Interim CRO / P&L gap analysis and EBIT increase of a Tier 1 supplier
In the course of the earnings analysis, the P&L margin is to be reviewed and the profitability of the supplier is to be increased significantly
Hard Facts:
- Budget variance
- Declining profitability
- Impending liquidity bottleneck
Solution approach:
With the objective of increasing the profit situation, at the beginning of the project first the manufacturing costs, but also the purchase prices and the sales prices were examined. The biggest levers showed up in the review of selling prices. This very quickly resulted in glaring deviations from the original order calculations.
No sales prices have been audited for years, but massive reductions in demand volumes were evident. As countermeasures, the annually agreed price reductions were first suspended and extensive price increases implemented.
Further potential savings were achieved in the area of other operating expenses.
Solutions at a glance:
- Cost analysis & reduction
- Price negotiations purchasing/sales
- Spending cut
Results:
Thanks to a consistent cost analysis and the corresponding implementation of price increases with almost all customers, the project was successfully implemented, the profitability of this supplier was significantly improved, and the EBIT margin increased markedly.
Results at a glance:
- Sales price increase
- Reversal loss of revenue
- EBIT improvement