TIM after a year of the pandemic. Krzysztof Folta: “We are already playing in a different league”

Analysts at PKO BP bank forecast an increase in revenues and profits in the coming years and regular dividend payments for TIM.– After the pandemic customers – both individual and business ones – will continue to shop online. This is what I am convinced of – says Krzysztof Folta, President of TIM SA. 

Aren’t you afraid of the end of the pandemic? 

I’m surprised by this question. When it comes to health issues, I can’t wait for it to end 

And in terms of business? After all, the pandemic has helped TIM in its very dynamic development.

It’s true. A year ago I said that we have been facing an opportunity we had never had before. We took it, still it is the result of hard work of the entire team not only during the last year but over the last 8 years, i.e. from the moment of the decision to change the company’s business model and enter e-commerce. 

My impression, however, is the market wouldn’t have noticed this change hadn’t it been for the pandemic. TIM’s share price has increased by about 200% within the last 12 months. 

This change in the perception of TIM from a wholesaler of electrotechnical materials to a serious e-commerce market player is undoubtedly one of our successes. But let me say it once again: we have been working long and hard to achieve this. 

During the meeting with analysts, summarizing the results for 2020, you said that that was the last time you presented a slide comparing TIM to companies in the electrotechnical industry. 

It’s because we are already playing in a different league. Just like today nobody compares Amazon to Wallmart, although both entities are involved in trade. This is why I can reply, I’m now getting back to the question about “concerns” related to the end of the pandemic, that eight years after the implementation of the business model based on online sales TIM is prepared to develop at least as fast as the e-commerce market. 

Meaning what? 

PwC, a consulting company, forecasts that this market will grow in Poland annually at the rate of 12%. After the pandemic, customers – both individual and business ones – will continue to shop online. This is what I am convinced of. 

More so, we are strongly supported by the demographic trend. TIM solicits about a thousand new customers a month. These are mostly young people who expect the provision of full service from the level of a computer or smartphone. They quite rarely contact their account managers directly. 

Exactly. In 2020 TIM’s sales exceeded PLN 2.5 million per day (+13% y/y). It was handled by 75 salesmen. 

This shows best how our hybrid sales model works. In the traditional one, each of our salesmen would have to handle over 230 orders a day. That would be undoable. 

Let’s get back to the average annual growth of the e-commerce market by 12 percent. How will that translate into TIM’s results? 

We do not share forecasts. But it is quite easy, based on this, to calculate the potential for the growth of revenues. In its latest forecast, PKO BP estimates TIM’s revenues for over PLN 1.3 billion and PLN 56.5 million of net profit in 2023. Analysts also point to the company’s high dividend potential. 

You have surprised the investors with high dividend his year. 

Once again let me refer to the American market: there the first dividend league is made up of companies that have been paying dividends for at least 20-25 years increasing it year by year and the company capitalization itself exceeds USD 2 billion. 

Is this your goal? 

One needs ambitious goals. (laughing). We certainly want TIM to be perceived as a dividend company which increases profit distributions to shareholders year by year. In the aforementioned analysis, PKO BP forecasts a dividend per share in the amount of: PLN 1.6 for the year 2021, PLN 1.68 for the year 2022 and PLN 1.77 for the year 2023. 

In the presentation regarding plans for the coming quarters you mention the expansion of the warehouse of 3LP, the company being a part of the TIM Capital Group. 

The facility with an area of 25 thousand sq. m will be fully automated, adapted to handle the most demanding customers from the e-commerce industry. The warehouse will be built by the developer on a plot we’re going to sell them. 3LP will invest in automation and will manage the facility. We are already operating in this system with such customers as Oponeo.pl or IKEA. Everything works like clockwork, 20 hours a day, 7 days a week. 

The plans also include forwarding services for 3LP customers. Do you want your own truck fleet? 

No. We will manage the fleet in cooperation with transport companies whom we have very good relations with. All this to provide customers with the most comprehensive e-commerce service at a single address: 3LP. This company is invariably the black horse within our group, we stake on.