce segment only came down by 3.1 % from EUR 455.6 million in 2011 to EUR 441.4 million. The divisional share of group revenues amounted to 96.7 %, compared to 94.9 % in the previous year.

First estimates of the BRV point to a 10,1 % decline in the German tyre trade for 2012. Against this trend, Delticom was able to increase sales in its core B2C E-Commerce business, helping the company to outperform the general tyre market significantly.

Gross margin

The cost of goods sold decreased in the reporting period by 2.7 %, from EUR 348.4 million in 2011 to EUR 338.9 million. Due to the sluggish demand for summer and winter tyres in Europe, the full-year gross margin came down from 27.4 % to 25.7 %.

Other operating income

Other operating profit decreased by -54.9 % to EUR 3.8 million (2011: EUR 8.3 million). This was mainly due to lower exchange rate gains in the order of EUR 1.6 million (2011: EUR 6.3 million). FX losses have to be accounted for as line item in the other operating expenses. For the period under review, the balance of FX income and losses totalled EUR -2.2 million or -0.5 % of revenues. In 2011 the balance had been EUR 0.5 million (0.1 % of revenues). Altogether, the gross profit shrunk in the reporting period by 13.4 % year-on-year, from EUR 139.9 million to EUR 121.2 million.

Personnel expenses

In the reporting period on average 144 staff members were employed at Delticom (2011: 116). The reason for this increase was the buildup of qualified staff for our warehouse facility opened in 2011. Personnel expenses amounted to EUR 8.8 million (previous year: EUR 7.2 million). This equates to a personnel expenses ratio (staff expenditures as percentage of revenues) of 1.9 % (2011: 1.5 %).

Other operating expenses

Overall the other operating expenses for the past financial year totalled EUR 77.2 million, a decrease of 0.6 % over the prior-year value of EUR 77.7 million.

Among the other operating expenses, transportation costs is the largest line item. It registered a slight step-up by 2.0 %, from EUR 37.4 million to EUR 38.2 million. The share of transportation costs against revenues went up from 7.8 % in 2011 to 8.4 % in 2012.

Due to the expansion of warehouse capacity, rents and overheads increased by 25.8 %, from EUR 4.9 million to EUR 6.2 million. Stocking costs came in at EUR 3.6 million, 30.0 % lower than prior-year's EUR 5.1 million. This was mainly due to taking qualified temporary workers on the payroll.

According to marketing plans, Delticom spent in Q4 12 with 2.6 % of revenues slightly more on customer acquisition than in the previous year (Q4 11: 2.3 %). For the reporting period as a whole, advertising costs totalled EUR 11.3 million. This equates to a ratio of marketing expenses to revenues of 2.5 % (2011: EUR 10.0 million or 2.1 %).

Depreciation

In line with our gradual warehouse capacity expansion and the parallel investments into warehousing infrastructure, depreciation rose by 28.0 % from EUR 2.1 million in 2011 to EUR 2.7 million. The low absolute level of depreciation underlines the low capital intensity of Delticom's business.

Earnings performance

For 2012 Delticom was able to achieve an EBIT of EUR 32.5 million. The drop of 38.6 % from previous year's EUR 52.9 million was primarily due to a lower gross margin, higher fixed costs and negative FX effects. The EBIT margin was 7.1 % (2011: 11.0 %).

Financial income for the reporting period amounted to EUR 45 thousand (2011: EUR 128 thousand). On the back of higher funding needs for inventories financial expenses increased to EUR 182 thousand (2011: EUR 127 thousand), leading to a financial result of EUR -137 thousand (2011: EUR 0 thousand).

The expenditure for income taxes was EUR 10.3 million (previous year: EUR 16.9 million). The tax rate was 31.8 % (2011: 32.0 %). Consolidated net income for 2012 decreased from EUR 36.0 million to EUR 22.1 million. This corresponds to earnings per share (EPS) of EUR 1.86 (undiluted, 2011: EUR 3.04).

Working capital

Among the current assets, inventories is the biggest line item. Stock value at year end amounted to EUR 74.1 million or 47.4 % of assets (31.12.2011: EUR 106.5 million, 64.0 %). Over the course of the year inventories have therefore been reduced down by EUR 32.4 million. In the corresponding prior-year period the inventory value had increased by EUR 54.3 million. The company is well positioned for the upcoming summer business.

Accounts payable increased from EUR 68.2 million by EUR 6.6 million or 9.6 % to EUR 74.8 million (31.12.2011: EUR 68.2 million). Taken together with accounts receivable of EUR 9.6 million (31.12.2011: EUR 10.1 million), the net working capital on 31.12.2012 amounted to EUR 3.2 million (31.12.2011: EUR 44.4 million).

Cash flow and liquidity position

Due to the favourable working capital development, the 2012 cash flow from ordinary business activities (operating cash flow) of EUR 62.2 million was significantly better than in the comparison period (2011: EUR -9.6 million).

The majority of racks, forklifts and packaging machines for the new warehouse were purchased in 2011. Last year's investments into property, plant and equipment have therefore been only EUR 1.1 million (2011: EUR 8.5 million).

In the reporting period, Delticom recorded a cash flow from financing activities amounting to EUR -37.1 million, thereof the dividend payout for the last financial year of EUR -34.9 million and disbursements due to redemption of loans of EUR -0.9 million. The balance of utilisation and redemption of short-term credit lines was EUR -1.2 million.

Liquidity (cash and cash equivalents plus liquidity reserve) as of 31.12.2012 totalled EUR 46.2 million (31.12.2011: EUR 22.2 million). The company's net cash position (liquidity less liabilities from current accounts) amounted to EUR 43.9 million (31.12.2011: EUR 17.8 million).

Outlook

Consensus among economists sees the economic headwinds in the Eurozone to persist in 2013. Increasing unemployment figures as well as the uncertainty stemming from the European debt crises should continue to burden European consumer sentiment.

Experts from the tyre industry are in disagreement as to whether the European replacement tyre dealers are able to show growth in the coming months, and if yes to which extent. At this point in time, Delticom does not have enough visibility to supply a reliable quantitative guidance for the sales and earnings development for the full year 2013.

Independent of those short-term developments, the share of online sales in the tyre market continues to be comparatively low. More and more drivers are turning to the Internet in search of lower-priced alternatives. Delticom as the leading online tyre dealer will be able to capitalise on this trend.

The full report for the fiscal year 2012 will be published on 21 March 2013 within the "Investor Relations" section of the website www.delti.com.

Company profile:

Delticom, Europe's leading online tyre retailer, was founded in Hanover in 1999. With more than 100 online shops in 42 countries, the company offers its private and business customers an unequalled assortment of excellently priced car tyres, motorcycle tyres, bicycle tyres, truck tyres, bus tyres, special tyres, rims, complete wheels (pre-mounted tyres on rims), selected replacement car parts and accessories, motor oil and batteries. The independent website reifentest.com contains impartial information about tyre tests and helps the customers choose from more than 100 tyre brands and more than 25,000 tyre models. Delticom delivers either directly to the customer's home address, or to one of more than 34,000 service partners - affiliated garages which take delivery of tyres and then install these on the customer's vehicle. Delticom's Wholesale division also sells tyres to wholesalers domestically and abroad.

On the Internet at: www.delti.com

Selected online shops: www.reifendirekt.de, www.123pneus.fr, www.mytyres.co.uk, www.reifendirekt.ch

end of announcement euro adhoc

company: Delticom AG Brühlstraße 11 D-30169 Hannover phone: +49 (0)511 93634 8903 FAX: +49 (0)511 336116 55 mail: info@delti.com WWW: http://www.delti.com sector: Electronic Commerce ISIN: DE0005146807 indexes: SDAX, CDAX, Classic All Share, Prime All Share

stockmarkets: free trade: Berlin, München, Düsseldorf, Stuttgart, regulated dealing/prime standard: Frankfurt
language: English

Digital press kit: http://www.ots.at/pressemappe/EASY_50331/aom

Rückfragen & Kontakt:

Delticom AG Investor Relations
Melanie Gereke
Brühlstraße 11
30169 Hannover
Tel.: +49 (0)511-936 34-8903
Fax: +49 (0)89-208081147
e-mail: melanie.gereke@delti.com

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