CASE NO. 72
Restructuring and turnaround of an industrial holding
INITIAL SITUATION
An industrial holding of ten engineering and production companies and about 270 million Euro in turnover had to cope with a sudden drop in turnover of 20 million Euro and an operating loss of similar size within one year. Various reasons were behind this development. After several acquisitions the group was highly indebted and liquidity low. The holding required a review of the mid-term business plan and a restructuring concept.
CHALLENGE
In spite of a comprehensive reporting and controlling system the planning and the forecasts of the operating companies were not reliable. Actuals versus plan were always negative in total. The group of companies was not integrated, synergies among the portfolio companies were unexploited. The holding was remote from operations and unreasonably expensive.
SOLUTION
The review of the mid-term business plan for each operating unit and site explained the reasons for the various plan deviations. Operational and financial risks were discovered on site. The business plans were corrected individually and consolidated into a new integrated finance plan. The effects of a restructuring programme were included in the calculations. More than 100 measures increased turnover by 20 million and profits by 10 million Euro over three years, in full year effect. The local managing directors became part of a newly established group management to mobilise the group. A programme office supported the execution of the restructuring plan.
RESULT
Several portfolio companies had to be sold to generate liquidity. For the remaining part of the group a positive outlook could be developed, i.e. growing annually by 10 % in revenues over three years on average. In year 3 the ROCE of the portfolio companies was restored to a range between 15 and 20 % .
