Restructuring and maintaining profitability of a 300 mio Euro + company

Tobacco

Manager:

Mr.A. F.

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  • Customer:

    Confidential

  • Role:

    CEO and Managing Director

  • Location:

    Hungary

  • Turnover:

    300 mio Euro + (in the time frame)

  • Time frame:

    30 month

  • No. of employees:

    more than 300

About the Customer

As a Joint Venture Company owned by a German investor group (51 %) and Japan Tobacco (3rd largest cigarette manufacturer worldwide) (Confidential – on demand) was by far the largest importer and wholesaler of tobacco products in Hungary. Products were sold and supplied mainly to food retailers, tobacconist shops, petrol stations and horeca (hotels, restaurants, cafes).

Testimonial from Сustomer

Mr. EK (Confidential – on demand), supervisory board member:
Mr. AF* has professionally maneuvered the company through exorbitantly turbulent times of painful down-sizing and restructuring measures. Being highly stress-resistant and creative, he managed to increase operational efficiency, to find new revenue streams and to maintain the overall profitability of the company.

Situation (Challenge)

Shortly before starting the mandate (Confidential – on demand) major principle Philip Morris (Marlboro) which accounted for appr. 60 – 70 % of its EBIT announced that it will build up their own DDS (Direct Distribution System) in Hungary and thus ending their distribution contract with (Confidential – on demand) effective one year after announcement. Major challenges: improving efficiency of operation, creating and implementing new revenue streams (diversification), releasing about 200 staff, hiring new staff (about 50) qualified for executing new strategy. Overall: ensuring profitability despite of the loss of the major principal.

Solution (Achievement)

I strongly contributed to maintain profitability (about 2 mio profit before taxes for the business year 2006) by negotiating and executing a profitable transitory distribution agreement with Philip Morris, renegotiating and improving contractual conditions with other major principals, establishing implementing new revenue streams (eg. gaining exclusive distribution rights for Red Bull energy drink for the tobacconists’ channel,  purchasing and installing electronic devices for e-loading of telephone cards at about 250 tobacconists’, etc.), downsizing the number of staff (from 300 to 150), hiring and training new staff (about 50) to close the “organizational gap”, organizationally integrating (Confidential – on demand) business into (Confidential – on demand) and liquidating (Confidential -on demand) and last but not least increasing overall efficiency by equipping sales force with new hand held devices, new supply-vans as well as  investing into and roll-out new ERP-software (total investment about 3 million Euros).

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