Expert RA assigned a ruBBB- level credit rating to AVTODOM
The Expert RA rating agency assigned a credit rating to the non-financial company AVTODOM at the ruBBB- level. Rating outlook is stable.
- (1888PressRelease) April 20, 2021 - AVTODOM Company is a car dealer holding leading positions in the automotive market in Moscow and St. Petersburg. The company, either directly or through 100% ownership of subsidiaries, specializes in the luxury and premium segments. The dealer network includes 21 centers. The company’s portfolio includes 9 brands: BMW, BMW Motorrad, MINI, Lamborghini, Mercedes-Benz, smart, Porsche, Audi and KTM. The company's revenue is forming through the sale new cars, used cars, service maintenance, trade-in, sale of spare parts and accessories, insurance and financial products.
1.6 million new cars were sold in Russia in 2020, which is 9% less than in the previous year. Despite the decline in sales in physical terms, the year was successful for car dealers. Delays in supply chains and temporary production interruptions at automaker plants have occurred due to the coronavirus pandemic. In 2020, a shortage of new cars drove up prices. The devaluation of the ruble and global uncertainty about the economic recovery supported the presence of demand. In contrast, in past years, dealers' warehouses have been overcrowded and they have been forced to maintain inventory turnover through discounts.
At the end of 2019, AVTODOM increased its stocks of new vehicles beyond the planned values, anticipating possible complications in the supply chain. The company's revenue increased by almost 50% to RUB 44 billion due to the above factors. EBITDA grew 2.5 times and, according to Expert RA estimates, amounted to RUB 4.3 billion. AVTODOM has carried out a set of measures for the development IT infrastructure and revised marketing strategy in recent years. Together with strong sales, this allowed the company to increase its EBITDA margin to 9.6% in 2020, up from 5.9% a year earlier. FCF profitability was 6.5%, which is also a high result for the industry.
«We are focused on growing business profitability and increasing sales margins across all our brands. Among our priority areas are business development, including through M&A deals in auto retail, and the introduction of new products to the market», – commented Andrey Olkhovsky, CEO of AVTODOM.
Offers from existing players of the sale their business appeared on the market against the background of a successful year for car dealers. AVTODOM took advantage of these offers due to limited opportunities to open new dealerships in the regions of its presence. In 2020, the company acquired 3 Audi dealerships and 1 BMW dealership and plans to purchase 2 another dealerships in Moscow. The deal should take place in the second half of 2021. All M&A deals involve concentration on premium brands in accordance with the development strategy of AVTODOM. In addition, AVTODOM signed an import agreement with KTM for the development of the KTM dealer city in the Russian Federation. In 2021, KTM's own dealership was already opened and several dealer contracts were concluded.
«We strive to raise capital for business development, like other large companies. To scale up a successful project, there is not enough financing from borrowed funds - there is a need for additional capital. This spring, our company launched its own service AVTODOM Subscription. Here we see great potential and feel the need for long-term investments. We plan to raise funds through public tools to scale this project. The issue of interaction with distributors and importers remains important. We will unconditionally comply all our agreements, – Andrey Olkhovsky continued to share ambitious plans for the development of AVTODOM. – Our immediate plans are to become one of the first Russian car dealers who can turn a startup into an independent sustainable company that will issue its own public shares and go to an IPO. Before that, we have a lot of work to do to bring the startup to the level at which public funding will be available. For us, this step is not just an attempt to make money. This is an opportunity to attract investments for the development our company and increase the profitability of all areas of business».
According to the reporting data according to RAS standards, the revenue of AVTODOM for 2020 amounted to 44.4 billion rubles, net profit - 2.1 billion rubles, the company's assets as of 31.12.2020 amounted to 25.3 billion rubles, equity capital - 6.2 billion rub.
The credit rating was assigned by AVTODOM for the first time.
The credit rating is assigned according to the Russian national scale and is long-term. The credit rating and outlook are expected to be revised no later than 1 year from the date of this press release.
AVTODOM was founded in 1992. The company specializes in the sale and maintenance of luxury and premium cars. Cooperation with the BMW concern has become the basis of the long-term successful history of the company. AVTODOM became the first official BMW dealer in Russia. In 2002, AVTODOM became the first official MINI dealer in the country. Now the dealer network includes 21 centers. The company's portfolio includes 9 brands: BMW, BMW Motorrad, MINI, Lamborghini, Mercedes-Benz, smart, Porsche, Audi and KTM.
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