The value drivers of excellent distributors in the Italian building sector during the 2007-2018 recession

The research focuses on the Italian building distribution sector addressing the effects induced by the economic recession during the years from 2007 to 2018. The objective is to identify the performance drivers of a small group of distributors qualified as “excellent”. We define “excellent” distributors as those that showed a positive EVA value in every single year of the mentioned period. We apply a set of performance indicators to the reclassified Financial Statements to highlight the dynamics related to the following perspectives: growth, net profitability, operating profitability, investments and financial structure. The value drivers of the “excellent” distributors are determined by comparing their performance with that of the sector. The results show that the better operating profitability of “excellent” distributors compared to the sector was not due to the sales margin, but to a more robust investment process. This made the operational processes more efficient, which benefited from lower service and personnel costs. On the other hand, the lower sales margin allowed “excellent” distributors to limit the decline in revenue that the sector experienced over the same period and to maintain a higher capital turnover. In particular, the “excellent” distributors achieved higher profitability because: - they accepted a lower sales margin, - they planned a reduction in service and labour costs, - they realized a better capital turnover.