Inter Cars SA
WSE:CAR
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
468
625
|
| Price Target |
|
We'll email you a reminder when the closing price reaches PLN.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Earnings Call Analysis
Q2-2024 Analysis
Inter Cars SA
In the first half of 2024, Inter Cars reported consolidated sales revenues of PLN 9.4 billion, reflecting an 8% increase from PLN 8.7 billion a year earlier. However, this increase fell short of internal expectations. Notably, when revenues are converted to euros, the growth appears stronger at 15%. The unit sales growth reached 10%, aligning closely with the company's initial guidance of 10% to 12%. There was a proactive effort to compensate for unfavorable currency fluctuations affecting reported revenues, underscoring the company's adaptability in challenging economic conditions.
Net profit for Inter Cars stood at PLN 345 million, a decline of 3% compared to the previous year. Despite a positive shift in Q2 2024, where net profit surged by 23% to PLN 189 million, the overall figures were affected by negative exchange rate adjustments totalling PLN 20 million for the first half of the year. The decline in gross margin, which fell from 29.8% to 28.6%, highlights the impact of fluctuating costs and pricing strategies. The overall operational efficiency indicates a focused effort on margin optimization despite external market pressures.
The management, while facing increased operational costs (14.1% of sales, a rise of 0.4 percentage points), remains confident in its ability to reduce the cost-to-sales ratio compared to 2023's levels. Specific guidance for the remainder of 2024 indicates planned cost adjustments to maintain this ambitious target, setting the stage for stronger profitability. The strategy emphasizes process optimization and ongoing assessment of initiatives to adapt to market dynamics.
The competitive landscape remains fragmented, particularly in Europe, where the top 10 players hold only 30% of the market, compared to 75-80% in the U.S. This presents an opportunity for Inter Cars to consolidate its position through organic growth and strategic acquisitions. The company targets independent workshops as its primary clientele, providing a one-stop shop for parts and services. Market consolidation trends are anticipated to accelerate, with Inter Cars well-positioned to benefit from larger market share against smaller players.
Inter Cars is making significant investments in automation and logistics, with plans for its first fully robotic warehouse set to become operational by late 2024. Additionally, a larger automated warehouse in Romania is slated for completion in 2025. These developments signal a commitment to enhancing operational capabilities and preparing for future growth as the market for aftermarket services continues to evolve positively. The management noted that they are building a solid foundation for long-term expansion, particularly in the segments of car repairs and ancillary services.
The company is observing a shift in consumer behavior towards more reactive servicing of vehicles, as customers tend to delay repairs unless absolutely necessary. This trend is partly driven by economic considerations, where consumers are opting to purchase used cars rather than investing in repairs. The registration of new and used vehicles in Poland has seen healthy growth rates, yet the immediate demand for parts and services remains cautious as a reactionary approach to vehicle maintenance prevails.
You don't have any saved screeners yet
Hello. Good afternoon, ladies and gentlemen. I would like to welcome you on our regular teleconference meeting with our Board. Today, we will talk about the result of Q2 of 2024. We will start in a moment. Just let in all the interested people. Okay. We can start. So just started the recording. Okay.
Hello, ladies and gentlemen. Just a moment, I just have to unmute. Okay. Welcome to our regular meeting regarding the result of second quarter of 2024. Today's meeting will be held by the Vice President of Inter Cars, Krzysztof Soszynski; and Member of the Board, Piotr Zamora.
The first part of the teleconference will be provided by our Board, and there will be the information about our results. And then second part of the meeting, you will be -- you will have possibilities to ask the questions and get the answer, of course. Our meeting will be recorded, and recordings will be uploaded to our Relations site. So please, Krzysztof.
Good afternoon, ladies and gentlemen. We will start from the description of the market as well the company because I think the second time, we -- together with Piotr, we started to prepare this phone teleconference in English. The European spare parts market has a stable basis for growth following a period of adjustment after COVID-19 and supply chain issues on the supply sides. Supply now exceeds the demand. This trend is observed across the United States, Western, Central, and Eastern Europe.
Our target group for Inter Cars is B2B, car repair shops, point of fixing, which accounts for Inter Cars around 74% of our sales. We act as a one stop shop. Inter Cars provides products and services to drivers, vehicle fleets, and last mile forwarding companies throughout a distribution network. We supply parts and added value to 100,000 regular customers in the category every day, which is our competitive advantage.
Inter Cars plays a critical role in the European distribution network. Our growth strategy based on customer trust allows us to grow at the pace of players who have chosen to grow throughout acquisitions. Our goal is to grow organically with each segment in the countries where we are already present and to expand the growth.
Our customer base, as I mentioned before, independent workshops, workshop chains and vehicle fleets giving us possibility to sell the highest possibility service for mobility in Europe. Our loyalty is 100% toward customers is exactly garage because we can give them all solutions starting from the parts with the know-how, finishing with the garage equipment and financing [ their ] growth. And we believe as well in the process, that entrepreneurs even acting the new technology and the new solutions will need the partners and we build with them kind of a successful ecosystem.
In Inter Cars, only the export is 5%, which mostly what we do toward these export we find the new partners because our network is based on the entrepreneurs, the kinds of the franchiser partners acting based on the distribution contract.
Something which as well we can manage and mention today is like about the consolidation in Europe. 7 players keeping around 25% of the market share. And we see that in United States, the consolidation is on a high, bigger, we could say, stage because these 10 players hold around 85% of the market.
Car sales in Europe are performing well with around 4 endpoints percentage of the grow in the first half of 2024. Touching one market, Poland, our largest market, we see that the registration of the new cars grow is around 16% year-to-year. And as well, registration of used car imported from abroad is around the grow of 24.6%. What we see that in the longer period as well, it will give us the possibility to sell the parts. But after post COVID situation, the people now exactly focus on exchanging the car instead to repair them from the operation, we can call the prevention, they go to the mode of the reaction. If something happened, they go to the garage. We see the nice grow in this product group like, filtration, lubricants, brakes, this, which is exactly to the first service after somebody buy the car, in place of the more advanced operation like change clutch or change timing kit. This is something which gives us as well the possibility to grow in many segments.
If we compare our grow in euro, this is something as well which we try as well to be comparable. Our grow in euro is 15%. If we look for the first half of 2024, In Polish zloty 8.1%. Piotr explain as well how it's influence us on the results.
We see the different dynamic in a different segment. In passenger vehicles, our organic grow is plus 16%. In the truck business, around 11%. And in tyres, which as well sometimes is the product group, which you can find some players European one or listed is plus 11%. We see the general grow is above the market if we compare it to the European players. That's #1 growing euro for a half a year, LKQ Europe is 3%. The third player, GPC is 8.1%, MEKO is 8.6%, and as well, [ parts sold ] in Europe for the half year is plus 7.
Some of these companies as well have the grow as organic grow, but as well part of the grow is from the acquisition, which we see that our strategy based on the grow -- organic grow, and based on the micro acquisition overtaking shopping jobbers, and setuping them as a -- and kind of the franchise partner give us a lot of the strength because most of the value is based on the Inter Cars tools. They operate on the distribution agreement as a kind of the agent, which means that every tools stock receivables are on accounts of the Inter Cars. And we share with them commission.
It's something to remind you the way how we grow, which means that to summarize, we are below our expectation. We thought that the grow will be higher. We are happy from the results we achieved. We try to improve as well all operations in Inter Cars group to have the market price to satisfy on the last mile, our main customer as a independent workshop and prepare for the extension role in the future because we believe that European aftermarket have solid statements to grow in the future.
Now I give the voice to Piotr.
Thank you very much, Krzysztof. Welcome everybody. A few comments on the results, just to clarify a little bit the situation because I've -- as we getting some questions from the investors sometimes they get confused how to read the results -- how to read our results.
Okay. So in the first half of 2024, Inter Cars group generated consolidated sales revenue at the level of PLN 9.4 billion compared to PLN 8.7 billion in the same period of the previous year, which means an increase of 8%, to which Krzysztof referred that we are little bit -- that we are slightly disappointed. However, if we look at our sales dynamics when we convert Polish zloty to euro, then we show a solid increase of 15% in the first half of 2024. And in our opinion, this more realistically reflects the sales they manage, especially of the companies whose functional currency is euro. And we have quite a big amount -- big number of daughter companies which operate in Eurozone.
So the strengthening of the Polish zloty versus euro, this exchange rate, while we purchase almost 50% of our spare parts in Polish zloty, compared to the levels of this exchange rate back in 2023, indeed had a quite significant impact on the assessments of our sales results.
When it comes to, in turn, when it comes to sales dynamics measured in units in the first half of 2024, the group generated sales increase of 10%. In this case, our results are quite similar to the assumptions regarding the unit sales increase that we communicated to the market at the beginning of the year. So just to remind you, in terms of units, our predictions were between 10% to 12% at the beginning of the year, and in terms of the value of -- in terms of the dynamics of sales value increase, our guidance was around 14% to 15%.
So in fact, our results are showing stable upward trend. We can say that if measured in Polish zloty, because majority of our costs are measured in Polish zloty, then this growth is insufficient. However, we have to bear in mind that how we should measure and judge the results of our operations in the Euro countries.
The group generated a net profit of PLN 345 million, which means a profit decline of 3% compared to the same period last year. However, exchanged rate differences from settlements, I mean settlements receivables from our daughter companies, because the Inter Cars in Poland is the main supplier of spare parts for our daughter companies and this valuation of these receivables had a significant impact on our results.
If we look from the perspective of the entire of 6 months of 2024 the impact on the results is minus, is negative and it's minus PLN 20 million. When we look from the perspective of quarter 1 and quarter 2, it's negative PLN 23 million in the first quarter and positive PLN 2.5 million in the second quarter.
With such a comparison of net profits, when we eliminate the impact of the change in the valuation of receivables, which are not very much connected with the sales of each distributing company, then the group would record an increase in profit by 2.5% instead of the decrease.
At the same time, for the second quarter 2024, the group increased its net profit to PLN 189 million, which is an increase of 23% compared to the second quarter of 2023, which is a significant improvement in profitability and in our opinion, is mainly due to the improvement of the [ first ] margin between the quarter 2 and quarter 1 of this year, while we still have lower percentage of the gross margin, if we compare it to the same periods of 2023.
As for the level of the gross margin, in the entire period of the first half of 2024, gross profit on sales increased by almost 7%, to the level of PLN 2.7 billion compared to the period of the previous year.
In the first half of 2024, the impact of the exchange rate differences on the change in margin was very small, 0.2 percentage points, while in the corresponding period of 2023, the impact was much bigger, it was 0.6 percentage point. After eliminating the impact of the exchange differences on these receivables towards our daughter companies, the margin would amount to 28.6% for the first half of 2024 versus 29.8% for the first half of 2023, which means a decline in the gross -- in the first margin percentage by 1.2 percentage points.
The key factors influencing the level of the first margin were, firstly, I would mention a decline in the exchange rate in virtually every month of the first half of 2024 compared to the corresponding periods.
Then the second point I would -- factor I would mention would be the decline in the average purchase prices of goods from our suppliers, which also partly result from the falling exchange rate.
And finally, the result of the change of those 2 preceding factors is the decline in the average sales prices, affecting our margin. Because in our business, the sales prices for the majority of distributors are calculated individually for each item sold. So if there is a decline in the purchase price of our inventory, that is reflected in the declining sales prices.
Additionally, I would like to mention the fact that there is an increased competition on some of the, I would say, on the main markets, I mean Poland especially, where we have the situation that the smaller players are defending themselves against the consolidation of the market, and there is an excess of supply over the demand on the market. Because the customers are, in our opinion, are deterring the moment. Actually, more in, I would say, reactive mode in terms of repairing their cars and they are delaying the repairs. Of course, the delay of the repairs cannot be delayed forever. The market will come, but for the time being we are in the situation that there is quite a big fluctuations of sales dynamics between the months, partly caused by exchange rate, but also partly caused by this reactive approach to servicing their cars.
What we would like to emphasize here, what is important, is that in such a market situation, Inter Cars sells -- must sell at the market value, at the market price, I mean. But this gives smaller space, and this is actually smaller space for our competitors, because this actually accelerates the consolidation of the market. So we must be at the market price in order to enter into the transaction. On the other side, it is accelerating the consolidation, but also our scale, our operational efficiency, on which we are focusing very much since the last 2 years, I would say especially, should give us better results than our competitors.
It is also worth noting that market consolidation is ongoing in Europe, which in our opinion actually in given market situation is actually accelerating. And we are aware that the smaller players are simply defending themselves simply with the price. But this only plays in the longer-term to our advantage because this will create the situation when with time a smaller number of much larger players will remain on the market. If we compare the market consolidation of the -- how advanced in terms of consolidation the European market is compared to the U.S. market, we see that the European market is relatively unconsolidated versus the U.S. market. The 10 biggest players on the European market comprise around 30% of the market, while in the U.S. they constitute as much as 75% to 80% of the entire market. So with this consolidation, we see also our future and we forecast what is going to happen.
So we can summarize that Inter Cars basically consistently pursues the policy of long-term cooperation with garages. It is very important for us to keep and develop the cooperation with point of fixing, because we believe that this is the solution for the future. And comprehensiveness of this cooperation that it provides will give us in the future the scale of our operation and will give us the possibility to obtain, to perform our business on more, I would say, favorable terms in terms of our profitability.
Regarding the situation with our operational costs, the share of sales and general management costs for the period of 6 months of 2024 in relation to sales amounted to 14.1%, which is higher by 0.4 percentage points compared to the same period last year. However, the Management Board, so we are focusing very much on improving the operating margin, including we are heavily focused on process optimization, continuous assessment of new initiatives and also ongoing projects. We are heavily focused also on generating higher and stronger cash flows.
So what we would like to stress here, that we would like to maintain our ambitious plan that we communicated to the market at the beginning of the year, that the cost to sales ratio for the entire year of 2024 should be lower than the similar ratio for 2023. This is very ambitious. But we think we can deliver this. We also plan some cost adjustments, cost reductions for the second half of 2024. So it should be doable. We will see, of course, what [ will ] be the sales revenue dynamics. And because it's true that we have not anticipated the situation that resulted from the change of the exchange rate. And we did not take it into account. But -- yes, but we believe that this is doable.
To sum up this short presentation, I would like to emphasize on, because we are getting a lot of questions from our investors, they perceive the situation as rather difficult, there is a lot of questions regarding whether and when we are going to improve our gross margins. But what we would like to stress, the situation actually is playing to our advantage. I mean the situation that there is a little bit of a stress on the market and this accelerates the consolidation.
We would like to emphasize that the organic growth model gives us higher growth than our competitors, which was clearly explained by Krzysztof in his presentation, that Inter Cars sales dynamics is the highest among competitors in Europe and also in the U.S.
And also, I would like to stress that in the past we have managed to adapt to many changes or abrupt changes in the market. So we believe that we can do it as well, even though that temporarily we would present slightly maybe less optimistic result or maybe less -- a little bit slightly less than expected. However, we proved that for example since 2019 we have almost tripled our EBIT. So we believe that and we also have many ideas how to improve our profitability in the future.
And we would like to stress that we reinvest in the company in the long-term, and we've accumulated almost PLN 5 billion in the equity, which we are using on a daily basis to build our company and prepare our company for the future. And with this investment program, for example, in logistics, where we devoted almost PLN 2 billion into robotization. That means that we simply believe that first the fundaments of our business are there, that the car park is growing, and we expect it to grow in the even next decade, and we are preparing for this. Thank you very much.
I pass the voice to Krzysztof to briefly summarize.
The outlook for the industry remains positive. We still see room for sales growth on domestic Polish market, but on each daughter companies, including B2B and e-commerce. As I mentioned the main customer is garage, we believe in the future as well in this channel a remote diagnosis every ecosystem partnership for Inter Cars to build the strength around the European aftermarket. We would like to grow as fast as possible using as well the balance between the prices and the add value.
Through our investments in logistics, we are preparing the company for significant further growth, as we believe that the market situation for independent aftermarket distributors will be favorable in the long-term.
Our first fully robotic warehouse will be put into operation in September, October 2024. At the same time, we are working on preparatory work for a fully automated warehouse in Romania. This warehouse will be twice as large as the current one. We plan that the warehouse in Romania will be fully operational at the beginning of the fourth quarter of 2025. We believe in perspective and of our company that we will be one of the main player on the market with the good buyback period for all our investment -- investors in the future.
Thank you very much and we will go to the session of the questions.
So if somebody would like to ask the questions, please raise your hand or just unmute yourself and please ask.
Or you can put your questions on the side of the Teams, yes.
Yes.
So we can see them. Okay. It seems there are no questions.
Today.
Yes, yes. Okay.
Yes, please.
Yes, there is one. Perfect.
Yes, William, please.
My first question is, you mentioned that you're seeing kind of the drivers, the end users, that they're deferring their repairs and there's been a change of behavior in terms of how frequently they're going to repair shops and maybe that they're not repairing their cars unless it's critical to the functioning of the car compared to what you've seen in the past. Can you just explain, like, what gives you confidence? How are you -- what is it exactly you're seeing that explains the sales dynamics? Obviously, the revenues are fluctuating quarter-to-quarter, but -- or month-to-month, but why is it that you think there's been a change in behavior specifically?
You know that I can't answer. It's like when the COVID came, the people really afraid about the future. What can be -- they wanted to be separated, transport themselves, to have mobility, to catch up the hospital, or the doctor. And that time, even it was not a big need, but they started after the COVID a little bit left after the first wave. They started to repair the car, not to change to the new one from other sites. It was all about the electric vehicles. And it was as well the question mark, which even technology will win. On the end, the people found that everything is coming back to the new normal time. And as well, they thought, okay, why I need to spend more money? I see that electric vehicle's wave is not coming. Maybe I'm extends the used car and I buy another one, better I have.
And on the beginning, because we see this on the products group, the people still exchange the lubricants filtration when they buy the new used car, but they do not touch timing if they do not need or they do not exchange the clutch or they do not exchange the injection system. They will do this when the problem will come and because you have so many cars and so many decision makers, as well it's giving you on the first time on the first momentum as well delay with the sale. It's not in Poland, it's not in Europe, it's in globe. Even you go to United States, you ask the guys, they will see the same that the people a little bit delay investments in the garage if they see that they have less customers. Less what it means that maybe number of the customer is not smaller. But this is a kind of the barrier with how much they want to spend in the garage. In the behind was inflation and sometimes for them it's better to buy new used cars instead to rebuild big part of the car.
But as I know and my knowledge in the past based on the importing of the used cars is that your new used car is not anymore new, which means that takes time and you need to repair and sometimes from the mode of the prevention if we come to the reaction, you pay more because something happened and you need to drive your car. This is my explanation based on my experience, but of course...
Plus I would add to this, Krzysztof, that generally the model of how the cars are serviced in, especially in the CE region, because now I wouldn't say in entire Europe, is more -- in general, more reactive than preventive, yes? If you compare Poland to Germany, you would see that the preventive -- and this is based on the surveys, yes, that the percentage of timely preventive servicing of car is much more frequent in Germany compared to countries, for example, Poland or some other CE countries. So this also comes down from this. We see this, as Krzysztof mentioned, in the structure of sales. It not only applies to engines, it also applies to tires. People can simply drive a little bit longer using the same tires. Not necessarily buy the new ones, yes. But at the same time, we see the same imports of used cars. We see also that people are not driving less. So either the cars disappear somewhere, or people simply try to [ defer ]. So this is our way of thinking, yes? Because if we look at the, for example, number of cars imported, used cars imported to Poland, is more or less on the level of almost 1 million a year. Which is like the level that we have seen in the past, where we see -- have seen in the past, in years where we had the biggest growth of sales, yes? So it's not smaller, yes. The sales of new cars is smaller, but it is not so much affecting the sales of spare parts in our aftermarket business. It's more driven by number of miles and cars in the car park, yes? And the car park is growing, and it's much -- it's growing faster than in the western part of Europe. Okay?
Yes, understood. One other question. I'd just be interested to hear some comments on the export segment and your business in Western Europe or just the business where you're selling outside of -- you are selling car parts outside of the branches. You've seen strong growth in this segment in prior years. Can you just comment on how this is trending in 2024?
I think that generally, as I mentioned, that generally our pure export is 5% and generally it was not higher. In dynamic, yes, it was nice dynamic, which means that on the end when the whole company is 15% of the grow, as well this export still with the grow is still a good trend. But as we mentioned always that we look for this final customer as the franchisor partner, future type of the customer connected to us using our tools, selling under our name, which means that our -- and it -- I started from this, yes, that our main customer is garage, independent workshop. 74% of our revenue around 100,000 customers like that, in all segments. Which means that for us this spot business, because I call it spot business, to sell outside the Poland to the -- as an export without our distribution network never was our strategy on a long-term.
On a short-term, yes, we can activate these customers because then we can think based on these customers how to build our network in this country. The same strategy was in Baltic states, on the south of Europe, in Poland. The same now we are doing in Germany, that we want to grow with the -- on each of the land in Germany with the local guys, then to choose the prospective customers to show them the idea how they can be our distributor. But distributor in our meaning means that it is Inter Cars outlet. It's own operated by a kind of the entrepreneur, but based on the IT of Inter Cars, stock of Inter Cars, shelves of Inter Cars, he pay only from the local, we could say, rental fee and generally we can exchange him if he is not performing according our mutual agreement, which means that generally our focus is the same as it was before, that we want to grow with the garage.
And of course, on the new markets, which still we do not have the grant network. Yes, we have these export customers, which we deliver the product. Sometimes our bigger customers, sometimes smaller depends as well on the cost of the logistic, because as well we need to balance it. But from customers which only looking for the price is no reality which means that we look for the customers which on the end will be with us they will clean their stock, on the end we buy from them then the stock and they will start to be our outlet, yes.
Yes. But it's true that the export sales slowdown. It's probably partly a fact of slowing down also in the West, which Krzysztof mentioned at the beginning of the -- of our presentation. It's probably partly due to the increasing, I would say, power of Polish zloty versus euro and also it seems that the competitors on the Western markets realize that quite a lot of players from the Eastern part of Europe are trying to enter their market and they are also reacting to this. So it slowed down definitely, yes.
Very clear. Final question. You're talking a lot about the downward pressure on prices. So volume growth is decent, but generally purchasing and selling prices are decreasing slightly year-on-year. Can you talk about, like, what does that mean for your negotiations with suppliers? How do the suppliers, like, see the current environment when there's a part -- when they're seeing parts deflation as opposed to the inflation that was the norm over the course of COVID and in the aftermath?
The customer...
And then obviously, what's the implication for back margin in those negotiations?
As I told, the suppliers are friends of everybody would who wants to buy especially that we know that they have the issues on their own profitability. They invested a lot in the new technology. They need commodity products to grow themselves, which means that if they see that the market is not growing, they support all of the sources as well us. On the end, we see that our margins are not different very much to this what it was in the past. Because as you, I think, Piotr mentioned as well that we need to look on the FX rates, yes, which as well are not something which we can easily touch, especially that part of this FX rate is, as well, Piotr mentioned as a kind of the evaluation of our accounts because of the investment in the foreign daughter companies, which generally the biggest players receive support of the suppliers, the big suppliers as well part of the suppliers, which lost a lot during the COVID. They try to come to the game, which it mean that on some brands you have the lowering the margins. But this is something the same as we had in 2008 when it was Lehman Brothers bankrupted and automotive were treated as a one segment, the car production, as well distribution of the car parts or the producers of the car parts. I think that we already had in the history situation as we facing now as a price war. It will be new status quo. And on the end, it will even speed up the consolidation and generally is good for us, especially that the Europe is much more fragmented than we compare it's to United States. Yes.
I think the suppliers have different strategies depending on their situation. Some of them invested more, some of them -- we know for the fact that if you look on the financial statements of some of our suppliers, or you would see the situation that aftermarket distributors, car manufacturers performed over the last 5 years quite well. However, some of our suppliers which are manufacturers of the spare parts did not perform that well. And this is making the situation a little bit more difficult because some of them trying to gain, yes, trying to improve their situation and that's why we have a little bit of this part of the story of this price declines. However, I think we are in a good situation because we have a quite big number of suppliers. I think we have the biggest number of suppliers in the -- among other distributors. And we still don't do this, but in the future, it will be possible for us to think about the consolidation of the volumes, yes. For the time being it's not good, because we are building our competitive advantage on the widest offer and availability. But with time, when the situation, for example, situation doesn't resolve in a beneficial way for us, then we will be able to consolidate the volumes, yes, in order to improve our profitability. But for the time being, I think it's too early, yes. We will see [indiscernible]
Does anybody have questions? Julian Scheffler, please. Can you unmute yourself?
This is Julian from MBB SE. I was wondering if you could help me, please a little bit with the market concentration in your markets outside of Poland. So we have looked at it and our feeling is that they are way less concentrated than the Polish market. If you look at your largest, so your top 2 to top 5 countries, who are your competitors there? And what fraction of the market is captured, for instance, by the top 3 or top 5 players in this market?
Okay. The answer is that the fragmentation outside the Poland in Central Eastern Europe is similar like you have in Germany. Top 4, 5 players, still a lot of the market which is fragmented. It's true that on Polish market Inter Cars is the #1 in the passenger vehicles and we are, I could say, I think that we have around 24%, 26% of the market share. We have some products which we are below, some products which we are above. But still we have the segments which we can grow because we try to have kind comparison to the players based on the segmentation. We have 5 players we compare in Poland. In passenger vehicles we have quite strong truck part distributor in Poland, as well we compare to them we have quite strong tire distributors in Poland, we compare to them, as well the agro players which are not the same companies which acting in the truck or passenger vehicles program.
And it's the same in Ukraine, the same in Baltic states, the same in Romania. Everywhere it's true that we have the space for a grow. This grow is on the different stage of the, we could say, the phase. And of course, in some markets we are more successful in the trucks in some markets we are more successful in the [ pass ] vehicles. The example is Czech Republic that we are not so strong with the passenger vehicles because on this market. The market was very much consolidated on LKQ. They have only -- what I know only 1 market they really bought too much players even they were asked by the European courts to sell part of the assets, but on the other markets is nobody so strong.
And even in Czech Republic we increased the market share, because we are weaker in the [ pass ] program, but we are quite strong in the truck business, in the tires and other products, which we can bundle as an unbeatable offer to the B2B customer, which we call the garage. I don't think so that we have a time now to go market by market, but in each market, you have the local players. For instance, in Romania you have 4 big players. One of these is Inter Cars, you have Autonet, you have the company Augsburg which now belongs to as well SAG-Autonet. And you have the company from AD which as well is quite strong player there and the company name is Auto Total.
In Hungary you have 2, 3 as well local players in the [ pass ] vehicles is company which is called Bárdi, the second one is Unix, and the third one is LKQ, which means that generally our local teams try to understand the local competitors and prepare the offer pricing according to this expectation. And we see and generally with Piotr mostly when we are asked by the investors what is the strategy that generally the companies outside the Poland they grow in the percentage normally is higher than the domestic markets mostly from the reason that they have much lower market share. And they starting mostly from the one segment or [ pass ] vehicle or truck business and then they extends to the products like mass products. They increase the volumes with the tires, lubricants, and batteries. And then extend their network because we know that the one is excel file where we will have the kind of the forecast, but the second is then fulfill it with the logistic infrastructure to deliver our service to the last mile of the delivery.
I don't know if I answer on your question or you would like to have a deeper view about this.
That was very helpful. If I may, just on Romania, your sales development in Romania, is that representative of the Romanian market at the moment?
No, now we are below our expectation. One issue is that we exchanged the person responsible for this market to the new one and he is on, we could say, setuping phase and as well he is now more concentrated last quarters on the profit than on the grow. One of the results of it was that he need to extend the logistic. And Piotr mentioned during the presentation that on the end of the next year we will double space for the logistic, which means that if you will keep the grow, but you do not have infrastructure, the cost will be even higher and the profit will be much lower, which our idea was to extend the logistic to onboard the new team, the new person which will be responsible for the grow there and then to speed up. But now the market is growing more than Inter Cars, but we do not know...
Yes, but I would like to, Krzysztof, precise one thing because if we are talking that we are not satisfied with the results in Romania, in terms of the current sales development because in terms of the results the company is -- and the size of the company and the market penetration that's a completely different story, yes, so. Yes, it's quite a complex, I would say, matrix of situations that we have with the countries, yes. I think we are not able to pass this information during such a short teleconference, yes. On each market we have a completely different competitive landscape and different market share, slightly different strategies even. So I'm afraid we are not able to answer this thoroughly.
Okay, do we have any questions? I don't see any hands up. Our -- recording of our teleconference will be uploaded on our Relations site. So and also information about our next teleconference of the third quarter will be also uploaded there. So thank you very much and see you [ at the ] third quarter.
Thank you very much for your time.
Thank you very much.
See you. Bye.
Bye-bye.