Focus areas and targets communication example company_Magnus Larsson

FOCUS 2016

Our Focus areas and Targets

The Process Industry Company - PIC

http://www.senegambiademocracy.org/focus.php

Content

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BACKGROUND

…to our choice of focus areas and targets


We haven chosen focus areas based on…

• The challenges we need to address to reach a sales and production output growth of 25% and deliver an EBIT increase of 600 Meur in 2016.

• Background• 400 Meur invested in new capacity and capability• Fixed unit cost above industry average• Current 7% EBIT margin not enough to reach our

owners target ROCE of >15%


Our performance• Margin erosion and CE increase resulted in 11% ROCE• With 25% growth in sales, EBIT margin at 10% and

flat capital turnover, we will deliver >15% ROCE

The Process Industry Company - PIC2010 2011 2012 2013 2014 2015

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EBIT Margin ROCE Capital employed

EUR

billi

on

%

Year

ROCE min level

WHAT

…to focus on and the targets to achieve


Focus 2016

Sales growthProfitability

Production output growth

People

600 MeurEBIT increase

10 kt weekly order intake

+1 shift operative

12 kt weekly capacity

8 activities to realize the targets

4 targets

4 focus areas

A SAFE WORKING ENVIRONMENT


Prioritized activites

• 8 prioritized activities, with targets and plans

• These are identified as the most critical activities to reach our targets. Limited number and scope allows time for ad-hoc activities.

• The top 8 take priority, in terms of funding and resources, over other activities


Our financial targets

• High level financial targets are:• Grow sales with 25%• EBIT +600 Meur (vs 2015)• Indirect cost reduction of 5%• Operational cash flow 100 Meur• Initial focus is to deliver the sales growth• NWC efficiency program to start in Q3


HOW

…we should act in order to reach our targets


Our opportunities

• With our latest investments, we can offer the highest quality product on the market

• Training has started for the new shift team

• Our recent order intake is up 10% vs 2015 average

• Initial discussions with major suppliers indicatea good opportunity for variable cost reductions


How to bridge the EBIT gap

• Steps to close the EBIT gap and reach a 10% margin

• 2600 Meur sales growth = +200 Meur

• Margins from 7% to 10% = +400 Meur• 350 Meur gross profit increase from

higher price and variable cost reduction• 50 Meur from 5% indirect cost reduction


How to act• Be proactive, take responsibility

• Collaborate across the whole organization

• Challenge old truths and find new ways

• Look for improvements in your daily tasks

• Speed. Act now. Even a small step is better than no step


VISUALIZATION

…of our focus areas and prioritized activities


Focus 2016Profitability Sales growth People

Production output growth

600 MeurEBIT increase

10 kt weekly order intake

+1 shift operative

12 kt weekly capacity

Targets

2016

Recruit and train a new shift team

+30% sales to key accounts

Launch & ramp up sales of the new AZ

product range

1kt weekly sales to new BC segment


Selective customer and segment price

increase, +250 Meur

150 Meur cost reduction program

Right first time at 85%

Execute the capacity ramp-up plan

ACTIVITY CARDS

…with background, plans and milestones


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Focus 2016Area

Variable cost reduction 100 Meur

and 50 Meur indirect cost

reduction

Targets

2016

150 Meur cost reduction program

• Current unit cost is above industry average• Higher volume will improve our position• Major supply agreements not revised for several years• Overhead/indirect cost growth during investment phase• Investment in new shift considered in savings target

• Renegotiate our top 5 supply contracts• Phase out the investment project organization• No overtime in production 1 qtr after new shift operative• New IT-outsourcing agreement• Secure lower usage of consumables from new equipment

Background and activity plan with milestones


Focus areas and targets communication example company_Magnus Larsson

Economy & Finance

Transcript of Focus areas and targets communication example company_Magnus Larsson