Interim CRO / Restructuring and increase critical equity ratio
A strategy for rapidly increasing the equity ratio of a Tier 1 should be developed within the framework of the owner-supervisory board. The measures proposed by Finanz, such as factoring (sale of receivables) and sale & lease back (of equipment and real estate), should be averted. The corporate imbalance had resulted over the last few years from the Corona crisis, the microchip crisis and massive increases in raw material costs.
- Negative EBIT > €1 million
- Declining equity ratio
- Impending liquidity bottleneck
One of the first approaches was to analyze the contribution margins and derive appropriate improvement measures. This showed a significant increase in cost of sales with little improvement in sales revenues.
Through a bundle of operational measures (operational excellence, KPI management), a significant increase in productivity was achieved throughout the company. Significant improvements were achieved, in particular by reducing quality costs but also by streamlining personnel costs.
Further important successes in the Profit & Cash Improvement Program were achieved in inventory management. As a result, an inventory reduction of more than € 2 million was achieved within 6 months and important liquid funds were freed up.
Additional indispensable improvements were achieved through further measures in the supply chain and in materials purchasing, and by focusing sales activities on sales price increases and claim management. The introduction of spare parts pricing after series production rounds off the project.
Solutions at a glance:
- Cost reduction
- Productivity increase
- Price negotiations in the supply chain
With the measures implemented and an increase in the contribution margin of +5%, the overall project was completed very successfully and the equity ratio was significantly strengthened and improved into the non-critical range.
Results at a glance:
- Higher contribution margin
- Increase in revenue & EBIT
- Improvement in equity ratio