EFKON AG Expansion

Introduction

EFKON is founded in 1994, EFKON has focused on the domains of high speed infrared DSRC vehicle interfaces, contact-less smart card based transportation payment systems and multi-lane free flow electronic toll collection. Today, EFKON AG is a leading provider of ITS electronic payment applications; multi-application central clearing house solutions; vehicle-to-vehicle, vehicle-to-roadside and roadside-to-vehicle communication systems; offering all major electronic tolling technologies such as satellite, CEN DSRC and ISO CALM; provides turn-key/end to end intelligent transportation, e-payment, traffic management, enforcement and traffic telematic solutions. EFKON has grown rapidly, doubling in number of employees between 2003 and 2008 to exceed 250, before merging into a larger group of companies in 2009.

Executive Summary

This paper will be discussing the Toll industry of Australian Market for Efkon AG use to enter. Revenue growth for the Toll Roads and Weigh Stations industry slowed in 2007 and 2008 as high fuel prices caused many Americans to use toll-free routes or leave the car at home in favor of public transportation. Demand weakened further in 2009 as the recession caused even more Americans to seek cheaper transportation, and commercial trucks moved less freight around the country. The decline in commercial freight hurt the industry by reducing revenue from weighing services and toll roads. Despite the overall decline in demand, many operators have boosted revenue by increasing toll rates. Consequently, industry revenue has increased 2.4% annually to total $1.9 billion, even though the number of vehicles using toll roads has declined since 2006.

During 2011, the industry will benefit from growth in total vehicle miles and toll fare increases implemented throughout the recession. Profit is also expected to increase as toll roads increasingly adopt electronic payment systems, reducing the need for toll takers. IBISWorld estimates industry revenue will increase 5.3% in 2011, and profit margins will represent 11.1% of that revenue, up from 9.5% in 2007.

Despite high barriers to entry like significant capital costs, the industry has grown as more states have considered public-private partnership agreements (PPPs). Under these arrangements, private companies build, maintain and manage toll roads for a certain period and receive a portion of the revenue that is generated. While PPPs represent an opportunity for growth in the industry, the majority of operators are still state agencies. Still, the number of firms operating in the industry has grown at an average rate of 0.8% annually to total 1,237 in the five years through 2011.

Looking ahead, industry revenue will continue to rise as the labor market improves, causing more individuals to opt for personal vehicles over public transportation. Rising disposable income will also lead to more toll road traffic as people increasingly look to save time over money. Furthermore, increased consumer spending will lead to greater freight volumes, causing commercial traffic on toll roads and in weigh stations to rise. As a result, IBISWorld estimates industry revenue will increase at an average annualized rate of 3.1% to reach $2.2 billion through 2016.

Australia: Industry Performance

Key External DriversWorld price of crude oil

The greater the world price of oil, ...