Successful turnaround in Eastern Ukraine
The collapse of oil prices at the end of 2014 had very negative repercussions on the level of sales of Centravis worldwide (33 %). Due to the important investments realized to modernize the production facility from 2006 to 2009 and the high amount of debt accordingly, the company found itself in a difficult negative cash flow situation.
After having closed one of the best years of its 80 years of history with record sales (about € 220 m) and a very attractive profit level in 2014, the company found itself with a negative EBITDA at the end of 2015 that did not allow it to service its loans.
In addition to a 33 % drop in sales, it had to deal with an instable political situation after the ousting of the pro-Russian government in February 2014 and the resulting devaluation of the Hryvnia, the local currency. Finally, the price of nickel collapsed, dramatically reducing the value of raw materials in the warehouse.
The combination of a high debt and relatively high level of SG&A with rapidly decreasing sales is of course very dangerous for the survival of any company and rapid restructuring measures had to be defined and implemented to bring the company back to profitability.
The dramatic situation that the Staufen consultant found on site was made even more difficult due to the fact that Centravis was a modern, western-oriented company and the challenges it faced were extraneous. Simple cost cutting actions would not have been sufficient.
A steering committee was formed, which was made up of the owners, the lenders and the consultant, to review the results of the analysis, agree on the implementation plan and follow-up on its execution.
At the end of the analysis, the restructuring team presented an implementation concept prepared in coordination with top management and detailing how Centravis would move back to profitability by 2020 through productivity improvement, realignment of the business processes, waste elimination and reduction of the cost of quality.
The restructuring project ended with successful results in December 2017.
In both 2016 and 2017, in a very difficult market characterized by an even further reduction in sales, generally and for Centravis, the company managed to deliver an EBITDA from operation
of 12 % or rather 14 % as compared to 0 before the start of the project.
It goes without saying that this result would not have been achieved if it had not been for the constructive collaboration and trust that
was built early-on between the consultant and top management team and without the positive energy that the management team invested in this difficult period.