By controlling specific factors of high-profit performance, a typical distributor can increase profits annually by 5% or $300,000, concludes the 2006 National Truck Equipment Association's (NTEA) Distributor Profit Report.
The Report suggests that there are major profitability differences within the industry. A typical distributor has a pre-tax profit margin of 2.9% while a high-profit distributor has a margin of 7.9%. If yearly sales of $5,989,460 were the same for both companies, the difference in annual profit would be about $300,000, according to the Report.
The high-profit category includes the top 25% of participating companies based on pre-tax return on assets. The solution for the average distributor is to focus on improving sales growth, gross margin and payroll expenses and to develop an action plan, states the Report.
Featuring detailed financial results of truck equipment distribution firms, the Report provides comprehensive, straightforward guidelines for analyzing profitability. Components include an explanation of statistics and executive summary containing an overview of the study results with emphasis between the typical and high-profit truck equipment distributorship.
Detailed results cover return on investment, income statement, balance sheet, financial ratios, productivity ratios, line of business and market area analysis, trend analysis, and an overview of the survey methodology and detailed information on the calculation of financial ratios used in the Report.
The results were tabulated and prepared for the NTEA by the Profit Planning Group (Boulder, CO).
Participants have received the Report free-of-charge, while it is available to nonparticipating NTEA members for $100 and nonmembers for $200.
To purchase a copy or for additional information, call 1-800-441-NTEA (6832) or visit www.ntea.com.