Strategic Profitability:

Manufacturer with high debt finds strategic insights and a path to improvement

The Situation

This consumer manufacturing company was in real trouble. It had taken on significant debt, but the expected growth was not being realized and margins were dropping. The company was producing weekly cash flow statements to be sure they could pay their employees.

On top of that, existing management & financial systems were not adequate to identify where they were making/ losing money. Essentially, they were flying blind.

Bond holders no longer trusted management and needed an independent assessment of what was going on, a determination of the value of the debt and a plan that would solve the company’s cash flow problems.

The Solution

As part of a comprehensive strategic review, the team used a strategic profit approach to bring significant understanding on the business profit:

• Developed a restructuring plan for the business
• Costed major processes across 4 different plants
• Determined profitability across 18 brands and 5 channels
• Assessed value of the debt

The Impact

We identified $47MM in improvements to the company’s cash flow. We also gave an accurate assessment of the value of the current debt, so that debt holders had better confidence in the value of debt they were holding.

For the management team, we also brought them insights that their financial systems could not provide. They had initially planned to invest into a growing, but unprofitably channel. The insights we brought allowed them to consider other options for their valuable cash.