Transcript Tim Tozer - ASE Global
Presentation to: ASE Financial Conference May 16, 2013 What we needed from our Finance community to run car retail in Central Europe Tim Tozer, CEO
1 16th May 2013
What we “high level” needed from our Finance community
Management information chasing managers – not the other way around.
To see the business in detail through the balance sheet and KPI’s – allowing management to direct their focus. A “measure it to move it” mantra. Finance control fulfilling and interpreting their role to be: – – – Guardians of the balance sheet.
Commercially involved challengers to the operational activities.
Financial controllers of risk management.
2 16 th May 2013
Overview of AutoBinck
104 year history in the automotive business Privately owned - Lauret family 100% shareholder – – – Businesses in 7 countries: – The Netherlands – Belgium – – Czech Republic Slovakia Poland Hungary Slovenia € 1.1 billion turnover (60% Benelux, 40% Central Europe) 1,650 employees 3 16 th May 2013
Recent history
Mazda from 1968 - 2008
Distribution in The Netherlands and then Czechoslovakia (1991) More than 655,000 Mazda’s sold in our 40 year relationship.
Hyundai from 1999 – to date
Distribution in The Netherlands and Czech Republic and Slovakia (2000). Factory take over of CZ and SK in 2008 (Hyundai factory set up), replaced by Slovenia and Hungary.
More than 250,000 Hyundai’s sold to date in our 13 year relationship.
Other:
1996: acquisition of Business Lease NL, thereafter entering Czech Republic (1996), Slovakia (1998), Poland (2001) and Hungary (2003).
2000: acquisition of Brezan NL. 2004: Mitsubishi distribution in Czech Republic and Slovakia.
2005 on: retail growth into multi franchise then restructured in 2010. 2011: Jaguar Land Rover distribution in Hungary. 4 16 th May 2013
AutoBinck organisational structure
Car Distribution
28,593 cars in 2012 Czech Republic Hungary Slovakia Slovenia The Netherlands
Car Retail
16,110 cars in 2012 Czech Republic Hungary Slovakia Slovenia The Netherlands
Financial Services
39,600 lease contracts and 5,400 financed units Czech Republic Hungary Poland Slovakia The Netherlands
Parts & Accessories
€ 96.3 M sales in 2012 130 outlets Belgium The Netherlands 5 16 th May 2013
Figures
Balance Sheet
(Euro * 1,000,000) 800 600 400 200 765 784 26.1% 2009 Solvency 26.9% 2010 Total assets 790 27.7% 2011 20 000 15 000 10 000 5 000 1.0 2009
Profit before tax
(Euro * 1,000,000) 13.1
2010 17.9
2011 6 0,2%
Sales per Division
24,0% 19,1% 9,7% 47,0% Business Lease Brezan Group Car Distribution Car Retail Other Total Sales 2011: € 1,051 million 5,2% 5,1% 1,9% 5,3%
Sales per Country
22,1% 0,9% 59,5% The Netherlands Belgium Czech Republic Hungary Slovakia Slovenia Poland 16 th May 2013
The AutoBinck way
Commercial and entrepreneurial local management trusted to act in the best interest of the business, delivering mission and strategy. Controlled through central funding and performance management of balance sheet, kpi’s and P&L.
Long term perspective.
Small HQ listening to the frontline, delivering action and energising the company.
Synergies between the operating divisions, a family feeling.
7 16 th May 2013
AutoBinck : 2012 Distribution and Retail volume
Country
Netherlands Czech Czech Slovakia Slovenia Hungary Hungary
Total Brand Distribution Volume *
Hyundai Mitsubishi Infiniti Mitsubishi Hyundai Hyundai Jaguar/LR 23,540 1,015 63 416 2,273 1,234 115
28,593 Market share
4.6% 0.7% 0.07% 0.7% 4.7% 2.3% 0.2%
Country
Netherlands Czech Slovakia Slovenia Hungary
Retail New cars
983 7,241 952 161 1,677
Used cars
1,940 2,377 421 90 268
Total
2,923 9,618 1,373 251 1,945
Total 16,110
8
16th May 2013
Central Europe total industry volumes
Country
Czech Republic Slovakia Hungary Slovenia Total
2007
174,456 59,700 171,661 68,719 474,536
2012
173,997 69,195 53,008 50,091 346,291 9
16th May 2013
Our retail past
Our retail business existed historically to underpin brands we distributed and was run by wholesalers. In consequence we built palaces, had no detailed idea how to manage and control a customer service business, lost significant amounts of money and destroyed much shareholder value.
The only available, reliable management information was the monthly P&L and balance sheet (at high level) – all else came ad hoc and heavily filtered by local management. If we were to continue with retail we needed a strong financial control based platform.
10 16th May 2013
An “Auto Palace”
11 16th May 2013
Our future
General pressure upon financeability choices have to be made.
Resources will be allocated to areas of core competence which can deliver the highest returns. “Stick to the knitting”.
Within this context we had to decide if car retail really was a core competence for us, justifying funding on the basis of attractive ROE’s?
Yes, but only with: – – – Retail management competence.
A very robust strategy and business plan. A new risk managed world under control.
12 16 th May 2013
Retail Strategy
Decrease dependency upon manufacturers: – – – Recognising used cars as a business within a business.
Improving after sales activity and sale of ancillary products.
Optimise brand portfolio (one site per brand, unless very “retail”).
Minimise capital employed.
Optimise market penetration for brands represented. Adopt an “AutoBinck Way” for retail: – – – Operational consistency across all sites.
Service first.
Share best practice - visible through 24 kpi’s. Deliver 15% ROE on 30% normalised solvency. 13 16 th May 2013
Retail strategy - how
Manage each business through the balance sheet and KPI’s into the P&L with daily operating controls for all activities.
Focus intensively upon used cars ROI - sweat purchasing and sales processes and stock turn.
Focus intensively on after sales: – Parts stock turn – make more by losing less – – CRM – customer retention builds after sales Service sales advisors (not receptionists) Sales department process, productivity and team development.
Internal communication - vision and values, results, recognition.
14 16 th May 2013
Retail brands represented 2011
Czech Republic - Prague (4 sites)
- Brno
Slovakia - Bratislava (2 sites) Hungary
- Budapest
Slovenia
- Ljubljana
The Netherlands
- Rotterdam
15 16 th May 2013
Retail brands represented 2014
Czech Republic - Prague (3 sites)
- Brno
Slovakia
- Bratislava
Hungary
- Budapest
Slovenia
- Ljubljana
The Netherlands
- Rotterdam
16 2 TBA 16 th May 2013
What we needed from our Finance community
Management information chasing managers – not the other way around.
To see the business in detail through the balance sheet and KPI’s – allowing management to direct their focus. A “measure it to move it” mantra. Fulfilling and interpreting their role to be: – Guardians of the balance sheet.
– – Commercially involved challengers to the operational activities.
Financial controllers of risk management across the complete business. 17 16 th May 2013
Retail Finance Director Job Description
Interpret role at high level to be: – “the guardian of the balance sheet” – – a commercially involved “challenger” to the operational activities financial “controller” in the sense of risk management of the complete business. An active involvement with MD and site managers, pro-actively assisting them in achieving their goals.
Timely and accurate reporting of DOC’s, KPI’s and management accounts with high level interpretation to the Board.
Assisting line management with interpreting DOC’s , KPI’s and management accounts, determining appropriate management follow up and corrective actions.
Focus line management on the balance sheet in order to reduce working capital, acting as the catalyst for them to take appropriate corrective management action.
Treasury and cash management. Overseeing and managing all regulatory and statutory obligations.
Adherence to AutoBinck accounting manual.
Resolving any issues within the annual auditors management letter and AutoBinck internal audit.
18 16 th May 2013
Example – management reporting Auto Palace Hungary
Our Jaguar Land Rover Budapest flagship retailer 19 16 th May 2013
Example – management reporting Auto Palace Hungary
20 16 th May 2013
Example – management reporting Auto Palace Hungary
21 16 th May 2013
Auto Palace Hungary* - Balance sheet 31-3-2013
LAND BUILDINGS DEMONSTRATORS
DEMONSTRATORS - UNITS
RENTAL FLEET
RENTAL FLEET - UNITS
BUYBACK CARS
BUYBACK CARS - UNITS
OTHER TANGIBLE FIXED ASSETS
TOTAL FIXED ASSETS
NEW VEHICLE STOCK-VALUE NEW VEHICLE STOCK-PROVISION NEW VEHICLE STOCK-BOOKVALUE
NEW VEHICLE STOCK-UNITS
NEW VEHICLE STOCK-AVERAGE BOOKVALUE USED VEHICLE STOCK-VALUE USED VEHICLE STOCK-PROVISION USED VEHICLE STOCK-BOOKVALUE
USED VEHICLE STOCK-UNITS
USED VEHICLE STOCK-AVERAGE BOOKVALUE
TOTAL VEHICLE STOCK
PARTS STOCK-VALUE PARTS STOCK-PROVISION PARTS STOCK-BOOKVALUE
TOTAL PARTS STOCK 31-3-2013 ACTUAL
26.235
360.474
25
3.216.357
304
278.918
3.881.984
758.775
-2.303 756.473
53
14.273
624.118
-22.533 601.585
67
8.979
1.358.058
312.851
-65.436 247.415
247.415
VEHICLE RECEIVABLES AFTER SALES RECEIVABLES OVERHEAD RECEIVABLES
TOTAL TRADE RECEIVABLES
INTERCOMPANY RECEIVABLES TAXES AND SOCIAL SECURITIES OTHER RECEIVABLES AND PREPAYMENTS
TOTAL NON TRADE RECEIVALBLES CASH IN HAND AND AT BANKS UNDERFUNDING VS 30% SOLVENCY TOTAL ASSETS 31-3-2013 ACTUAL
2.145.649
215.736
248.558
2.569.060
2.151.603
344.665
2.496.268
1.326.735
2.473.716
14.353.235
* 2 sites, 1 legal entity 22 16 th May 2013
Auto Palace Hungary - Balance sheet ageing analysis
AGEING NEW CAR STOCK
BETWEEN 0 AND 180 DAYS BETWEEN 180 AND 360 DAYS OLDER THAN 360 DAYS
TOTAL NEW CAR STOCK CURRENT PROVISION AGEING USED CAR STOCK
BETWEEN 0 AND 60 DAYS BETWEEN 60 and 90 DAYS OLDER THAN 90 DAYS
TOTAL USED CARS STOCK CURRENT PROVISION AGEING PARTS STOCK
BETWEEN 0 AND 6 MONTHS BETWEEN 6 AND 12 MONTHS BETWEEN 12 AND 24 MONTHS OLDER THAN 24 MONTHS
TOTAL PARTS STOCK CURRENT PROVISION
(Stock turn 0-6 months = 41)
AGEING TRADE RECEIVABLES
BETWEEN 0 AND 30 DAYS BETWEEN 30 AND 60 DAYS BETWEEN 60 AND 90 DAYS BETWEEN 120 AND 180 DAYS BETWEEN 180 AND 360 DAYS OLDER THAN 360 DAYS
SUBTOTAL TRADE RECEIVABLES
PROVISION ON DOUBTFULL RECEIVABLES BANKRUPT RECEIVABLES PROVISION ON BANKRUPT RECEIVABLES * Provi s i on a ccordi ng group Pol i cy
31-3-2013 ACTUAL Amount
599.884
53.573
105.318
758.775
2.303 Units
43 3 7
53 Amount
67.745
128.579
427.794
624.118
22.533 Units
10 14 43
67 PROVISION *
167.315
43.940
94.290
7.306
312.851
65.436 DIFFERENCE
10.985 47.145 7.306-
65.436-
0-
VEHICLES
2.129.482
13.864
2.303
-
2.145.649
AFTER SALES
119.183
24.242
17.890
11.401
12.175
14.194
215.736
2.116 -
OTHER
58.504
22.476
11.199
34.528
80.362
26.810
248.558
TOTAL 2.307.169
46.718
29.089
59.793
94.839
41.005
2.609.944
38.769 -
40.884 -
Provision policy USED CARS ABOVE 60 DAYS - MONTHLY REVIEW OF TRADE PRICES (EXTERNAL REFERENCE) PARTS BETWEEN 6 AND 12 MONTHS 25% BETWEEN 12 AND 24 MONTHS 50% OLDER THAN 24 MONTHS 100% 23 16 th May 2013
Budapest Hyundai & Opel - P&L Summary and absorption
SALES TURNOVER:
VEHICLE NEW RETAIL VEHICLE NEW FLEET VEHICLE EXPORTS VEHICLE USED RETAIL CAR RENTAL SERVICE BODYSHOP PARTS INTERNAL
TOTAL SALES TURNOVER GROSS PROFIT:
VEHICLE NEW RETAIL VEHICLE NEW FLEET VEHICLE EXPORTS VEHICLE USED RETAIL CAR RENTAL SERVICE BODYSHOP PARTS
TOTAL GROSS PROFIT x MARCH 2013 YTD ACTUAL € %
401.685
647.851
6.763.941
571.068
291.820
59.956
33.394
290.090
4,46% 7,19% 75,03% 6,33% 3,24% 0,67% 0,37% 3,22% (44.839)
9.014.966
100,00%
31.490
28.228
40.732
34.983
54.523
17.842
24.473
53.016
285.287
7,84% 4,36% 0,60% 6,13% 18,68% 29,76% 73,28% 18,28%
3,16% DIRECT PROFIT BY DEPARTMENT:
CAR RENTAL SERVICE BODYSHOP PARTS SUBTOTAL DIRECT PROFIT A/S + RENTAL
x MARCH 2013 YTD ACTUAL € %
38.101
1.945
12.052
41.284
93.382
13,06% 3,24% 36,09% 14,23% 1,04% 1,21% TOTAL OVERHEADS
OVERHEAD ABSORPTION %
VEHICLE NEW RETAIL (INCL. EXPORTS) VEHICLE NEW FLEET VEHICLE USED RETAIL SUBTOTAL DIRECT PROFIT VEHICLES
PROFIT BEFORE TAX
(109.462)
85,3%
47.099
12.073
24.558
83.730
67.650
0,66% 1,86% 4,30% 0,75%
0,75% INTEREST (OVER)/UNDERFUNDING PROFIT BEFORE TAX (NORMALISED) 12.369
80.018
0,89%
24 16 th May 2013
Budapest Hyundai & Opel - KPI’s Q1 2013
GENERAL
KPI Profit before tax / total revenue * Return on equity (normalised) * Sales department efficiency * Overhead absorption Gross Profit / FTE * Total personnel expenses as % of total gross profit * TARGET
2,0% 15,0% 55,0% 100,0% 50.000
40,0%
SALES
KPI New sales as a % of used sales (excl. export) Sales per sales person Average gross profit per new car sold * Used vehicle stock turn in days Return on investment used stock Average gross profit per used car sold
* KPI's heavily dependent upon quarterly manufacturer bonus.
TARGET
100,0% 160,0 750,0 45,0 80,0% 700,0 25
ACTUAL
0,9% 2,3% 38,2% 76,2% 42.265
40,5%
ACTUAL
77,8% 84,8 152,9 70,1 24,5% 431,9 16 th May 2013
Budapest Hyundai & Opel - KPI’s Q1 2013
AFTER SALES
KPI Service efficiency (sold / attended) Service time utilisation (worked / attended) Bodyshop efficiency Gross profit % on service labour sales Gross profit % on body and paint labour sales Workshop direct expenses as % of gross profit Hours per job card (Retail Service) Hours per job card (Retail Bodyshop) Retail proportion of labour sold Retail recovery rate (retail labour sales / retail hours) Parts & accessories gross profit % Parts & accessories direct expenses as % gross profit Parts & accessories stock cover (0-6 months) TARGET
110,0% 95,0% 130,0% 63,0% 73,0% 50,0% 2,4 8,0 70,0% 40,0 22,0% 30,0% 30,0
ACTUAL
86,1% 69,8% 101,3% 54,9% 73,3% 54,7% 1,2 4,1 65,9% 33,3 18,3% 22,1% 41,0 26 16 th May 2013
Waterfall chart – direct profit variances vs MAP
€K Direct profit - March Year-to-date variance versus MAP
70 60 50 40 30 20 10 -10 -20 -14 17 -18 18 -9 4 8 -5 63 4 68 27 16 th May 2013
30 Day forecast April 2013
AutoBinck Car Retail interim result 2013 Auto Palace Hungary - Hyundai & Opel Month: April (EUR)
10th day
283,00
20th day
283,00
30th day
283,00
TO DO
283,00
Full month Forecast
283,00
Budget (MAP)
283,00
Variance
283,00
1
Currency rate
New Cars
Hyundai
2 Units
3 4 5
#
GM excl bonus Bonus GM incl bonus Opel # # # # # # # #
Units
GM excl bonus Bonus GM incl bonus
TOTAL NEW CARS Units
Gross Margin Gross Margin other # #
Total gross margin # Used Cars
# #
Units
Gross Margin
#
#
# Car rent
Gross Margin # #
#
#
Service
Gross Margin # # # # # #
# Body Shop
Gross Margin
#
# #
Parts
Gross Margin
TOTAL Gross Margin
#
25
4.735
0 4.735
5
3.570
0 3.570
30
8.305
8.305
9
5.283
0 2.468
211 3.745
20.011
130
24.735
0 24.735
9
8.376
0 8.376
139
33.111
33.111
9
5.283
0 5.223
1.412
7.982
53.011
128
26.237
26.237
14
11.943
11.943
142
38.180
38.180
21
9.519
11.489
6.908
19.089
85.185
0
0 0 0
0
0 0
0 0
0 0 0
0
0 20.091
0 0 0
20.091
128
26.237
0 26.237
14
11.943
0 11.943
142
38.180
38.180
21
9.519
20.091
11.489
6.908
19.089
105.277
82
16.776
8.415
25.191
29
14.527
0 14.527
111
39.717
3.276
42.993
23
7.442
20.091
10.472
6.661
17.225
104.884
46
9.461
1.046
-15
-2.583
-2.583
31
-1.537
-4.813
-2
2.077
0 1.018
246 1.864
392
Actuals + Forecast
296,10
Version 1.6
YTD
Budget (MAP)
283,00
Variance -4,6%
741
76.994
9.997
86.991
58
42.427
42.427
799
129.418
7.524
136.942
102
44.081
73.726
28.823
31.075
71.260
385.906
300
54.922
33.659
88.581
94
46.944
0 46.944
394
135.525
13.102
148.627
78
22.071
80.365
39.070
27.177
63.087
380.398
441
22.072
-23.662
-1.590
-36
-4.517
-4.517
405
-6.107
-5.578
-11.686
24
22.010
-6.639
-10.247
3.898
8.173
5.508
28 16 th May 2013
Summary
We have the information now to direct management attention.
We have a team of retailers running the businesses to UK criteria. We have used our financial strength, this management team and the BER June 1 st moment to radically revisit our franchise/site portfolio. We now see 2013 as a mid point “year of transition” to 2015 ROE of 10% minimum, on the platform of a business which: – Trebles its used car business.
– – – Puts service first.
Optimises sales of a more balanced new car franchise portfolio. Works from a much smaller balance sheet and one less site (Prague). Our finance community are at the heart of the business, ensuring standards of commercial robustness, control and management of risk that we could only dream of two years ago. 29 16 th May 2013