2015 in TIM Capital Group: “The last year’s rumours about the death of TIM SA were exaggerated”

A year like this does not happen too often! The highest turnover in the history and the first in three years net profit and operating profit achieved by TIM SA and the entire TIM Capital Group in 2015. 2/3 of the TIM’s revenues was due to the internet sales channel.

Last year was the first in which TIM SA operated fully in a new, hybrid sales model being implemented since 2013 – with the dominating e-commerce channel, without the network of branches with local warehouses (they had been replaced by commercial offices).

The results were no longer burdened by the costs of the changes, in addition, TIM SA had sold a part of its logistics centre in Siechnice near Wrocław (after the extension, still being in progress, has been complete, it will continue to use it as a tenant and the facility will be managed by a TIM’s subsidiary appointed especially for this purpose). This was reflected in the operating profit which amounted to PLN 7.04 million (6.88 million in the TIM Capital Group) compared to more than PLN 24.28 million (PLN 25.55 million in the TIM Capital Group) of a loss in the year 2014. However, the net profit generated by TIM and the entire capital group exceeded PLN 5.8 million while the year 2014 recorded a net loss at the level of PLN 20.59 million and PLN 21.83 million respectively.

Change of the trading policy
For the second time in the history of the TIM Capital Group and for the first time in case of TIM SA the revenues from sales exceeded PLN 0.5 billion reaching respectively PLN 575.93 million (an increase by approx. 9% compared to the year 2014) and PLN 535.3 million (an increase by approx. 8%).

– A relatively small increase in turnover is the consequence of the change in our sales policy. In the past year we considerably reduced the sale in the investment model which translates into a high value of one-off sales transactions at a very low margin. This in turn resulted in a drop in the sale of such product groups as cables (by 16.9%) or light poles (up to 70%) – explains Krzysztof Folta, the President of the Management Board of TIM SA.

A steady increase in the number of customers is optimistic. What is more, in 2015 the number of loyal customers increased by more than 24%, i.e. those who repeatedly make purchases (purchasing in at least six of the last 12 months). As this indicator is growing continuously since the launch of the e-shop in July 2013 TIM.pl it is the best proof of the customers’ acceptance of the new sales model.

Even 80% of revenues from the Internet
In the entire 2015 the Internet channel brought TIM SA 67% of revenues from sales, i.e. PLN 358.7 million compared to 62% and PLN 307.5 million in the previous year. In November e-commerce generated up to 72% of turnover.

In 2016 the share of this channel should stabilize at the level of 70-80% of total revenues. – In fact we assume that customers who are used to place orders in the traditional manner, i.e. via traders or sales representatives will continue to generate approx. 20-30% of total revenues – says Krzysztof Folta.

The online store TIM.pl offers its customers the widest availability of electrical goods on the Polish market. At the end of 2015 the standard offer (goods shipped within 24 hours from the moment of placing an order) availed of more than 62 300 unique products. By the end of 2016 this number is expected to grow by 28% – up to 80 000.

High potential of the increase of profitability

The results for the year 2015 are optimistic as regards the results for the years to come. They constitute a tangible proof that the sales model chosen by TIM carries a high potential of an increase of profitability.

– When in 2013 we started an e-store – innovative for our industry, we often heard: “Customers do not want to make a purchase this way”. After the last year’s results and the loss, there were those who even proclaimed the end of TIM. Before TIM.pl emerged, the Polish electrical goods distribution market did not have an appropriate tool to buy online. However, in order to make it translated to our results we needed at least 24 months from the commencement of the process of change. Today, paraphrasing Mark Twain, I can say: the last year’s rumours about the death of TIM were exaggerated – says Krzysztof Folta.

It is worth noting that the entire TIM Capital Group has a very good financial situation as its equity covers 100% of fixed assets in the amount of PLN 100.6 million and 92% of the value of inventories.

Read 4 pages of the of 2015 summary, with the most important financial data [PDF] >>