Turnaround in a £60m frozen bakery subsidiary of a £4bn plc
Background
I was drafted into this subsidiary by the plc main board.
The Business had historically enjoyed profitable growth as pioneers in a sector of the market that had now become commoditised.
The company had a history of several failed recovery initiatives. The last of which, built around huge investment in development, had recently resulted in the MD exiting the business.
Key Challenges
The senior team were disjointed and were had over elaborated their role and leaving the middle management to run the business. They in turn did not have the capability for this and there was a corresponding lack of cohesion between the key functions.
The development approach to drive volume had exposed a very limited control over commercial processes and the inability of the operations to deliver these products at the level of quality and/or cost.
There was no coherent recovery plan and no focus.
There was no financial accountability of Budget holders and understanding of product costs was limited or erroneous.
New Ops director recently parachuted in was isolated and lacking impact amongst existing management team.
Main Actions
Introduced very strict controls to reproduce the impact of cash constraint and to drive cost reduction programme.
Introduced key priorities and focus for business.
My first tour around key factory lines confirmed standard costs were out of line with reality and I consequently introduced a mass balance project on major lines to quantify actual cost of products, improvement opportunities and/or commercial actions required.
Supported Ops Director in the delivery of his priorities.
Introduced new central planning process ensuring production, procurement and sales plans were tied into and committed to on a weekly basis.
Identified root case of issues and actions impacting customer service and production efficiency.
Lead management team in the development of major consolidation options and revised robust forecast.
Developed sale prospectus and supported Head Office corporate finance team with attempted sale process.
Main Results And Achievements
Massive improvement in customer confidence
Regained business previously lost and achieved new listings
Fundamental changes in senior and middle management team.
Sustainable business processes around forecasting, planning and procurement.
Achieved price increase and delists where necessary.
Through initiatives in headcount reduction, pricing and re-engineering, overhead reductions, plant efficiencies and robust commercial control the Business achieved EBITDA positive by month 4 and EBIT break even at my exit.
Provided detailed and worked up plans to plc Board providing consolidation and rationalisation options to deliver a further £8m profitability within 3 years – these options were the main thrust of the sale offering but required redundancies and significant investment.
Eventually transferred stable business into the group Bakery division after six months.