[European Atlas] Overview of Portugal

Image

The 100 leading spare parts distributors attained new heights in 2017, according to the Top 100 report from Portuguese trade journal Jornal das Oficinas. They invoiced €906 million, up by 6.3% on the previous year. This represents average productivity of €227,000 per employee (in comparison, the average salary of the top 100 distributors in France was €235,000 over the same period). To round off these encouraging results from the top 100 Portuguese distributors, their net profit increased by 5.3%, average productivity by 3.9% and sales by 12%. These come in addition to positive financial indicators (cash flow, financial independence, investment capacity), but also stock management ratios which have significantly improved, a key sign of the regular recovery of the listed companies. The companies displaying the biggest increases are the largest among them which report more than €5 million of turnover. Indeed, 47.6% of overall parts business is captured by 3% of the 1,273 firms studied by the Portuguese automotive trade association (ACAP). There is thus a premium for the major players, with average EBITDA of 12.7%. The indicator improved on almost all levels, both though margins and through a higher level of operational science, which led to cuts in expenditure.
Another detail supplied by this survey: over four years, companies with more than €2 million of sales grew by 0.8%, and their weight increased by 3.4%. This is a commendable overall performance when, as the ACAP reiterates, in automotive distribution, on average “for €100 of sales, €77 of product must be bought and €19 spent in operational functions, resulting in a mere €4 of profit”.

Image

Eight out of ten repair businesses are independent, and barely 15% of them are members of a network. This figure was 5% 15 years ago. The representatives of vehicle manufacturer brands make up the rest, representing 16% of Portuguese workshops. Such are the findings of a report by Ancera, the trade association for automotive retail and repair businesses. The workshops of brands have an average of 20 employees as against seven in independent workshops. And therefore, quite logically, the former claim 3,802 workshop entries per year as against 1,544 with the latter. And there is similar disparity in terms of hourly rate: brand representatives charge an average of €34.3, while independents charge €25.7. This average does not reveal significant differences between individual situations, given that nearly 3 in 10 respondents declare that they have been obliged to set an hourly rate of less than €20.

Image

During the year, Sofrapa consolidated its leading position for business volume, with turnover of €60.5 million (+1.4% versus 2016). It can be noted that in addition to being a multi-brand distributor, it is also a Distrigo platform, as the historical partner of the PSA group in Portugal. It is followed by MCoutinho Peças with €40.6 million (11%), also a distributor of vehicle parts. Just like Centrauto which is on the third step of the podium with €40.4 million of sales in 2017 (15.4%). While distributors have got back on the road to growth, it remains for them to take the road to the future. Quite logically, the Portuguese market is also affected by the big moves observed elsewhere in Europe. This means the arrival of manufacturers, notably Distrigo (PSA Aftermarket) in July this year, but it also reflects the expansion of the digital offering which distributors have not yet fully incorporated into their strategy. Counting in the growing pressure on margins and the beginnings of market concentration… Portuguese distributors are in good health, and it’s just as well, because they are going to have to invest to get stronger.

Image

Article produced with the assistance of apcomunicacao, publisher of Jornal das Oficinas.