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Finding Growth After Financial Crisis

A global player in the construction materials market was hit hard by the financial crisis. Sales fell 20%, and EBITDA was down more than 50%. Four years after the crisis ended, the company’s performance still had improved only slightly. A three-year value creation roadmap helped the company return to its precrisis growth trajectory.

The company’s private equity owner asked BCG to help it regain its precrisis margins and growth trajectory. Together, the team analyzed the company’s strategy, opportunities, and potential. Based on that information, it developed a value-creation plan and a three-phase implementation roadmap.

Achieve Short-Term Wins

The goal for the first phase was to build an organizational foundation for the future and get some quick wins through judicious cost cutting. To create a no-excuses culture, the team simplified the company’s organizational design and clarified accountabilities. To achieve some short-term wins, it also concentrated on optimizing overhead and sourcing costs. Rigorous governance helped engage company management and create a sense of urgency.

Accelerate Improvements

The second phase focused on operational improvement. The company worked to instill commercial excellence through pricing discipline and improved sales force effectiveness. It improved operations by streamlining manufacturing, logistics, and procurement. It also enabled finance and asset optimization by trimming net working capital requirements, rationalizing the company’s footprint, and disposing of inefficient assets.

Uncover Erosion

The last phase focused on a no-holds-barred review of the company’s strategy and growth ambitions. The company needed to find out where its competitive advantage was eroding. The path to renewed growth included creating a detailed capital investment plan and balancing organic and inorganic growth. The team also prepared and executed an exit plan, which included detailed goals for capital expenditures, research and development spending, M&A, and postmerger integration.

The results? EBITDA increased more than 50% from its baseline during the first phase, more than 90% during the second phase, and more than 100% during the third. The company's sales growth is now comparable to its precrisis growth trajectory.

Principal Investors & Private Equity
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