2007 emea budget v4 cargo section (2)
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Europe, Middle East & AfricaEurope, Middle East & Africa2007 Budget2007 Budget
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Management SummaryManagement Summary
Closed year FY revenues at $18.4MClosed year FY revenues at $18.4M
Sales contribution $10.8MSales contribution $10.8M
07 budget/forecast revenue = $17.4M07 budget/forecast revenue = $17.4M
Contribution = $10MContribution = $10M
Assumes no new heads/replacements or investmentsAssumes no new heads/replacements or investments
Takes into account known Q406 lossesTakes into account known Q406 losses
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Management SummaryManagement Summary
06 significant losses:06 significant losses:
– Publishing portfolio (-15%) YOY, ($1.3M)Publishing portfolio (-15%) YOY, ($1.3M)– LuxAir 07 impact ($421K)LuxAir 07 impact ($421K)– Finnair ($356K), marketed connectionsFinnair ($356K), marketed connections– Iceland Air ($59K), marketed connectionsIceland Air ($59K), marketed connections
Significant gains:Significant gains:
– Q107 Hogg Robinson should yield >$100KQ107 Hogg Robinson should yield >$100K
New Business - Gross Sales $000s
2006 2007 Var Var %
Aviation 677.0 936.5 259.5 38.3
Corporate 725.2 1,327.8 602.6 83.1
Cargo 409.5 733.0 323.5 79.0
Total EMEA 1,811.7 2,997.3 1,185.6 65.4
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CargoCargoSalesSales
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Cargo: IntroductionCargo: Introduction
Typical Customers: Typical Customers: Airlines with cargo capability. Freight forwarders.Airlines with cargo capability. Freight forwarders.
Market Size and Penetration: Market Size and Penetration: Currently have over +300 customers. Ranging from $100K data sales Currently have over +300 customers. Ranging from $100K data sales to a single user of Flights paying $400 per annum for cargo disk and guides.to a single user of Flights paying $400 per annum for cargo disk and guides.
Market Trend: Market Trend: Cargo market is a global growth market. Asia is a strong engine for growth. There is Cargo market is a global growth market. Asia is a strong engine for growth. There is fierce competition bringing pressure on margins. Operators are looking for automation to reduce costs fierce competition bringing pressure on margins. Operators are looking for automation to reduce costs and increase productivity. Investments are more geared to save costs rather than take market share. and increase productivity. Investments are more geared to save costs rather than take market share. India and UAE are high growth markets in EMEA.India and UAE are high growth markets in EMEA.
Opportunities:Opportunities:
Global market leadership on rates management and distribution.Global market leadership on rates management and distribution.
Global market leadership in online marketing for cargo.Global market leadership in online marketing for cargo.
Global market leadership in Cargo market intelligence (Piers synergy)Global market leadership in Cargo market intelligence (Piers synergy)
Risks: Risks:
IATA: cannot ignore their presence or sway on market matters such as cargo rules, rates information, IATA: cannot ignore their presence or sway on market matters such as cargo rules, rates information, system standards and our need to rely on that information.system standards and our need to rely on that information.
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Cargo: financial performanceCargo: financial performance
Market intelligence is niche but could be a growth Market intelligence is niche but could be a growth area.area.
MCs & advertising is flat but could be come a MCs & advertising is flat but could be come a growth areagrowth area
Data has shown some decline. Competition Data has shown some decline. Competition emerging with Innovata. Can fend off with drive on emerging with Innovata. Can fend off with drive on data acquisition and road feeder service datadata acquisition and road feeder service data
Inforwarding & AFRA in growth. Can be accelerated Inforwarding & AFRA in growth. Can be accelerated with greater presence/resourceswith greater presence/resources
Publishing in decline. Need to watch self Publishing in decline. Need to watch self cannibalisation.cannibalisation.
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200
400
600
800
1000
1200
Mkt intelligence Cargo MC's &advertising
Cargo Data Inforwarding &AFRA
Cargo Publishing
2005
2006
2007
$000s
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Cargo PublishingCargo Publishing
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Cargo PublishingCargo Publishing
Customers: Customers: Airlines & FF’sAirlines & FF’s
Market Size: Market Size: OAG is potentially at full market potential.OAG is potentially at full market potential.
Market Trend: Market Trend: Negative trend due to switch to online services. Self cannibalisation.Negative trend due to switch to online services. Self cannibalisation.
Opportunities: Opportunities: Enlist additional distributors. Proactive manage switch to online services with higher value & Enlist additional distributors. Proactive manage switch to online services with higher value & margin.margin.
Risks: Risks: Competition and “oag migration” causes significant price depreciation and margins fall. Airlines Competition and “oag migration” causes significant price depreciation and margins fall. Airlines expand online services and drive FF’s direct.expand online services and drive FF’s direct.
Revenue 2006 = $831KRevenue 2006 = $831K Budget 2007 = $843K Budget 2007 = $843K % change = 1%, $12K% change = 1%, $12K
2007 Assumptions: 2007 Assumptions:
156 new sales = $58K gross156 new sales = $58K gross
Flow through of 2006 gainsFlow through of 2006 gains
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Cargo MC’s & AdvertisingCargo MC’s & Advertising
Customers: AirlinesCustomers: Airlines
Market Size: Market Size: Probably 100 airlines out of the 320 operating in EMEAProbably 100 airlines out of the 320 operating in EMEA
Market Trend: Market Trend: Cargo advertising is the first to be cut in hard times. Not very sophisticated outside of the Cargo advertising is the first to be cut in hard times. Not very sophisticated outside of the larger players.larger players.
Opportunities: Opportunities: Reach of Cargo flights to measure MC look up. Create competitive demand within airlines.Reach of Cargo flights to measure MC look up. Create competitive demand within airlines.
Risks: Risks: Lack of ROI model for the airlines.Lack of ROI model for the airlines.
Revenue 2006 = $176KRevenue 2006 = $176K Budget 2007 = $180K Budget 2007 = $180K % change = (16%), $4K% change = (16%), $4K
2007 Assumptions: 2007 Assumptions:
MC target = $145K, advertising $35K MC target = $145K, advertising $35K
11 new Cargo MC sales @ $6 = $6611 new Cargo MC sales @ $6 = $66
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Cargo data Cargo data
Customers: Customers: Larger airlines & airports for market analysis. Cargo system providers.Larger airlines & airports for market analysis. Cargo system providers.
Market Size: Market Size: Niche market but potentially growing with direct feed and web services capabilities.Niche market but potentially growing with direct feed and web services capabilities.
Market Trend: Market Trend: Increase in demand for cargo data.Increase in demand for cargo data.
Opportunities: Opportunities: Sell on a royalty basis or not sell at all to maintain own product position.Sell on a royalty basis or not sell at all to maintain own product position.
Risks: Risks: Difficulty in obtaining up to date schedules information. Selling data to customers who emerge as Difficulty in obtaining up to date schedules information. Selling data to customers who emerge as competitors. competitors.
Revenue 2006 = $517KRevenue 2006 = $517K Budget 2007 = $456K Budget 2007 = $456K % change = (12%), ($61K)% change = (12%), ($61K)
2007 Assumptions: 2007 Assumptions:
Flow through of cancellation plus impact of mergers in the industry e.g. Excel & DHLFlow through of cancellation plus impact of mergers in the industry e.g. Excel & DHL
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Cargo flights Cargo flights
Customers: Customers: FF’sFF’s
Market Size: Market Size: As large as our cargo publishing business.As large as our cargo publishing business.
Market Trend: Market Trend: Conversion rates on free trials is less than 1.5%. Will be slow for the market to change Conversion rates on free trials is less than 1.5%. Will be slow for the market to change working practice. working practice.
Opportunities: Opportunities: Requires route construction for planning purposes.Requires route construction for planning purposes.
Risks: Risks: Break deal with Conducive.Break deal with Conducive.
Revenue 2006 = $1KRevenue 2006 = $1K Budget 2007 = $12K Budget 2007 = $12K % change = (1100%), $11K% change = (1100%), $11K
2007 Assumptions: 2007 Assumptions:
49 new sales @ $51649 new sales @ $516
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Inforwarding: .com, announcements & banner advertisingInforwarding: .com, announcements & banner advertising
Customers: Customers: All Cargo Airlines & GSA’s in all locations with cargo capacity. 321 cargo airlines operating All Cargo Airlines & GSA’s in all locations with cargo capacity. 321 cargo airlines operating within EMEA.within EMEA.
Market Size: $2M+. Market Size: $2M+. Ave value for Inforwarding per airline per market = $1,200. Holland & Belgium = $150K Ave value for Inforwarding per airline per market = $1,200. Holland & Belgium = $150K market from 170 Airlines/GSAs. 2 dedicated staff developed.market from 170 Airlines/GSAs. 2 dedicated staff developed. Over 2300 Airlines/GSAs in the region.Over 2300 Airlines/GSAs in the region. UK UK Market has 314 Airlines/GSAs. 242 in Germany. 664 in rest of Western Europe. 246 in eastern Europe. 291 Market has 314 Airlines/GSAs. 242 in Germany. 664 in rest of Western Europe. 246 in eastern Europe. 291 in Indian subcontinent, 277 in Middle East.in Indian subcontinent, 277 in Middle East.
Market Trend: Market Trend: OAG is market leader in these areas with an increasing profileOAG is market leader in these areas with an increasing profile
Opportunities: Opportunities: Constraint on growth. Available resource & distributors to promote and create Inforwarding Constraint on growth. Available resource & distributors to promote and create Inforwarding markets. markets.
Risks: Risks: Local competition/initiatives to create cargo Communities e.g. UAE with DNATA. Local competition/initiatives to create cargo Communities e.g. UAE with DNATA.
Revenue 2006 = $537KRevenue 2006 = $537K Budget 2007 = $572K Budget 2007 = $572K % change = 6%, $35K% change = 6%, $35K
2007 Assumptions: 2007 Assumptions:
Revenue split: .com = $465K, advertising = $112Revenue split: .com = $465K, advertising = $112
New units: inforwarding.com = 89, Advertising = 22New units: inforwarding.com = 89, Advertising = 22
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Inforwarding: AFRA, AFRA Shell & System Licences Inforwarding: AFRA, AFRA Shell & System Licences
Customers: Customers: Shell targets large FF and cargo airlines for internal rates management & distribution. Medium sized FF subscribe Shell targets large FF and cargo airlines for internal rates management & distribution. Medium sized FF subscribe to AFRA.to AFRA.
Market Size: 200 customers. Market Size: 200 customers. Current average value $1.5K per forwarder with a target of 4,500 FF’s in EMEA. Market size = Current average value $1.5K per forwarder with a target of 4,500 FF’s in EMEA. Market size = $6.7M. 974 FF’s in UK alone gives market potential of $1.4M.$6.7M. 974 FF’s in UK alone gives market potential of $1.4M.
Market Trend: Market Trend: Increasing interest in the benefits of a global rates database.Increasing interest in the benefits of a global rates database.
Opportunities: Opportunities: Sell the system as a rates management tool that serves the needs of the customer plus feeds the global rates Sell the system as a rates management tool that serves the needs of the customer plus feeds the global rates system.system.
Risks: Risks: OAG allows its market leading position to be overtaken. System may not cope with volume of rates. IATA may start a OAG allows its market leading position to be overtaken. System may not cope with volume of rates. IATA may start a competing system.competing system.
Revenue 2006 = $294KRevenue 2006 = $294K Budget 2007 = $471K Budget 2007 = $471K % change = 100% $237K% change = 100% $237K
2007 Assumptions: 2007 Assumptions:
Budget Revenue split: AFRA = $248K, AFRA Shell = $180K, System Budget Revenue split: AFRA = $248K, AFRA Shell = $180K, System Licences $40KLicences $40K
3 x AFRA Shell @ $60K3 x AFRA Shell @ $60K
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Cargo PersonnelCargo Personnel
Duncan AlexanderManaging Director
AMSTERDAM
Strategic AccountDevelopmentDirk de Rooij
Strategic AccountDevelopment
Bart Haasbeek
DUNSTABLE
Giles Smith (UK)Sales Executive
Marion Robinson*(Rest of Europe)Sales Executive
Nora Termorshuizen*Inforwarding Trainer
Anne Marie Van Vliet*Office Manager
Duncan AlexanderManaging Director
AMSTERDAM
Strategic AccountDevelopmentDirk de Rooij
Strategic AccountDevelopment
Bart Haasbeek
DUNSTABLE
Giles Smith (UK)Sales Executive
Marion Robinson*(Rest of Europe)Sales Executive
Nora Termorshuizen*Inforwarding Trainer
Anne Marie Van Vliet*Office Manager
Staff exits in 2006
1 x Cargo Director 1 x Cargo Sales Manager
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Cargo PersonnelCargo Personnel
1.1. Cargo Sales Director (replacement)Cargo Sales Director (replacement)
Lost this position end of 06. Seen as critical. Virtually impossible to get the right Lost this position end of 06. Seen as critical. Virtually impossible to get the right candidate outside of LHR area. Drives office decision.candidate outside of LHR area. Drives office decision.– Cost: $110K Base, OTE $150KCost: $110K Base, OTE $150K– FY Revenues: $150-$200KFY Revenues: $150-$200K– If recruited now may not cover 07 costsIf recruited now may not cover 07 costs
2.2. Cargo Marketing ExecutiveCargo Marketing Executive
Currently covered by Nicola Burrows. Needs its own focus. Catalyst for Currently covered by Nicola Burrows. Needs its own focus. Catalyst for advertising sales and overall portal promotion. PR agency savings $21K.advertising sales and overall portal promotion. PR agency savings $21K.– Cost: $55Cost: $55– Revenues: $50-$100K direct sales of advertisingRevenues: $50-$100K direct sales of advertising
3.3. Field Sales ExecutiveField Sales Executive
Replaces Cargo Sales Manager (left March 06)Replaces Cargo Sales Manager (left March 06)– Cost: $80K base $110 OTECost: $80K base $110 OTE– Revenues: $150-$200KRevenues: $150-$200K– If recruited now could cover 07 costsIf recruited now could cover 07 costs
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LHR Cargo office investment caseLHR Cargo office investment case
Cargo Sales Director 150 Giles Smith relocates & is based in officeCargo Marketing Executive 55 Marion continues European telesales from DunstableCargo Sales Executive 110
On cost 20% 378
Office 60
Total costs 438
Total airlines 300Total forwarders 900Average per airline 1,200Average per forwarder 1,500Airline mkt size 360,000Forwarder market size 1,350,000Total market size 1,710,000
Assume 30% penetration 513,000
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Cargo Aviation SummaryCargo Aviation Summary
Mission: Deliver $2,539K released revenue, YOY, 7%
Assumptions:$78K lost revenue$733K gross new sales (vs. $410K in 2006)
Strategic Imperatives:1. Invest in new cargo team based in LHR2. Establish GSA’s or own offices in key markets3. Acquire content for AFRA system4. Cargo advertising revenues5. AFRA system sales
Product requirements:1. Single log-in for cargo portal products2. AFRA system (scalability & content)