Link put in an iterim CEO to help this company recover.
Company profile:
Vending machine manufacturer/sales;
Turnover: €147m;
EBITDA €4.2m
The problem:
Improving profitability & cash flow during company sale and merger
The issues:
- Too many product variations
- Management not located in relevant locations
- Cash flow – debtors/payables
- Too many manufacturing sites
The actions:
- Rationalisation of product portfolio following activity-based costing “snapshot.”
- Reduction in overheads following product rationalisation
- Sale of redundant equipment
- Reduction of non-productive senior management team (45%)
- Relocation of new management team to correct locations
- Aggressive action to reduce debtor days
- Renegotiation with major suppliers to reduce costs and increase payment terms
- Closure and sale of one manufacturing facility
The results:
- Product portfolio reduced by 42% with no loss of sales
- Cost of goods reduction of 12%
- Debtor days reduced from 115 to 51
- Payables days increased from 25 to 56
- EBITDA increased from €4.2 million to €15.2 million in one year.
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