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How to manage expansion effectively

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How to manage expansion effectively

Developing export links is the goal for many businesses. While the advantages that can come from strong export links can be very beneficial to a business, there are some significant challenges which arise with the growth.

Before looking to develop exports, it should be stated that having a strong domestic foundation, regarding business operations and client bases, should make perusing exports much easier. It’s important to remember the costs which come from exporting your product and having strong local sales will make these easier to handle. Furthermore, being an established company with trading experience at home will make any ventures into overseas markets easier due to the knowledge your company has gained through trading domestically.

One company which has recently been recognised for its success in exports and overseas trade is the UK company Concrete Canvas Ltd. Based in Wales, the company produces ‘concrete on a roll’ with its concrete-filled fabric, which is significantly more environmentally friendly and time efficient than traditional poured concrete.

Due to Concrete Canvas’s highly successful export strategy, the company was awarded a 2019 Queen’s Award for Enterprise in International Trade. This is the second Queen’s Award won by the company, having previously been honoured with the award for Innovation in Enterprise in 2014.

International Business Development Manager for Concrete Canvas, Darren Hughes, believes the main challenge for the company is “to build in line with the ever-growing global demand for our products.” This growing demand is a result of the company’s ability to demonstrate the value of its product on a smaller scale initially, rather than starting with the immediate ambition to sell its product around the world.

For start-ups, like Concrete Canvas growing from the bedrooms of two university students in 2004, or SMEs, making sure that they establish themselves and have the infrastructure in place to meet export orders when they arrive is critical.

Marcin Kujawski, Quality and Material Research Manager for Concrete Canvas, stressed the importance of planning when exports start becoming a more significant aspect of any business. “We have planned carefully to make sure that we have secured all necessary resources such as raw ingredients, operators, quality control services, health and safety resources and space for the finished product,” Kujawski said.

Specifically, making sure the quality control of your company’s products is maintained is essential when it comes to exports. For a company such as Concrete Canvas, they need to be sure that if they ship an order of their fabric to Australia to be used in a channel lining project, when the product arrives on site there are no issues which could delay work. As such, the time and effort to ensure the quality of the product needs to be taken at the point of production. Clients receiving products they are not happy with, particularly in a sector such as civil engineering, could result in substantial additional costs for all involved and damage future export opportunities.

factory
Once the production side of the business is operating at a level which can handle large scale exports, there needs to be a simultaneous effort to generate those export opportunities. According to Darren Hughes, Concrete Canvas achieves strong export links through understanding overseas client needs. A straightforward way in which they achieved this was by operating support systems in the same time zones as key customers. As such, Concrete Canvas now run six overseas offices and support over 50 sales partners. The result: in 2017-2018, around 80% of all material manufactured by the company was exported.

Company Director William Crawford referred to the work of the overseas sales partners following the 2019 Queen’s Award, saying the award was “a reflection of the hard work and dedication of everyone at Concrete Canvas as well as the fantastic network of international sales partners around the world.”

Hughes acknowledged that, when starting to explore the potential of the export market, it can be a “daunting proposition.” Some of the key challenges which face every company regardless of the product they produce or service they offer are the “differences in language, culture and certification requirements” Hughes said.

One way in which Concrete Canvas tackled some of these problems was by consulting organisations available to all businesses. Hughes explained, “there are a number of support services offered by government departments and agencies, such as the Welsh Government and Department for International Trade, which can greatly help in overcoming these initial challenges.”

Overall there are several key pieces of advice to take from Concrete Canvas’s success. Make use of the service on offer to businesses by governments and other organisations, ensure that the correct procedures and infrastructure are in place and have sales and support teams which understand and can directly respond to the needs of overseas clients. By building upon a strong foundation of domestic success, the benefits of exports can be significant in helping grow a business.

Author Bio:
Written by Concrete Canvas – producers of a unique concrete filled fabric which can be used in a large variety of civil engineering sectors around the world. More information can be found here.

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Battling Covid collateral damage, Renault says 2021 will be volatile

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Battling Covid collateral damage, Renault says 2021 will be volatile 1

By Gilles Guillaume

PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19 pandemic, including a shortage of semiconductor chips, that could make for another rough year for the French carmaker.

Renault reported an 8 billion euro ($9.7 billion) loss for 2020 which, combined with gloomy take on the market, sent its shares down more than 5% in late morning trading.

“We are in the midst of a battle to try to manage a difficult year in terms of supply chains, of components,” Chief Executive Luca de Meo told reporters. “This is all the collateral damage of the Covid pandemic… we will have a fairly volatile year.”

De Meo, who took over last July, is looking at ways to boost profitability and sales at Renault while pushing ahead with cost cuts. There were early signs of improving momentum as margins inched up in the second half of 2020.

The group gave no financial guidance for this year, although it said it might reach a target of achieving 2 billion euros in costs cuts by 2023 ahead of time, possibly by December.

Executives said they were confident the carmaker could be profitable in the second half of 2021, but that they lacked sufficient market visibility to provide a forecast.

Renault struck a cautious note, saying it was focused on its recovery but warned orders had faltered in early 2021 as pandemic restrictions continued in some countries.

The group is facing new challenges as the European Union tightens emissions regulations and after rivals PSA and Fiat Chrysler joined forces to create Stellantis, the world’s fourth-biggest automaker.

The auto industry endured a tough 2020 but a swift rebound in premium car sales in China helped companies such as Volkswagen and Daimler to weather the storm.

Auto companies globally have since been hit by a shortage of semiconductors that has forced production cuts worldwide.

“The beginning of the year has shown some signs of weakness,” De Meo told analysts, but added the chip shortage should be resolved by the second half of 2021. “We have taken the necessary measures to anticipate and overcome challenges.”

Renault estimated the chip shortage could reduce its production by about 100,000 vehicles this year.

SHARP HIT

The group was already loss-making in 2019, but took a sharp hit in 2020 during lockdowns to fight the pandemic, which also hurt its Japanese partner Nissan.

Analysts polled by Refinitiv had expected a 7.4 billion euro loss for 2020. The group posted negative free cash flow for 2020.

The 2018 arrest of Carlos Ghosn, who formerly lead the alliance between Renault and Nissan, plunged the automakers into turmoil.

In a further sign that the companies have been working to repair the alliance, De Meo told journalists that Renault and Nissan will announce new joint products together in the coming weeks or months.

Renault has begun to raise prices on some car models, and group operating profit, which was negative for 2020 as a whole, improved in the last six months of the year, reaching 866 million euros or 3.5% of revenue.

Analysts at Jefferies said the operating performance was better than expected. Sales were still falling in the second half, but less sharply.

Renault is slashing jobs and trimming its range of cars, allowing it to slice spending in areas like research and development as it focuses on redressing its finances. It is also pivoting more towards electric cars as part of its revamp.

It was already struggling more than some rivals with sliding sales before the pandemic, after years of a vast expansion drive it is now trying to rein in, focusing on profitable markets.

De Meo told journalists on Friday that the French carmaker will make three new higher-margin models at its Palencia plant in Spain, where manufacturing costs are lower, between 2022 and 2024.

($1 = 0.8269 euros)

(Reporting by Gilles Guillaume and Sarah White in Paris, Nick Carey in London; Editing by Christopher Cushing, David Evans and Jan Harvey)

 

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UK delays review of business rates tax until autumn

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UK delays review of business rates tax until autumn 2

LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.

Many companies are demanding reductions in their business rates to help them compete with online retailers.

“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.

Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.

($1 = 0.7152 pounds)

(Writing by William Schomberg, editing by David Milliken)

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Discounter Pepco has all of Europe in its sights

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Discounter Pepco has all of Europe in its sights 3

By James Davey

LONDON (Reuters) – Pepco Group, which owns British discount retailer Poundland, has targeted 400 store openings across Europe in its 2020-21 financial year as it expands its PEPCO brand beyond central and eastern Europe, its boss said on Friday.

The group opened a net 327 new stores in its 2019-20 year, taking the total to 3,021 in 15 countries. The PEPCO brand entered western Europe for the first time with openings in Italy and it plans its first foray into Spain in April or May.

Chief Executive Andy Bond said its five stores in Italy have traded “super well” so far.

“That’s given us a lot of confidence that we can now start building PEPCO into western Europe and that expands our market opportunity from roughly 100 million people (in central and eastern Europe) to roughly 500 million people,” he told Reuters.

To further illustrate the brand’s potential he noted that the group has more than 1,000 PEPCO shops in Poland, which has a significantly smaller population and gross domestic product than Italy or Spain.

The company, which also owns the Dealz brand in Europe but does not trade online, has already opened more than 100 of the targeted 400 new stores this financial year.

Pepco Group is part of South African conglomerate Steinhoff, which is still battling the fallout of a 2017 accounting scandal.

Since 2019 Steinhoff and its creditors have been evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.

That process was delayed by the pandemic, but Steinhoff said last month that it had resumed.

“The business will be up for sale at the right time. It’s a case of when, rather than if,” said Bond, a former boss of British supermarket chain Asda.

Pepco Group on Friday reported a 31% drop in full-year core earnings, citing temporary coronavirus-related store closures.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were 229 million euros ($277 million) for the year to Sept. 30, against 331 million euros the previous year.

Sales rose 3% to 3.5 billion euros, reflecting new store openings.

($1 = 0.8279 euros)

(Reporting by James Davey; Editing by David Goodman)

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