The Hungarian company, Waberer’s reported financial results for Q4 2018. The company’s income fell both in the last quarter (by 6.1%) and in the whole of last year (by 1.9%). That is why the new president of the company, which since February is Robert Ziegler (pictured), announces some actions – also far-reaching changes, which are to restore profitability. One of them may be the reduction of the fleet.
Waberer’s revenue in the fourth quarter of 2018 increased by 4% year-on-year to EUR 186m, the financial report reads. The increase in revenues was achieved thanks to a price change strategy which led to an increase in average prices in both the international and regional transport segments. And although the company’s truck capacity increased by 7% year-on-year, the decrease in the use of these capacities offset most of the effects of the increased rates.
The company also admits that, to a lesser extent, but the freight forwarding and logistics were affected by the slowdown in demand. This was a consequence of the general situation in the European economy, where demand slowed down in the last three months of 2018. The GDP of key euro area markets grew slightly or even negatively.
Moreover, the decrease in production in factories in the automotive sector also contributed to a decrease in demand for transport services, while total industrial production decreased by 2-4 per cent in the fourth quarter.
Indicators of overcapacity in the European transport sector have worsened and it is estimated that prices in the transport market have fallen by as much as 6% compared to the same period in 2017. In Hungary, however, the economic environment remained favourable, with GDP growing by 5% in Q4 2018 and a similar increase in industrial production and retail trade,” the Waberer’s report reads.
Rising costs impacted the results
Therefore, the bottom line of the Hungarian company is not impressive – a loss of EUR 1.5 million in Q4 2018. What is more, the financial situation of the company was still negatively affected by currency movements, which also affected this result.
Waberer’s was also significantly affected by the increase in costs of running a business. According to the company, direct salaries, benefits and bonuses, including mainly salaries for drivers, increased in the fourth quarter of 2018 by 13 per cent year-on-year to the level of EUR 32 million.
Drivers’ salaries per kilometre were on average 8 per cent higher in the international segment and 24 per cent higher in the regional segment,” the company reports.
On the other hand, fuel costs increased by 12% (up to EUR 33 million) and road tolls and transit costs by 6% (up to EUR 32 million).
“No doubt 2018 was a difficult year for Waberer’s. On the one hand, the company had to face pressure from key cost elements, and on the other hand, it had overcapacity in the second half of the year. The company was therefore faced with lower margins and a rapidly changing situation in the very competitive European market of truck cargo,” notes Robert Ziegler, President of Waberer’s.
Fleet reduction not excluded
Ziegler sat in the President’s seat on February 1st, replacing Ferenc Lajko. In the first weeks after the takeover, he supervised the short-term measures taken to restore the company’s profitability as soon as possible. He also started to set plans for the future.
“I also realised that Waberer’s needs deeper changes, which I will be happy to implement,” adds Ziegler.
According to the president of Waberer’s, the most crucial element of short-term action is the reduction of loss-making factors, which should lead to an increase in the use of the fleet.
The order for more than 300 trucks has been put on hold and if profitability does not improve sufficiently, we are ready to further reduce the fleet,” announces Ziegler.
The company also conducted a thorough cost review to assess whether there is still room for further optimisation (especially in the area of transit and fuel costs).
A change in strategy is to be implemented
However, the head of the company believes that these short-term measures are insufficient to guarantee sustainable development and a return to growth.
We have identified a number of structural problems that prevent us from being a truly competitive player in changing markets,” admits Ziegler.
In his opinion, Waberer’s business offer is too much based on its fleet. A better balance between vehicle ownership and contracted capacity is therefore needed. Hence, the company’s authorities, together with experts and customers, work on updating the strategy. “2019 will be the year of transformation for Waberer’s,” concludes Ziegler.