This week, we revisit the situation of AutoPartner (APR) and Inter Cars (CAR), the Polish car aftermarket distributors we first discussed a year ago. They presented their Q3 results two weeks ago. The reason for this update is the drawdown that their share prices have seen YTD (-20%). We believe the drawdown is driven by short-term macro conditions, while long-term business fundamentals remain unchanged.
In 2024 the market has reacted to the compression in the margins of these companies. The are 4 reasons that explain the short-term margin compression:
- Minimum Wage increase in Poland: Until 2023 Poland revisited the Minimum Wage once a year, in January. But in 2023 and 2024, a total of 2 yearly adjustments took place and these were substantially over the registered inflation. In 2023, January and July, the minimum wage increased 16% and 3%, respectively. In 2024, January and July, the minimum wage increased 18% and 1.5%, respectively. The forecast for 2025 is that there will be only a single wage increase of 8.5% in January. The distributors have a part of their workforce earning minimum wage.
