Posts Tagged Germany

A Bump in the Road?

D’Ieteren, the parent of auto glass repair and replacement (AGRR) behemoth Belron, offered some insight into the current state of affairs at Belron in a press release last Friday. Even the strong can have some problems. The title of the press release was, “Annual impairment testing and profitability improvement measures / Update on group’s FY 2014 outlook / Early views on 2015” You can download the release via this link. It provides some interesting insight.

When you read the details of the press release pay particular attention to the section titled ”IMPAIRMENT AND RESTRUCTURING CHARGES”. This section provides an in-depth discussion of the non-cash charges and actions that D’Ieteren is taking.

First of all the release states that “Since 2010, Belron has been facing adverse market conditions in the UK with the vehicle glass repair and replacement market down by circa 40% over the period (-12% in 2014) together with price deflation. This has led to an erosion in profitability during the period.”

A “EUR 89 million non-cash goodwill impairment charge is therefore required.” (Definition of impairment charge by www.investopedia.com)

“Belron entered the Chinese market in 2009 and expanded its network to 39 branches through a number of acquisitions, all of the businesses having both a wholesale glass and a fitting activity.”

“Experience to date has shown that Belron’s high business standards were not compatible with the carrying out of a profitable wholesale business in the region. Given the relative size of this activity in many of the existing branches, the discontinuation of the wholesale business means that these are no longer viable in the long term and will be either closed or sold. Following the closure of 31 non-profitable locations, Belron’s footprint in China will be concentrated on 8 branches.”

“This change will result in EUR 7 million unusual costs as well as a non-cash goodwill impairment charge of EUR 9 million, all provided for at year-end.”

“In Italy, following a decline in the vehicle glass repair and replacement market of circa 8% in 2014 and the decision of one of the major insurance partners to cease its collaboration and to establish its own network for fulfilling glass claims during the year, Belron has decided to implement a number of efficiency improvement measures. This will encompass merging the back offices of Carglass Italy and Doctor Glass, its franchise operation, as well as reducing administrative work in several branches thanks to the roll out of the new remote advisor system. The resulting EUR 4 million unusual costs will be fully provided for at the end of this year and will generate savings that should partially compensate for the reduction in sales.”

“In the Netherlands, vehicle glass repair and replacement market has halved in the last 5 years following the roll out of a new road surfacing technology that resulted in the vehicle glass breakage rate reverting to the European average while it was previously significantly higher. Profit improvement measures are currently being implemented both centrally and in the field operations that will require EUR 4 million unusual costs to be fully provided for at the end of this year.”

“In addition to its classical fitting business, Carglass Germany runs a separate activity offering glass repair and replacement for heavy commercial vehicles, notably buses and coaches. The profitability of this business has deteriorated in recent years due to the contraction in this market segment and will be negative by EUR 3.5 million in 2014. The decision has been made to close this business for total unusual costs of EUR 9 million.“

The value of the goodwill allocated to Brazil (EUR 20 million) is still under review.”

In the press release section titled, “TRADING UPDATE FOR THE PERIOD ENDING 30 NOVEMBER 2014” you’ll read the following:

“At Belron, year-to-date sales were up 1.3% on 2013 at the end of November, consisting of a 0.4% organic increase and 2.1% growth from acquisitions, partially offset by a 0.8% negative currency translation effect and a 0.4% decline due to fewer trading days. Total repair and replacement jobs have increased by 1.7% to 10.3 million.”

“In Europe, despite share growth, sales were down 4.8%, consisting of an organic decline of 6.6% due to severe market declines following an exceptionally mild 2013-2014 winter weather in Northern Europe, and a 0.6% decline due to fewer trading days, partially offset by 1.8% growth from acquisitions and a 0.6% positive currency impact.”

“Outside of Europe, sales were up 8.3%, consisting of an organic growth of 8.4% predominantly due to the extreme winter weather in the eastern US at the beginning of the year, and 2.5% growth from acquisitions, partially offset by a 2.4% negative currency translation effect and a 0.2% decline due to fewer trading days.”

During the early to mid 1990’s I held senior management positions at Windshields America, Belron’s retail subsidiary in the United States. I was fortunate to have worked with the greatest group of people that I’d ever had the opportunity to have been associated; the company grew from 50+ stores to 274 stores with exceptional sales and bottom line performance. Great people make all the difference in any organization. (December 16, 2012 blog post “What’s Your Line-up?”) The growth in store count and profitability was made possible by the performance of Autoglass. The Managing Director of Autoglass rightly boasted at the time that his company was providing the fuel (British pound profits) to help drive the growth of Windshields America and other areas of the world of Belron. True. It wasn’t his choice, but it was his view that he could have used those profits to further the goals that he had for Autoglass in the United Kingdom. Possibly true. Perhaps today Safelite profits could be diverted to help Belron around the world? If that does happen Safelite would have less money to spend in the United States to further their goals. Also a possibility.

So this week when you have a few minutes to consider the “strengths, weaknesses, opportunities and threats” (SWOT analysis) that could affect your business in the upcoming year and decide on what actions you will take to ensure that 2015 achieves the success you desire, know that even the dominate player in the AGRR industry in the world is having their share of problems. Some of their problems are market driven, so not necessarily self-inflicted. But some of them are strategic and tactic driven, so those are self-inflicted. Regardless they are not going away so don’t rejoice, but there is hope.

Just sayin’.

 

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Courtesy of http://www.TomFishburne.com

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Just Sayin’ Blog – Interview with Dave Taylor and Cindy Rowe-Taylor

Two of the most respected people in the auto glass repair and replacement (AGRR) industry are Dave Taylor and Cindy Rowe-Taylor who together built Cindy Rowe Auto Glass into the dominant AGRR company in much of Pennsylvania and Maryland. They retired to Florida a few years ago and spend much of their time cycling the world and enjoying their lives.

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At Auto Glass Week™ 2013 that was held in Tampa, Florida last month Rich Campfield, president of the National Windshield Repair Association (NWRA), presented Dave Taylor with a new industry award named in his honor. As a founding member of the NWRA, Dave was a force in helping to mold the organization. Cindy was in the audience during the opening ceremony where Dave was presented with the inaugural award.

While at the Auto Glass Week™ Conference I had the chance to talk with both Dave and Cindy and they agreed to an interview. 

DR      First, thanks to you Cindy and Dave for taking the time to talk with me today. Special congratulations to you Dave for receiving the NWRA award that was named in your honor. I can’t think of anyone more deserving to be recognized for the work you have done to bring windshield repairs to consumers.

My first question is how do you both like retirement versus the daily challenge of being in the AGRR business?

DT      Retirement is terrific. As many folks know, we are avid bicyclists and living in The Villages in Florida is a bicyclists dream come true. We would have retired sooner if we had known had much fun and satisfaction retirement life had to offer.

CR-T  Retirement has been an easy transition and so enjoyable.  It is not sitting on the couch eating bon-bons, but having a very busy schedule and having such fun being busy.

DR      It sounds like you’re both making the most out of retirement. Cindy, what year was it and what was it that drew you to the AGRR industry that caused you to open the first Cindy Rowe Auto Glass store?

CR-T  I was a registered nurse for 13 years and decided I wanted to be my own boss.  That was when I became aware of the windshield repair (WSR) possibility in my area. In 1979 I started out with my repair kit in the trunk of my Vega, seeing dealers and fleets, where the volume was.  No sales experience ever.  I loved it from the start. I am the WSR pioneer in the Harrisburg, PA, and surrounding areas.  Dave joined me in 1986, working mobile WSR for one year; it was after that year that we bought our first glass shop.  We kept on both technicians and learned about replacement.

DR      Dave, what was it that you found attractive (besides Cindy) to the industry?          

DT      Self employment is the short answer.  After a 25 year career in department store retailing I wanted to be independent of the corporate world. Joining Cindy’s business was the logical next step. Being able to work together added icing to the cake.

DR      What was it Dave that made you such an early and strong supporter of repairs versus replacements?

DT      Cindy founded the business as a windshield repair-only business before we had even met. Eventually we expanded from repair to full service.  Unfortunately for the consumer, and perhaps fortunately for us, 25 years ago most glass companies were focused on replacement. They probably felt it was best for their glass company.  Solid business management practices made repair profitable for us and a well executed repair program gave us a significant and profitable competitive advantage. Providing customers with their best solution to an auto glass problem, be it repair or replacement, was our primary business strategy.

DR      This question is for both of you. What can you tell the readers of this blog made the biggest difference in the growth and sustainability of Cindy Rowe Auto Glass over the years?

CR-T  Staying ahead of the industry with their many changes, starting with the early 90’s and on.  Customer service was not to be compromised and keeping valued employees.  Early on, Dave and I decided that advertising heavily and educating the public would do well.

DT      Consistently providing the best quality service to customers and aggressive brand building through media and public relations.

DR      I know that in my own career finding the right mix of people made all the difference in my finding success that I’ve enjoyed. At Cindy Rowe how were you both able to always ensure that you surrounded yourself with the best people, that you got the best from them and what advice can you offer those in business today as to that importance?

DT      Choose wisely, treat kindly.

CR-T  Fairly early on, we decided to hire people “green” and train them, offer good benefits, keep them abreast of the industry and give some autonomy.

DR      At Cindy Rowe you provided consumers in the Pennsylvania and Maryland markets you served with AGRR services, but you also offered paint-less dent repair. Would you suggest paint-less dent repair (PDR) as an additional product line that for those in business looking for additional revenue streams? And if not paint-less dent repair are there other products you think work well in today’s AGRR business?

DT      PDR is a profitable but technically challenging service. While it worked for us, it has proved difficult for many AGR companies to integrate into their businesses. I like what I saw during Auto Glass Week’s joint event with the window film industry.  We would have given window film a thorough evaluation.

DR      Something that some may not have known about you Cindy is that you are a registered nurse and that you’ve donated your time and expertise to those in need while in business at Cindy Rowe Auto Glass and still to this day being retired in Florida. Were you a registered nurse when you first started Cindy Rowe Auto Glass?

CR-T  Yes, for 13 years.  In 2002 I took the “Refresher Course” for RN’s and have been volunteering since in an area where uninsured patients are treated.  It is gratifying to be able to give back in some capacity.

DR      What traits or experiences in your background Cindy gave you the ability to find such success in business?

CR-T  I would guess perseverance, honesty, not afraid of working extra (lots of that for years), organization and time management skills.

DR      Here is a question for you both. Using radio and/or television advertising was a way that you got your name out into the marketplace and helped establish and differentiate Cindy Rowe Auto Glass. It is expensive to advertise on radio and television. When you look back at the genesis of Cindy Rowe through the day you departed the business, what was it that caused you to make that decision to spend money on that form of advertising?

DT      When we expanded from being a car dealer driven windshield repair only business to full service auto glass, we were the new kids on an already crowded block. Capturing the customer through the traditional referral routes would have taken a decade or more. So we went directly to the customer with Radio/TV and created an awareness and demand for our brand. When TPA’s began to capture significant market share, our brand building paid off handsomely. We were the only AGR company anyone in our markets had ever heard of and they asked for us. We never anticipated TPA’s when we began our brand building but brand building saved our skin when TPA’s took over most of the insurance business.

           Radio/TV and now internet are the effective media tools to build your brand with the general public. To influence “choice” at TPAs we wanted to be top-of-the-mind before the customer calls the TPA. Branding is a prerequisite to being “chosen”.  While media is expensive, aggressive purchasing strategies can help control the costs.

DR      Here’s a non-industry question. You mentioned that you are avid cyclers. Can you tell me what countries you’ve cycled and as a follow-up what you’ve learned about yourselves in your cycling adventures?

CR-T Cycling helps keep one in good physical condition and it really is a focus issue while on the bike – lots of issues to watch out; cannot daydream.

DT      United States, Canada, Bermuda, Denmark, Germany, Austria, Italy, France, Luxembourg, Slovenia, Hungary, Lichtenstein, South Africa and Switzerland.

DR      One thing I’ve noticed is that you both smile quite a bit. Can you say you’re both happier now that you’ve left the industry? What is it you miss being in business?

DT      Happier? YES! What I miss about the business is the daily challenge to effectively manage the unending stream of issues. In retirement I can choose easier and less stressful challenges.

CR-T  I look at it as another chapter in life. I have always loved my work, but times change and I am now thoroughly enjoying retirement with Dave. One of the things I missed when we first left was seeing the people in the office. My people spoiled me and it did not go unnoticed by me!

DR      My thanks to you both for taking the time to answer my all of my questions.

For those of you who haven’t had the opportunity to meet Dave and Cindy I can tell you from personal experience with them that they are good people. Truly fine people; who have effected and changed the lives of those that have come into contact with them over the years. Whether that interaction was in the business they operated together, the AGRR industry they both left their mark on or in their active community service over the years, both Cindy and Dave have given their time to those who sought them out or they felt needed their help.

The industry has been made better by their being a part of it and I hope that they continue to be active in helping to improve it in the future.

Just sayin’.

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