Hanover, 30th March 2009
A Firm Grip.
Investor Presentation
on the Occasion of the Release of the Financial Results 2008
Investor Presentation
Hanover, 30th March 2009 2
Delticom at a Glance
Business Model
Seasonalities in the Tyre Trade
Financials
Outlook
Agenda
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 3
Agenda
Delticom at a Glance
Business Model
Seasonalities in the Tyre Trade
Financials
Outlook
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 4
Delticom at a Glance
� #1 European online tyre dealer (car replacement tyres):> 100 online shops in 35 countries
� founded 1999, IPO Oct 06, SDAX Dec 08� customer base: more than 2.6 million
2008: ~700 thousand new customers� broad product range: > 100 tyre brands, > 25,000 models� other products: motorcycle, truck, rims, complete wheels,
motor oil, car parts, accessories� global network with more than 24,000 fitting partners
DE 6100 US 5638 UK 1723 FR 2161 CH 888
02.01.2008 - 31.12.2008
32
34
36
38
40
42
44
46
48
50
24.12 12.2 2.4 22.5 11.7 30.8 19.10 8.12
-30
-20
-10
0
10
20
30
40
02.01.2009 - 26.03.2009
32
34
36
38
40
42
44
46
48
50
2.1 22.1 11.2 3.3 23.3
-30
-20
-10
0
10
20
30
40
2008 2007 yoy
Revenues € million 259.0 215.5 +20.2
EBIT € million 16.4 12.3 +34.0
EBIT margin % 6.4 5.7
Net income € million 11.7 8.3 +40.5
Earnings per share € 2.97 2.12 +40.5
Total assets € million 95.6 87.4 +9.5
Equity ratio % 52.5 53.0
Liquidity position € million 42.9 34.5 +24.3
Dividend € 3.00 2.00 +50.0
Operating cash flow per share € 4.22 1.67 +153.4
Free cash flow per share € 3.89 1.18 +230.7
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 5
Agenda
Delticom at a Glance
Business Model
Seasonalities in the Tyre Trade
Financials
Outlook
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook
1.8%1.0%
2.5% 3.1%4.9%
8.9%
6.1%4.8%
3.3%
15.0%15.6%15.1%13.7%13.4%
27.8%28.1%26.4%
24.1%
0%
5%
10%
15%
20%
25%
30%
98 99 2000 01 02 03 04 05 06 07 08 09*
WesternEurope
other 67
UK 24
DE 49
FR 24IT
22
ES 13
World
Rest 20
Asia 213
NA 263
WE 199
EE+CE 76
SA 50
+2.5%
-12.7%-3.5% -3.3%
0
10
20
30
40
50
60
98 99 2000 01 02 03 04 05 06 07 08 09*
6
Tyres and the Internet
Source: LMC World Tyre Forecast Service 2009, Michelin, BRV, own estimates
European Car Replacement Tyres: € 11 billion
Europeans are increasingly online...
66
56
46
39
52
7769
57
80
8376
50
34
Desk Research GfK Austria, December 2008
adults on the Internet in % of total
in million tyres
... and buy their tyres online.
Source: BRV (car replacement tyres, incl. retreaded) * estimates as of March 09
in million tyres
Germany: 2 bad years in a row, difficult 2009 ahead.
want to buy online in the future (18-39)
want to buy online in the future (all)
bought last tyres on the Internet (18-39)
bought last tyres on the Internet (all)
Source: ADAC Reifenmonitor 2005-2009, 2009 preliminary
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 7
Redesign of the Tyre Distribution Chain
European TyreManufacturers
Non-European TyreManufacturers
European TyreManufacturers
Non-European TyreManufacturers
WholesalersDelticom EuropeanDistribution Centers
Wholesalers
Retailers
Small Garages
Customers
B2B
B2C Customers
Traditional Retail Delticom Redesign►
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 8
Agenda
Delticom at a Glance
Business Model
Seasonalities in the Tyre Trade
Financials
Outlook
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook
„Relative“Weather
Snowfall
„Relative“Revenues
2007 vs. 2008 Seasonalities
9
Summer season (Q2) and winter season (Q4) are very important.►
1. End of Jan 08 was warmerthan Jan 07 – hurt Q1 revenue growth
2. Mar 08 was colder than Mar 07 – late start into summer season 2008, revenues decreased yoy
3. Cold Q2 lead to investment into market share, revenues increased yoy
4. Q3 margins back on track5. Good snowfall, although
relatively late in the season6. Cold in Jan 09 (but not as
much snow as in 08), even colder in Feb 09 (late snow) and unusually cold in Mar 09
�
�
�
�
�
�
�
�
�
�
�
Q1 Q2 Q3 Q4
�
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 10
Seasonal Demand
Repurchases constitute important growth potential►
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 11
Agenda
Delticom at a Glance
Business Model
Seasonalities in the Tyre Trade
Financials
Outlook
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 12
Quarterly Revenues
Fluctuations in growth rates: seasons, weather, base effects, strategy►
in € million
53.7
78.9
64.2
33.5
49.9
38.9
25.6
42.6
63.1
44.0
69.5
84.0
+21.9 %
+52.3 %
+26.5 %
+31.5 %
+8.2 %
+9.4 %
+25.2 %+20.9 %
2006 2007 2008
0
20
40
60
80
100
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0
20
40
60
80
100
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 13
Revenues-to-EBIT Bridge
► Gross margin and operating leverage drive EBIT
in € million
► ► ► ► ► ► ► ►
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 14
Revenues and Gross Profit
� eCommerce: € 237.6 million(+21.7%, '07: €195.3m)
� Wholesale: € 21.4 million(+5.9%, '07: €20.2 million)
� good growth in DE and other parts of EU,
� pos/neg FX effects in certain countries – hedge or accept
� global sourcing� volumes sometimes depend on FX
differentials (timing)� selling tyres creates market
intelligence, interesting for suppliers
� purchasing � pricing
� eCommerce margin 26.7% (2007: 25.7%)
� Wholesale business 11.6% (2007: 11.9%) – strategically important, growth depends on opportunities (again FX)
133.
2
163.
6
193.
7
+22.8%
+18.4%
0
50
100
150
200
250
300
2006 2007 2008
Cost of Sales
173.
1
215.
5
259.
0
+24.5%
+20.2%
0
50
100
150
200
250
300
2006 2007 2008
Revenues
68.5
53.6
40.9
23.5%
24.7%
26.1%
+31.1%
+27.6%
0
20
40
60
80
2006 2007 2008
22%
23%
24%
25%
26%
27%
28%
Gross Profit Margin
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook
1.5
0.7
0.0
0.3%
0.6%
121%
0
1
2
3
2006 2007 2008
0,0%
0,5%
1,0%
1,5%
Rents Margin
15
Logistics
� parcel services� the longer the „relation“, the higher
the costs (absolute)� the higher the shopping basket
value, the lower the relative margin impact
� more shipments to customers in non-domestic destinations
� productivity increased due to new systems and processes
� basically unchanged mix (stock-and-ship vs. drop-ship)
� since 2008 rents are not passed to Delticom anymore ...
... because we pay them directly to the owners of the (bigger) warehouses
� more capacity to be added 2009
2.5
2.9
1.7
1.0%
1.4%
1.0%
+67.9%
-14.1%
0
1
2
3
2006 2007 2008
0,0%
0,5%
1,0%
1,5%
Stocking Tyres Margin
20.9
17.1
12.7
7.3%
7.9%8.1%
+34.3%
+22.5%
0
5
10
15
20
25
2006 2007 2008
6%
7%
8%
9%
Transportation Margin
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 16
Personnel (own and outsourced); Bad Debt
� 86 employees (2007: 78)� low staff levels due to efficient
business processes
� outsourcing partners for e.g.hotline, order processing
� 2008: wage levels increased, and additional parts of the value chain outsourced
� gives flexibility if the recession turnes into a depressions
� in difficult times, payment behaviour worsens
� wholesale: residual losses after credit insurance
� tightened credit management
5.0
4.3
3.0
1.7%
2.0%1.9%
+45.0%
+15.2%
0
1
2
3
4
5
2006 2007 2008
0%
1%
2%
Personnel Margin
3.8
2.9
2.1
1.2%1.4% 1.5%
+39.3%
+28.3%
0
1
2
3
4
5
2006 2007 2008
0%
1%
2%
Operation Centres Margin
1.9
1.1
0.9
0.5% 0.5%0.7%
+16.9%
+78.1%
0
1
2
3
4
5
2006 2007 2008
0%
1%
2%
Receivable Losses Margin
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 17
P&L Drivers
(schematic example calculation)
growth2008 2007 % factor 2008 2007 chng
Revenues 259.0 215.5 20.2 1.0 100.0 100.0 0.0Cost of sales 193.7 163.6 18.4 0.9 74.8 75.9 -1.1Gross Profit (simple) 65.3 51.9 25.6 1.3 25.2 24.1 1.1Direct costs 38.1 31.3 21.8 1.1 14.7 14.5 0.2
Direct costs (dep. on sales) 27.2 22.9 18.6 0.9 10.5 10.6 -0.1Transportation costs 20.9 17.1 22.5 1.1 8.1 7.9 0.2Warehousing costs 2.5 2.9 -14.1 -0.7 1.0 1.4 -0.4Operations centre costs 3.8 2.9 28.3 1.4 1.5 1.4 0.1
Direct costs (dep. on revenues) 10.9 8.4 30.7 1.5 4.2 3.9 0.3Credit card fees 1.8 1.8 -0.6 0.0 0.7 0.8 -0.1Bad debt losses 1.9 1.1 78.1 3.9 0.7 0.5 0.2Marketing costs 7.2 5.5 31.7 1.6 2.8 2.5 0.2
Contribution margin 1 27.2 20.7 31.4 1.6 10.5 9.6 0.9Indirect costs 10.3 8.8 16.5 0.8 4.0 4.1 -0.1
Personnel expenses 5.0 4.3 15.2 0.8 1.9 2.0 -0.1Rents and overheads 1.5 0.7 121.4 6.0 0.6 0.3 0.3Financial and legal costs 2.0 2.2 -6.5 -0.3 0.8 1.0 -0.2IT and telecommunications 0.5 0.4 17.4 0.9 0.2 0.2 0.0Other 1.3 1.2 5.1 0.3 0.5 0.6 -0.1
Contribution margin 2 16.9 11.9 42.4 2.1 6.5 5.5 1.0FX effects -0.8 -0.3 Other operating profit (w/o FX gains) 0.8 1.0 EBITDA 16.9 12.6 34.4 1.7 6.5 5.8 0.7Depreciation / Amortization 0.5 0.3 49.3 2.4 0.2 0.2 0.0EBIT 16.4 12.3 34.0 1.7 6.4 5.7 0.7Net financial result 1.1 1.1 2.9 0.1
Financial income 1.2 1.2 -5.4 -0.3Financial expenses 0.0 0.1 -90.1 -4.5
EBT 17.6 13.4 31.4 1.6 6.8 6.2 0.6Income taxes 5.9 5.0 16.3 0.8Consolidated net income 11.7 8.3 40.5 2.0 4.5 3.9 0.7
margin %
purchase price 50,00direct costs 6,00
56,00
preset margin (e.g. 25%) 14,00retail price 70,00
plus VAT (e.g. Germany 19%) 13,30gross retail price on shop website 83,30
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 18
Working Capital Management
► Changes in working capital reflect seasonal patterns
quarterly delta in € million
Accounts receivable
Inventories
Accounts payable
Working Capital
... Follow the seasonal peaks.
... Driven by sales (–) and capacity (+).(e.g. 2007 ramp-up)
... Discretionary payment terms, e.g.Q3 07: early paymentQ2 08: stocking for winter season
... Both + and –, with significant swings.2009: Prepare for increased cash consumption (inventories, terms).
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook
34.5
16.4 0.5 -0.3 -1.6 1.5
4.5 1.1 -5.6
-1.2 -0.1 1.0 -7.9
0.0 -0.1 42.9
0
10
20
30
40
50
60Li
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sLi
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1.12
.08
0
10
20
30
40
50
60
19
Cash Bridge
Delticom continues to be strongly self-financed►
in € million
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 20
Agenda
Delticom at a Glance
Business Model
Seasonalities in the Tyre Trade
Financials
Outlook
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 21
Outlook
� Current trading in Q1:� no snowfall in January (less winter tyres), snowfall in February (no winter tyres)� unusually low temperatures in March� still: satisfactory yoy growth� remember
� Jan/Feb are months with low revenues � no indicator for Q1� Q1 is quarter with lowest revenues � no indicator for FY� remember base effect Q1 08
� ... German market (BRV)� 2008: summer ↓ 4.5%, winter ↓ 3.3%� 2009: summer ↓ 4%, winter ↓ 3% (revised after approval of Management Report)
� ... “Recession” vs. “Depression”: production �, prices �, demand �?
� Delticom not unaffected by recession, but other factors might (partly) offset effects:� Ongoing internationalization � diversified country portfolio� Recession in all European countries � customers are trading down� Delticom is online � good prices, good sales, good margins
� Revenues 2009: not more than +10%
� EBIT-Margin: > 6% treated as a positive surprise
Investor PresentationHanover, 30th March 2009
At a glance Business Model Seasonalities Financials Outlook 22
Key Investment Highlights
#1 European online tyre retailer
Excellent growth opportunities
Strong cash flow, strong balance sheet
Resilient and profitable business model
Redesign of the tyre distribution chain
1111
2222
3333
4444
5555
Investor Presentation
Hanover, 30th March 2009 23
Vielen Dank!
Investor Relations:
Melanie GerekeDelticom AGBrühlstr. 1130169 Hanover, Germany
eMail: [email protected]: +49-511-93634-8903
Rainer BinderPurchasing and Pricing
Frank SchuhardteCommerce and Finance
Philip v. GrolmanLogistics and USA