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Articles

Sales of new automobiles drive significant improvement to revenue and profits for EuroSports - 2019 Annual Report

2020/03/06

Source: Pixabay

EuroSports Global Limited (EuroSports)

Source: EuroSports

Established in 1998, EuroSports is in the business of distributing ultra-luxury and luxury automobiles, as well as the provision of after-sales services. The company’s Automobile Sales business retails new and pre-owned automobile brands – mainly Lamborghini and Alfa Romeo.

FY 2019 Financial Highlights:

Source: EuroSports FY 2019 Annual Report

  • EuroSports’ revenue grew by 58.0% year-on-year to SGD 96.2 million in FY 2019 (FY 2018: SGD 60.9 million).
  • Consequently, FY 2019 gross profit surged by 80.7% year-on-year to SGD 15.9 million, while gross profit margin increased from the 14.4% in FY 2018 to 16.5% this financial year.
  • Net profit in FY 2019 improved to SGD 0.03 million, compared to the net loss of SGD 4.0 million in FY 2018.

Performance Drivers:

Source: EuroSports FY 2019 Annual Report

Performance Drivers (Positive Factors)

  • Sales of New Automobiles

EuroSports’ improved revenue figures for the year was primarily due to a 76.8% increase in sales of all automobiles from SGD 49.9 million in FY 2018 to SGD 88.2 million in FY 2019. This increase in all automobile revenues was in turn backed by higher sales in new automobiles – such as the Lamborghini Urus, Alfa Romeo Giulia and Alfa Romeo Stelvio. As a proportion of total FY 2019 revenues, sales of new automobiles accounted for 76.0%, as compared to 50.9% last year. The rise in new automobiles sales also contributed to the higher margins for this financial year.

Performance Drivers (Negative Factors)

  • Sales of Pre-Owned Automobiles

Although EuroSports recorded an overall year-on-year increase in sales of all automobiles for FY 2019, there was actually a decrease in the sales of pre-owned automobiles. As a proportion of total FY 2019 revenues, sales of pre-owned automobiles accounted for 15.7%, as compared to 31.0% last year.

  • Sales of Parts and Services

EuroSports experienced a 27.5% drop in sales of parts and servicing from SGD 10.2 million in FY 2018 to SGD 7.4 million this year. As a proportion of total FY 2019 revenues, sales from this segment accounted for 7.7%, as compared to 16.7% last year.

  • Sale of Watches

The company saw its sales of watches decrease by 25% from SGD 0.8 million last year to SGD 0.6 million in FY 2019. As a proportion of total FY 2019 revenues, sales from this segment accounted for 0.6%, as compared to 1.4% last year. EuroSports will continue to review this segment, which was incorporated in 2012 for the exclusive distribution of the deLaCour brand in Singapore, Malaysia, Indonesia and Thailand. Although the company believes that it is still a desirable brand, there is a need to reassess their marketing efforts and reconsider their next steps.

  • Discontinued / New Businesses

In FY 2019, EuroSports decided to dispose of underperforming businesses to focus on their core business segments, as well as develop their new sustainable mobility segment.

The company successfully disposed of subsidiaries AutoInc EuroSports (involved in the sale and leasing of pre-owned luxury automobiles) and Ultimate Drive EuroSports (involved in their experiential business of operating a membership fee-based supercar club and short term rental of premium sports and luxury cars). EuroSports ceased these two businesses as they had been badly impacted by intense competition and the weak economic conditions.

Meanwhile, EuroSports embarked on a new project through wholly-owned subsidiary, EuroSports Technologies (EST), to develop a sustainable mobility solution in the form of a fully electric motorcycle (e-bike). EST is involved in the research and development of the e-bike and clean energy charging ecosystems. EST will also be responsible for the regional distribution of the e-bikes after their launch and start of sales at the end of 2020. As this project is still in the investment phase, it at a loss of SGD 0.6 million in FY 2019.

Source: EuroSports FY 2019 Annual Report

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