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