Organised Retail in Tyres: Global Examples
- 1. www.indiabusinessreports.com Organised Retail in Tyres: Global Examples Sector: Retail Sep 2013
- 2. Index US 3 Europe 12 ROW 16 Transactions 20 www.indiabusinessreports.com Global Tyre Retail 2
- 3. US www.indiabusinessreports.com Indian Dental Services Market
- 4. Discount Tire (unlisted) • Started in 1960 • Claims to be the world’s largest tyre retailer, with over 850 stores • The company remains privately owned • Has stuck to the knitting – sells only tyres and accessories like alloy wheels www.indiabusinessreports.com 4Global Tyre Retail 1 7 36 209 418 790 850 1960 1970 1980 1990 2000 2010 2013 Store Count - Discount Tire
- 5. TBC Corporation (was listed, now acquired) • Traces origin to 1956, then called Cordovan Associates. • Cordovan Associates changed its name to Tire & Battery Corporation in 1972 • Brands include Tire Kingdom, National Tire and Battery, and franchised stores under Big O Tires. Has close to 850 outlets • Markets and sells nine proprietary brand of tires • Also does tyre distribution through Carroll Tire wholesale distribution centers, where it markets to independent tire dealers across the United States. • In 2005, TBC Corporation was purchased by Sumitomo Corporation of America (SCOA) in a $1.1bn transaction www.indiabusinessreports.com 5Global Tyre Retail
- 6. Les Schwab (unlisted) • Started in 1952, in Pinedale, Oregon • Close to 450 stores, present in nine states in Western USA • Employs 7000+ people, highly regarded for its employee friendly policies • In addition to tires, the company sells a variety of other auto parts and auto related services, including brakes and shockers. • Privately held • Revenues reportedly around $1.6bn www.indiabusinessreports.com 6Global Tyre Retail
- 7. Monro Muffler Brake and Service Inc (listed) www.indiabusinessreports.com 7Global Tyre Retail • Started in 1952, listed in 1991 • 935 stores in 22 states, of which, 397 tire stores are tire stores, and the rest are service stores • Has the following business areas: Tyres (42%), Maintenance (29%), Brakes (15%), Steering (10%), Exhaust (4%) • 2012 turnover - $686mn, EBIDTA margin – 16.8%, Net Margin – 8% • Tyres 42% of total sales, from 434 stores. Has done 24 acquisitions in 11 years to build the tyre vertical. Aiming for 1300 tire stores • Market cap: $1.38bn. • Valuation (www.finance.yahoo.com) – EV/EBITDA: 14x – Price/Sales: 1.8 – P/E: 32 (trailing) – P/E (FY15): 20x ($mn) FY11 FY12 FY13 Revenues 637 687 732 Growth (%) 12.8 7.8 6.6 EBITDA 101 116 101 Margin (%) 15.9 16.9 13.8 Net Income 46 55 43
- 8. The Pep Boys (listed) www.indiabusinessreports.com 8Global Tyre Retail • Started in 1921 • Has 750+ stores in 35 states of US, and 19,000 employees • 12.8 million sft of retail space, 7300 service bays • Apart from tires, provides a variety of automotive repair services including: Scheduled maintenance services, oil changes and tune- ups, brake repair and replacement, air conditioning, financial services • Tires are 19% of revenue, other parts and accessories are 60%, and service is 21% • Market cap: $639mn. • Valuation (www.finance.yahoo.com) – EV/EBITDA: 7.8x – Price/Sales: 1.15x – P/E: n.a – P/E (FY15): 18x ($mn) FY11 FY12 FY13 Revenues 1989 2063 2091 Growth (%) 3.7 1.4 EBITDA 83 66 12 Margin (%) 4.2 3.2 0.6 Net Income 36 29 13
- 9. TCi Tire Centers (unlisted) www.indiabusinessreports.com 9Global Tyre Retail • A wholly owned subsidiary of Michelin North America Inc. • 58 retail locations • 77 wholesale distribution centers • 10 retreading plants • Has two divisions: distribution and commercial. – The distribution division serves passenger and light truck tire retailers across the country. – TCi supports its truck and earthmover customers from its 68 commercial centers located throughout the United States.
- 10. S&S Tire www.indiabusinessreports.com 10Global Tyre Retail • Started in 1974 • Current size: – 8 Retail Tire Stores – 18 Commercial Truck Tire Centers, – 3 Tire Retreading Plants, – 10 Wholesale Tire Distribution Centers – Over 1 million square feet of inventory space • Does business in 15 states.
- 11. Tire Distribution Systems (TDS) www.indiabusinessreports.com 11Global Tyre Retail • 44 locations in 8 states • Formed in 1996, when Bandag, world’s largest supplier of retreading materials, acquired 100 percent interests in five Bandag dealerships through a newly formed subsidiary, Tire Distribution Systems, Inc. • In 1996, these dealerships had aggregate pre-tax earnings of $16 million, net sales of approximately $366 million • Aggregate cash purchase price of the transactions was approximately $158.5 million • In 2006, Bandag itself got acquired by Bridgestone Americas Holding, Inc., the U.S. subsidiary of Japan’s Bridgestone Corporation
- 12. Europe www.indiabusinessreports.com Indian Dental Services Market
- 13. Euromaster • Fully owned subsidiary of Michelin • Started in the 1967 in UK, known as ATS then. • In 1991, the brand Euromaster is created, ATS network became ATS Euromaster. • In 1992, the first center branded Euromaster is opened in France • Network now present in 17 countries, and over 2200 outlets • Key countries: – UK: 476 – France: 408 – Germany: 352 – Spain: 350 – Italy: 105 – Netherlands: 101 – Sweden: 76 • In 2011, Euromaster reported turnover of €1,872m, and had 11,500 employees • Sells over 9 million car tyres per year, of all brands (not just Michelin) www.indiabusinessreports.com 13Global Tyre Retail
- 14. Kwik Fit • Started in 1971 • 1,218 directly-managed tyre fitting centres in the UK, France and Holland. • Market leader in UK and Holland • In 1995 Kwik Fit Insurance Services was launched to offer Kwik Fit branded motor insurance on behalf of a panel of leading insurance companies. • The Group’s turnover in 2010 was £875 million, of which the Group’s major business, Kwik-Fit UK, with 673 centres, represented £561 million Ownership changes at Kwik Fit • 1999: Acquired by The Ford Motor Company for more than $1billion • 2002: Ford divests to CVC Capital Partners • 2005: Acquired by PAI Partners, which sold sold its German subsidiary Pit- Stop and also sold Kwik Fit Financial Services to Fortis UK. • 2011: Acquired by Itochu Corp www.indiabusinessreports.com 14Global Tyre Retail
- 15. Vianor Tyres • Owned by Nokian Tyres, a leading Nordic tyre manufacturer • Vianor is the biggest tyre chain, in terms of size and reach, in the Nordic countries, Russia and the CIS countries. • In year-end 2012, the chain comprised 1,037 sales outlets in 26 different countries in Nokian Tyres’ core market regions. • The Nokian Tyres Group owns 182 Vianor outlets, while the rest operate on a franchising/partnership principle. • In 2012, the chain grew with 127 new outlets. • Net sales in 2012 was Euro 315 mn • Apart from tyres and related accessories (like rims), its outlets sell other car parts like: car batteries, shock absorbers, exhaust pipes, oils and other car parts. • Its service selection includes tyre storage, oil change, air conditioner service, brake adjustment and adjustment of steering angles. www.indiabusinessreports.com 15Global Tyre Retail
- 16. RoW www.indiabusinessreports.com Indian Dental Services Market
- 17. Canadian Tire Corp (listed) • Started in 1922 • 490 tire outlets, all in Canada • Has moved much beyond tire retail, into areas like gasoline retail, home products, garments • Does not disclose tire revenue separately. Total retail revenue was C$10.4bn in 2012. • Market Cap: $7.5bn • Valuation (www.finance.yahoo.com) – EV/EBITDA: 12x – Price/Sales: 0.68 – EV/Sales: 0.88 – P/E: 15 (trailing) www.indiabusinessreports.com 17Global Tyre Retail (C$mn) 2011 2012 Revenues 10,387 11,427 Growth (%) 10.0 EBITDA 762 803 Margin (%) 7.3 7.0 Net Income 467 499
- 18. Beaurepaire (unlisted) • Started in 1922 • Australia's leading tyre retailer, with approximately 300 stores nationwide. • Merged with Dunlop Group in 1980 www.indiabusinessreports.com 18Global Tyre Retail
- 19. Bob Jane T Mart (unlisted) • Started in 1965 • Has 156 outlets currently through Australia • Apart from tyres, sells car batteries as well www.indiabusinessreports.com 19Global Tyre Retail
- 20. Transactions www.indiabusinessreports.com Indian Dental Services Market
- 21. Japanese conglomerates entering US, Europe www.indiabusinessreports.com 21Global Tyre Retail TBC Corp – Sumitomo Corporation • In 2005, TBC Corporation was purchased by Sumitomo Corporation of America (SCOA) in $1.1bn transaction • Was listed on Nasdaq prior to this Kwik Fit – many —Itochu Corp • Sold in 1999 by the promoter to the Fort Motor Company for US $1.6b. • Ford sold in 2002 to CVC Capital Partners • In 2005, Kwik Fit was sold for £800m to PAI Partners, a leading French-based private equity firm. • The Kwik Fit Financial Services arm of the business was sold by PAI to Fortis Insurance UK, now Ageas (UK) Limited, for a figure of £215m in 2010, while the tyre retailing and service centre business was sold to ITOCHU Corporation for $1bn
- 22. Acquisitions by Tyre Cos www.indiabusinessreports.com 22Global Tyre Retail Pirelli’s several acquisitions • Däckia Holding AB, Sweden, 2011: Acquired Sweden’s multi-brand tyre distribution from the private equity group Procuritas Capital and minority shareholders for 625 million kronor, or approximately 70 million euro. • Campneus, Brazil, 2012: Acquired 60%, 54 outlets • Abouchar, Brazil, 2013: Abouchar had 29 outlet Michelin - TCi • Michelin acquired USA’s largest commercial tyre retailer and retreader TCi in 1999 • At that time, TCi had revenues of around $500mn, from 163 locations
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