Second biggest company facing a profitability challenge

Initial Situation

• Low Margins
• Second biggest company in the sector
• + 940 employees
• Elevated working capital cost
• Long-term receivable (~120 days)
• High dependence on large retailers

Strategy Designed

• Reduce Dependence on retailers
• Staff Optimization (economy – €4MM) – from 940 to 563 employees
• Administrative Headquarters Change (economy -€336 k)
• Variable remuneration model
• New Strategic Business Model
• Value Chain Domination
• Focus on small retailers (more margins and minor cash cycle)
• Creation a new business model (franchising)
• New products launch
• R&D
• Product Pipeline Review

Results

• Dependence on large retail fell from 67% to 37%
• 3 lines of production are reduced, impacting directly
• 17 new stores in the first year
• Profitability went from 4% to 14.5%
• Cash cycle reduced for 47 days
• Working capital need reduced impacting directly on cash generation
• New Capital from banks
• Debt restructured

Family industry

Initial Situation

• Wrongly allocated resources
• High cost of returning products
• High debts with high rates
• Lack of financial control
• Lack of commercial direction
• Amateur and centralized management
• Hostage owner of his own business

Strategy Designed

• Reallocation of resources through asset refinancing
• Implementation of PRE SALE Controls
• Debt renegotiation
• Management KPI’s implementation
• Decentralization of organizational chart

Results

• Fundraising and allocation for Key operation (business unit)
• Better view of the company’s situation for decision making
• Managers training
• Redirection of responsabilities by sector
• Owner’s focus on business development and expansion