Record-breaking 2022 – a show of strength of the TIM Group [PRESENTATION]
The 35 years of TIM S.A.’s presence on the market were celebrated by the TIM Group with the best results in history – not only at the sales level, but also, for example, at the level of financial flows. In 2022, for the first time, TIM’s revenues from online sales carried out by customers independently exceeded PLN 1 billion, and installers were the largest group of TIM customers in terms of revenue. And all this in the conditions of an extremely dynamic market and geopolitical situation.
Consolidated and unit sales revenues in 2022 amounted to PLN 1.52 and 1.45 billion respectively (+15.9% and +16.1% yoy). EBITDA also recorded historic levels: PLN 129.2 million for TIM (+18.8% yoy) and PLN 160.4 million for the TIM Group (+10.9% yoy).
“The bar is set high, but we like to set ourselves ambitious goals and then achieve them. That is why last year we presented a new, long-term development strategy for TIM, with financial goals set until 2026: exceeding PLN 3 billion in revenue and PLN 250 million EBITDA at the unit level,” says Krzysztof Folta, President of the Management Board of TIM SA. “We want to be a true centre of electrical engineering, which is why we are working intensively on the fullest possible implementation of our new mission: Make work easier for professionals,” adds Krzysztof Folta.
Record number of customers and expected change of seats
And it was professionals, i.e. various types of contractors of installation works, qualified within the segmentation applicable in TIM to the “Installer” sector, who overtook resellers and took first place in 2022 in terms of sales revenue. Their share in last year’s revenues was 43.7% (+2.9 pp yoy). Resellers, i.e. sellers and wholesalers of electrical engineering items, were the source of 36.2% of revenues (-4.8 pp. yoy). The next two places were taken by the broadly understood industrial sector, i.e. OEM production (9%) and maintenance (8.3%).
“The first year in which sales to the installation sector accounted for the highest revenues is behind us. The effect of changes in the scope of customer segments results from the pro-sales activities aimed at strengthening the “Installer” and “Industry” segments. In the case of the former, it is also the result of the growing conviction and trust in shopping via the Internet,” explains Piotr Nosal, Member of the Management Board and Commercial Director of TIM SA.
Trust in the e-commerce model of sales is perfectly visible in the statistics on the number of customers. The number of customers who made a purchase from TIM at least once in 2022 was 84,000 compared to 51,790 in 2021 (+62.1% yoy). The number of key customers, i.e. those with sales higher than PLN 1,500 per month over the last 12 months, increased to almost 22,700 at the end of 2022, i.e. by 25.3% compared to the same period of 2021. The number of loyal customers, i.e. those who made purchases in at least six of the last 12 months, amounted to almost 7,100 at the end of December 2022 (+10.3% yoy). In addition, TIM’s revenues from online sales carried out independently by customers in 2022 amounted to PLN 1 billion for the first time in history.
“Although our record-breaking results are more than satisfactory, it was not an easy year. The market, which has not yet recovered from the pandemic, has become volatile once again due to the Russian invasion of Ukraine, record inflation, rising interest rates and the energy crisis. The TIM Group treated the market turmoil as an opportunity. The year 2022 showed the strength of our organisations. This resulted in a record number of both new and loyal customers. Once again, we have proven that we are able to adapt to changing external conditions and use them to the benefit of our companies,” emphasizes Krzysztof Folta.
Very good liquidity position
In addition to the already mentioned record sales revenues and EBITDA, the TIM Group recorded a historic net profit in 2022, which increased year-on-year by 11.3%, to almost PLN 102.2 million.
“It is the fifth year in a row, in which we achieved revenues and profits higher than in the previous year, and we improved profitability. The liquidity situation of the TIM Group is also very good,” points out Piotr Tokarczuk, Member of the Management Board and Financial Director of TIM SA. “In 2022, we generated PLN 129 million of positive cash flows from operating activities compared to PLN 67 million a year earlier. Such a strong operating cash flow was driven by high operating profitability and optimization of net working capital. The very good liquidity position allowed for the payment of a record dividend of PLN 57 million in 2022. We did it without the need to reach for external sources of financing. At the end of the year, we still had PLN 35 million of free cash, and the interest debt remained negative,” adds Piotr Tokarczuk.
The logistics company 3LP is also developing dynamically. At the end of 2022, it already managed 184 thousand sqm of warehouse space in Siechnice and Krajkowo near Wrocław, as well as in Syców and Zelgoszcz near Łódź. Sales revenues in 3LP SA amounted to over PLN 163.3 million in 2022 (+15% yoy). The increase in 3LP’s revenues from the sale of logistics services to external customers amounted to 12% (PLN 70 million).
Call for the sale of TIM SA shares
As previously announced, FEGA & Schmitt Elektrogroßhandel GmbH, an entity belonging to the international Würth Group, announced on a call for the sale of all TIM SA shares on 20 April 2023. Subscriptions for the sale of shares is possible at brokerage houses from 26 April 2023. This is the result of a review of strategic options, started by the Management Board of TIM in August 2022. As a result of a process that lasted many months, the Management Board of TIM SA selected the offer of the Würth Group as the most advantageous. The main shareholders of TIM, holding a total of approx. 42% of the Company’s shares, including i.a. President, Krzysztof Folta, and other members of the Management Board of TIM SA, as well as Chairman of the Supervisory Board of TIM SA, Krzysztof Wieczorkowski, and President of the Management Board of 3LP SA, Maciej Posadzy, have already signed agreements under which they have committed to sell their shares under the call.
“The basic assumption was to conduct the entire process in a transparent, in line with the best M&A practices, and highly competitive manner – so that it would result in maximizing value for current shareholders and ensuring positive long-term development prospects for both companies forming the TIM Group,” explains Piotr Tokarczuk.
“The comprehensive proposal submitted by the Würth Group was the most advantageous. Würth is a reputable company with long traditions and successes in the development of the distribution business on an international scale, focused on long-term investments. Thanks to this, we are guaranteed the continued presence of the TIM and 3LP brands on the market, as well as the certainty of further development in the areas of digitization, automation, expanding the range of products and logistics,” emphasises Krzysztof Folta.
New ESG strategy
Work on the first ever ESG strategy for the entire TIM Capital Group lasted a little less than a review of strategic options. Earlier (since 2019), TIM had its own strategy, while 3LP had a sustainable development policy.
The new strategy for 2023–2026 is based on three pillars (Sustainable relationships, Innovative activities, Development opportunities), from which the goals and priorities emerge. Four of the measurable goals have been set at the Group level (three of them support the implementation of the goals set out in the UN 2030 Agenda for Sustainable Development), and a dozen or so others – at the level of individual companies.
“We maintain and deepen the social commitment that is inscribed in the DNA of the TIM Group. For example, at TIM we continue the existing employee volunteer and grant programs. At the same time, we do not forget about extremely important environmental goals,” says Piotr Tokarczuk.
The TIM Group calculated its carbon footprint for the first time (in scope 1 and 2) in 2022, and its reduction is one of the goals included in the ESG strategy.
“In order to reduce our environmental footprint, we plan actions both within the Group (replacement of the car fleet in TIM with a hybrid or electric one, replacement of batteries with lithium-ion batteries in forklifts in 3LP) and in relation to our customers (expansion and promotion of the RES portfolio on TIM.pl). Modern technologies are important not only for the environment, but also for the labour market. That is why we are planning partnerships with organisations that strengthen the digital competences of children and young people and support young programmers,” adds Piotr Tokarczuk.
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