SOLARIS BUS & COACH : STRONG PERFORMANCE RECORD YEAR 2004.

Solaris Bus & Coach rounded up sales and trading results for 2004. Last year turned out to be a record year for the Bolechowo-based company, with tripled profits and doubled export sales. The company also closed last year

with a 50 per cent share of the Polish market for low floor and low entry buses. The most spectacular success for Solaris last year was clinching a deal to supply 130 articulated buses for Berlin's City Transport Company (BVG).

Overall Solaris Bus & Coach sales in 2004 totalled 489 units, with 123 buses sold on the home market and 366 vehicles going for export. During last year the company attracted 35 new customers and won orders for 724 new vehicles.

Polish market

During 2004 the company, with a 37 per cent share, has maintained its position as the unquestionable market leader for all city bus categories. This translated into a 7% growth when compared with the previous year and constitutes Solaris's best-ever result.

The Solaris Bus market share for low floor (LF) and low entry buses (LE) looks even more impressive. In 2004 the company delivered a total of 115 buses in this market sector, having clinched a record 50%1 share of the market and consolidated its unquestionable leader's position yet again. It is worth noting that in the 1997-2004 period over 1/3 of overall Poland's expenditure on city buses was spent to purchase Solaris Bus products.

In 2004 the company further expanded its customer base, having added seven new customers. Key factors in maintaining steady progress on the home market in the past year were: securing the order for 50 Solaris Urbino buses from MPK Cracow City Transport Company and a public tender announced by MPK Poznań City Transport Company which yielded an order for further 10 Solaris Urbino buses.

On the tough Polish coach market which, according to analysts, has entered a phase of slow but steady recovery, Solaris Bus sold further eight Vacanza tourist coaches during 2004. The company also succeeded in attracting five new customers including four coach operators, namely Trans Bis, Kurier, Trans Expres and Gliwice-based Machura Coach and Tourist Travel as well as Bydgoszcz Regional Blood Donation and Blood Treatment Centre (RCKiK).

Export sales

Following the pattern established in previous years, the Solaris Bus sales strategy in 2004 was on consistent growth of sales in export markets.

During 2004 Solaris exports soared 117%, with a total of 366 units delivered to export customers. In terms of actual volumes, in 2004 the share of exports in overall sales grew to 75%, compared to 61% in the previous year.

The biggest export markets for the company in 2004 were: Germany (110 buses), Latvia (81 units), Switzerland (42 units), Czech Republic (30 units) and Lithuania (30 deliveries). Also worth noting is a very high, fifth spot held by Italy which took a total of 26 Solaris buses and trolley buses in 2004.

Definitely the main highlight of the Solaris export success story in 2004 was winning the prestigious tender announced by Berlin's City Transport Company (BVG). As a result, Solaris Bus & Coach will deliver 130 Solaris Urbino 18 articulated buses to Berlin during 2005, with an option to supply further 130 Solaris Urbino 18 units in the following two years. The biggest success on the Central and East European export markets in 2004 was securing two deals to supply over the next few years 45 Solaris Trollino trolley buses to the city of Vilnius and 55 Solaris Urbino 12 buses to Kaunas.

"It is absolutely vital for our company to expand our customer base and we are delighted to say that during the past year we managed to win as many as 35 new customers, both home and abroad. For this success we are also largely indebted to our existing customers who recommend us in their local circles and give us excellent references," stressed Krzysztof Olszewski, Solaris Bus & Coach chairman.

The most popular Solaris product on the European markets is the Solaris Urbino city bus family and it is in this segment that the Bolechowo-based company posted highest sales. During 2004 Solaris Urbino 12 low floor city buses also constituted the lion's share of the manufacturer's export sales, with as much as 49.2%. These were followed by: Urbino 18 (13.4%), Trollino 12 (10.4%), Urbino 15 (9.6%), Trollino 18 (7.9%), Trollino 15 (4.6%), Urbino 10 (4.4%) and Vacanza 13 (0.5%).

Solaris Bus plays an active role and helps to shape the trends in the bus industry. The company is currently the only city bus manufacturer which builds vehicles in 10, 12, 15 and 18 metre lengths from modular components. This program has been designed and engineered in-house by Solaris. Numerous benefits include considerable reduction of stock inventories, which in turns helps to reduce overall costs. Lower operating costs of Solaris buses are another major benefit appreciated by operators.

"We are delighted to see credits and appreciation of the efforts of our employees and of our own as shown by journalists and industry experts. What is more, a number of our products designs have won awards both home and abroad. Last year's important highlight was the fact that the revamped Solaris Urbino was short-listed for the prestigious "Bus of the Year" and emerged with runner's-up honours in the final. It is worth noting that the Solaris Urbino was just 1 point (out of 53 possible) short of overall win," pointed out Solange Olszewska, Solaris Bus & Coach deputy chairman in charge of customer relations.

Financial success

Successful Solaris Bus & Coach sales drive in 2004 was reflected in the company's strong financial performance. The turnover for 2004 closed at PLN 462.8 million, representing a nearly 76% increase over 2003.

During 2004 overall pre-tax profit closed at PLN 20.8 million compared to PLN 5.4m in 2003.

Increasing sales and turnover accompanied by higher margins were reflected in net profit which last year closed at PLN 15.2 million, a threefold increase over 2003.

The company generates higher profits thanks to bigger returns on sales and thanks to a consistent drive to reduce costs, including optimisation of management and organisation processes as well as more efficient internal control mechanisms.

A nearly 100 per cent increase in production output made it necessary to introduce deep changes in the production process during 2004. No less important were the changes aimed at improving the working conditions and reducing the plant's impact on the environment. These moves were endorsed when the company obtained the ISO 14001:2004 standard compliance certificate related to environmental protection.

Bigger order book and increased production capacity to four units per day enabled Solaris Bus & Coach to create extra jobs. By December 2004 the overall number of employees rose to 836 people.

Plans for 2005

"The success achieved last year makes us even more determined to succeed in reaching the objectives we have identified for this year. Naturally the most important goal is to further increase sales, and consequently our production output. It is our ambition to build 720 "bus wagon" units in 2005. And a turning point for Solaris Bus & Coach is likely to be the company’s debut on the stock exchange planned for the second half of the year," said Chairman Krzysztof Olszewski.

In trying to address the market needs, the company is developing new designs. Among the first in the pipeline is the range of new generation Solaris Urbino III low floor buses in 10-, 15- and 18-metre versions. Also in the early months of this year volume production of the new Solaris Urbino Low Entry local bus will get under way, followed by Solaris Urbino CNG city bus powered by compressed natural gas. During 2005 new derivatives will also be added to the Solaris coach range, with the most eagerly awaited premiere being the launch of the largest, 14-metre, version of the Solarisa Vacanza.

"We look forward to 2005, hoping that it will be equally intensive and no less fascinating than the year 2004 that gave us every reason to feel satisfied", chairman Olszewski concluded.

Statistics and charts:

Diagram 1: Polish city bus market in 2004 – manufacturers’ market share.

Source: JMK Bus Market Analysts

Diagram 2: Solaris Bus & Coach share of the Polish low floor (LF) and low entry (LE) bus market in 2004

Source: JMK Bus Market Analysts

Diagram 3: Overall city bus market in Poland in the 1997-2004 period

Diagram 4: Solaris Bus export sales in 2004 by markets

Diagram 5: Export sales in 2004 by individual types (units)