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Haynes has reported results for the six months to 30th November. I thought this a good time to review the business. I’ve done this by breaking the Group into its component parts.
Thus I’ve separated the digital business (HaynesPro together with some digital income from selling to consumers rather than professional mechanics) from:
1.the UK & Europe printed manual business
2.the printed manual businesses in North America and Australia (with some consumer digital)
(see earlier Newsletters for background on Haynes 11th – 19th Feb, 8th – 12th Oct, 29th Oct 2015).
The digital business
Most of the revenue of the digital business is from professional mechanics using HaynesPro. I cannot tell whether that is, say, 90% or 95% of the digital revenue because the company does not supply that information, but I’m led to believe that it is the great majority.
| 2011 | 2012 | 2013 | 2014 | 2015 | H1 2016
annualised |
|
| HaynesPro + consumer digital
sales (mostly Europe, some UK) |
£4.3m
|
£4.4m
(growth 9%) |
£5.2m
(growth 10%) |
£6.1m
(growth 18%) |
£6.4m
(growth 5%) |
£6.8m (growth 6%, but 27% growth half-year to half-year) |
HaynesPro
The supply of technical information to 40,000 professional mechanics workstations online in 23 languages across Europe is growing at a nice steady pace.
Only 5-6 years ago this business turned over about £4m. Now it does nearly £7m, a growth rate averaging about 11% per year.
It has grown while the manual book sales have declined, so that now it accounts for 28% of Haynes’ total turnover (if you include the other digital sales related to digital versions of, and supplements to, the manuals).
Hot off the press
Simon Hedger, a fellow shareholder, interviewed JHC Haynes Chairman), E Oakley (CEO) and J Bunkum (FD) following the release of the interim results last week.
He kindly forwarded the key questions and answers so I could pass them on to you:
Question: I noted that HaynesPro appeared to have lots of potential (in contrast to the printed manual side of the business) and was keen to understand where the Board saw HaynesPro with a 3-5 year horizon.
Answers: Eric noted that they saw ‘strong’ growth from HaynesPro and they were already a market leader (No1 / No2). Growth was up 27% in the HY. Customers of HaynesPro are not only the large number of independent auto repair shops but also the manufacturers of diagnostic equipment for which there are a number of sales opportunities. HaynesPro currently covers 19,000 vehicles and this is growing as new models get released. This inherent growth in vehicle models from the various manufacturers underpins growth in HaynesPro. They are also building and developing their offering continuously with a further big launch planned for early 2017. In summary there is lots to aim for.
Question: The latest annual report notes that the Group is “in a phase of significant investment” specifically related to digital platforms. How is this investment going to be funded?………….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
