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.
This report suggests 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 answer for the average distributor is to focus on improving sales growth, gross margin, and payroll expenses and to develop an action plan, says the report.
Participants have received the report free of charge, while it is available to non-participating NTEA members for $100 and non-members for $200. To purchase a copy or for additional information, phone 800-441-6832 or visit www.ntea.com.