From crisis to recovery: turning around a detergents and adhesives manufacturer
When the value of the Russian rouble plummeted as a result of the economic crisis, our St Petersburg client suffered a business crisis. Sales virtually came to a halt and many of its customers went bankrupt.
Our challenge
Our task was to minimise losses and then create a stable platform for sustainable, profitable growth.
What we did
First, we checked the financial stability and debt situation of our client’s top five customers, who accounted for around 70% of the business. To demonstrate our client’s commitment to them and their value to our client, three-year partnership contracts were offered, making the creation and implementation of debt repayment plans possible.
Next, we initiated a major cost-cutting drive. We first identified the major cost drivers in the business and then dealt with them systematically.
We then looked at substituting imported goods with locally available, lower-cost materials. This had the added benefit of avoiding import duty and reducing transportation costs.
Finally, a team of marketing, key account and business development professionals was hired to help drive forward a business development programme.
The outcome
By the end of the first year the business had fully recovered: sales had increased to 140% of pre-crisis levels, and profits had risen by 160%.
