Razvan Bagherea, Organization and Human Resources Manager at Aquila, answered the questions coming from Progresiv Magazine, in an interview on the logistics market challenges and future opportunities
Razvan Bagherea, Organization and Human Resources Manager at Aquila, answered the questions coming from Progresiv Magazine, in an interview on the logistics market challenges and future opportunities. Below you can read the interview, and the full article is available on the digital editions of the magazine.
1. How do you appreciate the distribution market evolution in Romania in the course of the latest year, having in mind the context generated by the sanitary crisis?
R: The pandemic created an imbalance in all fields, but our company did not stop its activity at any time, managing to overcome this serious sanitary situation by means of a good organization. A major objective was and still remains the safety of all our colleagues. Our crisis situations management team monitored the epidemiological situation daily. With the will to continuously improve the efficiency of our activity, this latest year we have been a part of an industry vital for the economy, which has facilitated the access of the products to the consumers, even in the difficult conditions generated by the pandemic. Together, we have managed to maintain our economic activity and avoid possible difficult situations, triggered by the temporary lack of the first necessity goods.
At the distribution market level, we have forecast an average annual growth of 5% for the coming 5 years. This thing conforms that fact that the market on which we play is a solid one, with grow potential, and market resilience has been proven during the pandemic. Our experience and what we can see in the rest of Eastern Europe tells us that there is still room for a rapid growth of the distribution market in Romania.
2. How have you felt the price increase on oil and fuels? What estimates do you give for the coming period, having in mind the current tensions at European level?
R: Inflation has become a matter of interest for all European countries, because we are facing the highest increase in the last 3 years. Throughout the development of our business, we have been always facing fluctuations of the fuel price and in time, we have learned to minimize their impact on our business, by negotiation a better price, reflected in the final price.
In this context, our company assumes a series of engagements with regard to social and environmental responsibility, such as, in the coming 5 years, reducing the carbon footprint by up to 10% by means of various measures we want to implement. Also, we are targeting to equip our sales force with vehicles fitted with state-of-the-art engines, with little pollution and electric. Until 2024 we want that 100% of the auto fleet be made up of Euro 6 vehicles. More than this, this year, the group has purchased 14 vehicles running on alternative fuels (GPL), and for 2022 we are analyzing to start a project in the domestic transport area with a truck unit fueled with natural gas.
3. How would you describe this year’s relationship with the other players on the FMCG market? Have met problems on any segment of the distribution chain?
R: For 4 years we have been ranking first in Romania among the distribution companies. We take pride in our position on the market, but this compels us to maintain the highest level of the services offered to our clients, so that we would be not only a leader, but an example for the rest of the players in this field. Competition brings progress and every day we adapt to new trends, to the environment requirements and trends in the digitization field. Successfully concluding the Initial Public Offer represents an opportunity for us to purchase other companies having strong brands in their portfolios and to extend our range of products.
4. From your point of view, how important is implementing new technologies such as ERP or Warehouse Management System? Have these become essential for process optimization?
R: Technology has advanced fast and managed to come rescue the field where we act, with efficient solutions for process optimization. ERP and Warehouse Management System are too important components for the efficiency of the goods reception, storage, collection and shipping activities. More than this, IT solution-based management of resources is an important step for the internal processes and offers an integrated management of processes and operations.
Together with concluding the IPO, we have important plans in this field. The online commerce B2B platform shall allow the clients to monitor the product offer, promotions and make orders, making the purchasing process of these products much easier and simpler. We shall implement a new performant ERP system, adapted to the current needs of the company and sufficiently flexible to allow for the integration of some new functions and solutions, as Aquila development strategies are applied in practice. At the same time, we shall make efforts for the automation of as high percentage as possible of the current operations. Thus, we are aiming to implement a system which allows combining several orders (many order pickers) by one single operator and replacing the conventional (goods preparation) picking system via a RF (radio frequency) terminal with voice and vision picking.
5. How do the financial results look like for 2021 and what are your expectations for the coming year?
R: In 2020, the company recorded a turnover of 1.8 billion lei, a growth by 6% by comparison to 2019. In June 2021, Aquila recorded incomes of 901 million lei, a growth by 15% by comparison to H1 2020. The profit of 2020 is of almost 58.4 million lei, growing by 171% by comparison to 2019. All this evolution place us on a very favorable position to benefit from the changes on the market by concentrating high added value products, expanding the range of products and covering of distribution channels.
We have grown above the market average and we expect to follow the same evolution after being listed at BVB. We ground our estimates on the experience we have in selecting the proper targets for our strategy and on the increased efficiency brought about by the digitization of operations.
6. What was the investment budget in 2021 and how shall it look like in 2022?
R: As previously mentioned, we have successfully run the public offer to increase our share capital, following which we have prepared now 367 million lei for the planned investments. We want to intelligently benefit of the opportunities offered by the market, and that is why these amounts shall be used to grow and consolidate. Thus, we want to use between 50%-70% of the funds to purchase companies which hold important brands on the consumer goods market and of some distribution companies with product portfolios complementary to the range offered by Aquila.
Then, we plan to use 10%-15% of the funds as working capital, between 10%-15%, for operations digitalisation projects, service improvement for the clients, increasing traceability and productivity and a similar percentage to develop our own and some new brands. We aim to consolidate the position of Aquila in Romania and Republic of Moldova, without having immediate plans targeting other markets, but we monitor the political-economic context of the surrounding countries and the potential opportunities.
7. Which are the areas you target mainly, when setting the investment budget?
R: Aquila permanently invests in warehouses and auto fleet. We also prepare investments in green energy. We pay a special attention to the ESG area, since this shall be a major component in our future business strategy.
8. How do you appreciate the ever-growing impact of the e-commerce channel on the local market distribution chain?
R: We are active on all channels, and so we can profit from any market evolution. Having in view the traditional commerce share decrease, the turnover of the Group in the period 2018-2020 increased by a cumulative annual growth rate (CAGR) of 11.6%. The organized retail channel includes over 4,500 clients, the main clients being the hyper-markets, super-markets, discount shop chains and over 1,400 petrol stations. In 2020, the total turnover of the Group, o this channel, in Romania was of 743 million lei, and on June 30th, it was of 363 million lei. With the development of an online B2B platform, we can say that Aquila continue to offer our partners real solutions in classic and digital versions.
Full interview: https://revistaprogresiv.ro/revista/2021-12-dec-asf9f7342ufiewrg843r/ pages 58-60