Sales report

2

Introduction

In the last few months we realized we are far from where we should be. There is a lot of change and effort required.

The question is: How to do it?

Better?

Or… Different?

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There must be a better way.

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1. Transparency

2. You get what you measure

3. Hands on

4. New resources

5. Team spirit

2005 Strategies

Main question: What are we going to do in order to deliver?

Speak loud and straightforward of what we have to achieve and what we have to do as to meet our goals.

Set a set of standards and KPIs; measure, action, implement, control (MAIC).

Be in the field, together with the RSMs and distributors, to see their problems and find solutions together.

Get people and money needed for ‘low hanging fruits’ projects that will bring us immediate and measurable sales results.

Synergise efforts of the entire sales team through team motivation actions and team results measurements. Celebrate and reward successes.

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1. Transparency

2. You get what you measure

3. Hands on

4. New resources

5. Team spirit

0. Current status

Key Findings

• The April-May retail audit shows no progress in numerical distribution numbers, and decreases in weighted distribution. Still, Company distribution numbers (numerical and weighted) are above competitors for the majority of products

• Some of these results are because our poor performance in replenishment and fighting against OOS

• We lost shelf space and image against Competitor, following a range of (their ) successful in –store promotions

• Our distributors performance vary over a big range (see the ‘penetration = consumption / capita’ numbers)

• We are still behind in terms of leading the market in initiatives, and quality of implementation of our promotions

• We still don’t have a clear picture of our sales force performance – we lack a consistent set of KPIs to be measured and awarded

• Easy volume gains (in the first half of 2005) hindered structural improvement needs

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RETAILSales 2005 vs.. 2004

197

407

969

825

1231

1502

13431266

591

424

202

427

586

1140 11241047

1208

1650

899

0

200

400

600

800

1000

1200

1400

1600

1800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

TEU

R

2004 2005 ACT

0. Current status

– Company has grown in line with the market (Although numerical and weighted distribution numbers decreased, our shares follow the market trends (increase 11%);

– First 6 months results in 2005 are 24% (value) above the same period of 2004

(estimate)

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RETAILSales 2005 vs.. PLAN

427

586

1140 1124

1047

1208

1650

422471

1120

963

1074

1298

1435 1438

1298

960

467

232

0

200

400

600

800

1000

1200

1400

1600

1800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

TE

UR

2005 ACT 2005 PLAN

0. Current status

– However, we are still 5% behind the 2005 plan

– Based on the recent marketing moves and feed-back from the field, we feel we are on track to get the right numbers for 2005

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TOOLSSales 2005 vs.. 2004

30

40

9389 90

132

123117

186

69

55

45

47 44

82

126

106

153

136

0

20

40

60

80

100

120

140

160

180

200

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2004 2005 ACT

0. Current status

– Getting better, but not good enough

– 17% above the same category 2004 results

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TOOLS (scule) Sales 2005 vs. plan

47 44

82

126

106

153

136

51

70

127

142 142

156

171 171

180

113

71

28

0

20

40

60

80

100

120

140

160

180

200

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

TE

UR

2005 ACT 2005 PLAN

0. Current status

– For the ‘Tools’ category, for 2005, we are behind 19% planned numbers

– We’ve introduced new pre-set multiple SKUs kits, on sale already to the market; therefore we believe we can recover in the second half

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BTBSales 2005 vs. 2004

30

85

238

370

311 305

357345

357

304

206

72

123 128

229

375

415

505483

0

100

200

300

400

500

600

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2004 2005 ACT

0. Current status

– New manager for B2B + a lot of focus

– First 6 months results in 2005 are 33% (value) above the same period of 2004

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BTBSales 2005 vs. plan

123 128

229

375

415

505483

120 117

367

453

495

536 536 538

497

283

124

42

0

100

200

300

400

500

600

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

TE

UR

2005 ACT 2005 PLAN

0. Current status

– …However, still 15% less than our initial predictions;

– Now the new dedicated RSMs are kicking in: we feel good about it, it’ll be a good year.

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Opportunity analysis

Obviously, the name of the game is better performance, not increased territories:

– There are the Obelix-es (big greens with clay feet) that need the most focus and attention;

– Nice surprises might come from Asterix-es (Harry Potters).

Obelix

Asterix

Losers

Hercules

AMBIENT

FEPO

HARD

PROGERPRO CASA

ARABESQUE

DURABILMURA

SIPEX BVIPA

DEDEMAN

VEGACONNEXIONS

SERSTILL SIPEX TSIMSONS

BULCAMPTEX MET

APICOMVASION

perf

orm

ance

size

FOCUS!

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Strategy 1: Transparency Speak loud and straightforward of what we have to achieve and what we have to do as to meet our goals.

1. Transparency

2. You get what you measure

3. Hands on

4. New resources

5. Team spirit

Actions

– Clear trade terms

– Clear expectations from the distributors and sales personnel

– Clear KPIs

– Feed-back (both verbal & in written) – everybody (RSMs) copied

– Feed-back to the distributors

– Shared reports

– ‘Advertised’ rewards and punishments

– Success models, reapplied

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Actions

New job description and reports for the RSMs– Transfer of responsibilities in the regions where we have 2

RSMs (1 BTB, 1 retail)– Develop reports to show: distribution numbers, sales in the

A&B stores, recommended priced SKUs vs.. total SKUs listed, Standard merchandising -% clients with StM vs. all covered (for A&B)

KPIs– Select efficiency KPI’s for the sales force and distributors

KPI’s and measure them on an on-going basis – Improve product-mix for the Top 15% accounts by:– Listing all new launched SKU’s– Improving targets (Changing volume weight between

products/ SKU’s) for the RSMs – Setting target volume growth by category and

products/SKU’s

Promotional effectiveness through excellence in execution

– Written reports from RSMs, detailing the implementation and results of each promotion

– Numerical measurements associated to each promotional activity

– Re-design processes to improve promotion management – Clear launch dates and deadlines

Strategy 2: Set a set of standards and KPIs; measure, action, implement, control (MAIC).

1. Transparency

2. You get what you measure

3. Hands on

4. New resources

5. Team spirit

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Strategy 3: Hands on Be in the field, together with the RSMs and distributors, to see their problems and find solutions together.

Calendar for the SM for the next 3 months– Improve time efficiency, and organize trips & office

mix management and feed-backs

Mix of pre-announced and ‘on the spot’ in field trips– Improve in store presence, numeric distribution /

coverage through direct observation and checking– Introduce reporting from RSMs, each time a pre-

announced visit is done– Discussions and dinners with distributors

Feed-back + ‘carrot & stick’ model– Written feed-back after each visit (copied all the

RSMs)– Congratulations (in written) for good results &

findings, letters of warning with recommendations and next steps for lack of satisfaction / meeting of standards

– Up to territorial cuts (see recent Sipex action)– Track results and launch new standards / models

deployed to the rest of distributors as soon as possible

1. Transparency

2. You get what you measure

3. Hands on

4. New resources

5. Team spirit

Actions

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Strategy 4: New resources Get people and money needed for ‘low hanging fruits’ projects that will bring us immediate and measurable sales results.

1. Transparency

2. You get what you measure

3. Hands on

4. New resources

5. Team spirit

Return at hypermarkets / MKA – directly served by Company those potential is

much bigger than our current distributors– Recommend hiring a team of merchandisers:

implement it– Superweiss promotion in Metro in July + final

season promotion in Metro with posting in a special catalogue for constructions

Separate B2B, Retail and KA teams– Much better focus– New contacts, more contacts and contracts– Playing actively in the B2B field

Actions

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Strategy 5: Team spirit. Synergise efforts of the entire sales team through team motivation actions and team results measurements. Celebrate and reward successes.

1. Transparency

2. You get what you measure

3. Hands on

4. New resources

5. Team spirit

New individual target (higher targets) and new bonus system

• Rewarding individual performance, but also the team performance

• Performances measured at the end of the year (such way avoiding peaks and valleys in revenues, and minimizing the risks of not hitting the company targets)

Special projects• Each RSM will be accountable (deadlines, results) for a

specific special project, such enhancing their skills and helping them contribute to the team effort

Actions

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NEXT STEPS

1. Transparency

2. You get what you measure

3. Hands on

4. New resources

5. Team spirit

Next Steps

What we are going to deliver (in the near future)

• July & August: recover 200m out of the difference vs.. plan

• 12 distributors checked (JA) – in field trips

• Finish listings of Product ready mix in all MKA (this week)

• Hire and basic in-section training for the last two regions without B2B RSMs: Timisoara & Cluj

• The new merchandisers team for the MKA

• First fully-fledged (with dedicated managers) B2B planning meeting – setting up the plan for 2005 and 2006

• Evaluation of the big 3s with problems: Mura, Sipex, and Arabesque. Investigate alternative solutions