Brewing reported the biggest improvement in C2C among the three CP subsegment, with a swing of 41 days (from 39.4 days to -1.5 days) since 2002.
The findings for 2011 show that since 2002, each CP segment has made significant progress in reducing levels of WC, as measured by C2C. However, the results mask significant variations over time and between segments.
Change in C2C across the CP industry, 2002–11
| ||C2C |
| ||Change 2011/2002 ||Change 2011/2006 ||Change 2006/2002 |
|Brewing ||down 41 days ||down 33 days ||-19% (down 8 days) |
|F&B ||-13% (down 5 days) ||-11% (down 4 days) ||-2% (down 1 day) |
|HPC ||-32% (down 13 days) ||-34% (down 14 days) ||4% (up 1 day) |
Source: Ernst & Young analysis, based on publicly available financial statements
Change in C2C per company, 2002–11 (in days)
Source: Ernst & Young analysis, based on publicly available annual financial statements
A number of factors have been reshaping the CP industry over the last decade, including:
- Increased pressure from retailers
- Growth in emerging markets
- Volatility in commodity prices and currencies
In this context, CP companies have a proven record of increasing WC efficiency (with large differences in the degree and speed with which each one of them was able to deliver these efficiencies). In particular, businesses have been adept at including cash levers when considering changes to their underlying businesses and the interactions with counterparties.
Brewing reported the biggest improvement in C2C among the three CP subsegment, with a swing of 41 days (from 39.4 days to -1.5 days) since 2002. Three out of four brewers improved WC performance, with a much stronger focus on cash and WC management driven by the need to address balance sheets stretched by aggressive acquisition strategies.
Food and beverage (F&B)
F&B has reduced C2C by 15% since 2002, with most of the gains achieved in the last five years. Six F&B companies out of nine posted improved WC performance. However, overall performance has been highly volatile since the global downturn of 2008. Last year’s increase in C2C followed a drop of 9% in 2010 and an increase of 5% in 2009.
Health and personal care (HPC)
HPC has reported a strong WC showing since 2002 (C2C dropped by 32%). However, the entire gain has been achieved in the past five years (there was an increase of 4% in C2C in the first four years). Five HPC companies out of seven posted improved WC performance. As with brewing and F&B, progress has come primarily from payables, with DPO up 43% (equivalent to a gain o f 12 days). Receivables performance also improved slightly, with DSO down 4%.
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