FARMINGTON HILLS, MI
– By controlling specific factors of high-profit performance, a typical distributor can increase profits annually by 5 percent or $300,000, concludes the 2006 National Truck Equipment Association’s (NTEA) Distributor Profit Report.
The report suggests that there are major profitability differences within the industry. A typical distributor has a pre-tax profit margin of 2.9 percent, while a high-profit distributor has a margin of 7.9 percent. If yearly sales of $5,989,460 were the same for both companies, the difference in annual profit would be about $300,000.
The high-profit category includes the top 25 percent of participating companies based on pre-tax return on assets. The solution for the average distributor is to focus on improving sales growth, gross margin, and payroll expenses and to develop an action plan.
Results were tabulated and prepared for the NTEA by the Profit Planning Group in Boulder, Colo. To purchase a copy or for additional information, call 1-800-441-NTEA (6832) or visit www.ntea.com.