New research report: Speedy prepares to double profitability over the next 3 years



With strong double digit revenue expansion and 20%+ growth in the 4x larger Romanian market, the leading Bulgarian company Speedy prepares to double profitability over the next 3 years. ROE to quickly return to 30%+ as the Company reaps profits from the new capacity in Bulgaria and Romania where booming e-commerce and good B2B positioning drive long-term growth – this is what ELANA Trading analysts say in their updated corporate profile of Speedy.

Romania to be key growth driver for Speedy after heavy capacity expansion

Romania to be key top line growth driver with 20%+ expected CAGR over the next three years after aggressive infrastructure capacity expansion. In 2016, the Company set up a new logistics network to tap on the booming courier industry in the country. Overall, Romanian operations expected to reach 50% of the Group’s sales due to accelerating B2B and B2C segments. Speedy also continued to innovate in Bulgaria adding additional capacity and C2C services.

Profitability expected to surge post major investments

2016 investments surpassed BGN 15m, most of which in logistics infrastructure and fleet modernization with significant part passing through the P&L. Accordingly, margins are expected to improve considerably starting 2017 as utilization surges and Romania turns on profit. ELANA Trading analysts expect 38% average EPS growth over the next five years.

Strategic investor – a benchmark for good corporate governance

In 2014, Speedy signed a strategic partnership with GeoPost, the express parcel delivery subsidiary of the French La Poste. The partnership entailed GeoPost buying 25% in Speedy in exchange of its subsidiaries in Romania and Bulgaria – DPD Romania and GeoPost Bulgaria. In 2020, GeoPost has the option to increase its stake to 70% at 8x EV/EBITDA. GeoPost’s involvement is a benchmark for Speedy’s long term sustainable growth goal as well as a good corporate governance benchmark. Speedy’s founders manage the Group’s operations and to stay on board post any 2020 option exercise.

Speedy Overview

Speedy is a leading courier services provider in Bulgaria with a 30% market share. After acquiring DPD Romania in late 2014, the Company has also been among the top 5 express delivery providers in Romania.

The Group’s core business is door to door standard and express city, country and cross border delivery services that represent 95%+ of the revenues. It is present on the B2C, B2B and C2C segments of the express delivery market. Corporate clients generate 88% of the revenues as of 2015 with no client exceeding 3% of sales.

Speedy is a market leader on the B2B segment in Bulgaria with innovative large parcel and pallet services. It also provides competitive transport, logistics and inventory management services to corporate clients. The Company has long term contracts with 22 000 clients.

Booming e-commerce has changed the segments mix for the company from a B2B dominant model up to 2014 to a 60%:40% B2C:B2B model in 2016. The Company also offered C2C services in 2016 which, however, is still a tiny part of the operations.

The Group offers 100% coverage of Bulgaria and Romania with 6 logistics hubs in Bulgaria and 8 line hauls in Romania. A major part of the infrastructure – hubs, vehicles and couriers is subcontracted. For the rest of Europe it partners with land express delivery operators such as DPD Group and Palletways.

At the end of 2015, the Croup’s workforce totaled c.1 200 people with more than 60% of couriers subcontracted. Speedy operates 820+ vehicles with 15%-20% renewed annually. The Company invest also considerably in ERP and software upgrades for fleet and parcel tracking as well as e-commerce clients’ platform integration and payment solutions.

Find out more in the updated Corporate profile of Speedy by ELANA Trading analysts