Hilding AndersReleasing up to €36 million in trapped cash

Customer story

FURTHER INFORMATION

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HILDING ANDERS FACTS

Needed a broad picture of working capital across the Hilding Anders business

Benchmarked working capital internally and externally as a first step towards optimisation

Provided with a comprehensive set of proposals by Nordea relating to working capital management

SHORTCUTS

Learn how you can free up working capital atNORDEA.COM/WCM

With annual turnover topping €1 billion and sales in 40 markets, Hilding Anders is already one of Europe’s most respected bed manufacturers. But after 75 years of growth through acquisitions, joint ventures and private-equity backing, the time was right to refocus the business, set ambitious new targets, and implement a lean and unified group structure to support growth.

New organisation, new prioritiesWhen in 2014, Hilding Anders welcomed a new CFO and then just a year later appointed a new CEO, a wave of change that has affected every department had been started.

Group Controller Patrik Peterson joined Hilding Anders in August 2015, at a pivotal point in this transformation. His top priority was to renew the business’s focus on working capital management. A team from Nordea’s working capital team, led by Henrik Anbelin, was brought in to work with Peterson, as Lars Hansson-Gladh, Nordea’s the senior relationship manager for Hilding Anders, explains: “Leif [Hilding Anders’s CFO] told me that they had initiated an internal working capital project in the group. I suggested that we could assist with support in the process through Henrik and our working capital team and maybe, since we were coming from the outside, look on things from another angle.”

This was not the first time that Nordea had gone above and beyond. The two organisations had a strong relationship, as Group Finance Director Jenny Appenrodt explains. “Nordea is our closest bank. I always get the feeling that they have our interests at heart and do what’s best for us

— that’s clear as soon as you start working with them,” says Appenrodt. “And whatever the subject that we need advice on, Nordea always has an expert there to help. I see them as our consultants.”

In the fieldPeterson and Anbelin wasted no time getting the project started. “We needed to get a clear picture of our organisation’s current working capital situation,” says Peterson. “So for us the first logical step was to visit a subsidiary and learn how the people there are really doing their jobs.” Hilding Anders’s Belgian subsidiary was the perfect candidate. In Peterson’s own words, the subsidiary wasn’t “world-class” in its working capital management.

Peterson and Anbelin visited the subsidiary in person. “We spoke to people there across sales, finance and procurement and gave them an opportunity to talk freely,” explains Peterson. In a subject like working capital, softer cultural factors are critical — financial performance depends on how individual people do their day jobs and what attitude they have. “We actually sat there and listened to the team’s stories,” explains Anbelin. “That showed everyone in those subsidiaries that the group finance team is interested in their perspectives.”

Releasing up to €36 million in trapped cash

Hilding Anders

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Hilding Anders — Releasing up to €36 million in trapped cash

Learning what’s possibleAt the same time, Nordea conducted a quantitative benchmarking exercise on every Hilding Anders subsidiary. This involved plotting the spread of working capital performance across the group, as well as seeing how the business was performing against key competitors and the market average. Nordea calculated the value that could be released by a single day’s improvement in DWC for each subsidiary, in terms of DIO, DSO and DPO. Anbelin’s team also modelled a number of scenarios for improvement:for instance, how much cash Hilding Anders could release if all its subsidiaries were brought up to best-in-class performance, or to the baseline performance of the “average” subsidiary, or the best competitor.

For instance, by ensuring all 18 subsidiaries met the group average number of DWC, Hilding Anders could free up €18 million. And by improving each of its business’s DWC to match the best in class, the company would be able to release €36 million in cash.

When combined with the findings from the exploratory pilot in Belgium, this kind of quantified analysis was invaluable. It gave Peterson the data he needed to explain the scale of the working capital opportunity to the senior leadership team; to understand what kinds of targets would be realistic; and to identify top-performing subsidiaries to explore for potential best practices that the rest of the group can learn from.

The journey is just getting started“Working capital management is now at the top of the management agenda, every month. Thanks to the Nordea analysis, we know where we have issues, and we have the data and scenarios we need to set our targets,” says Peterson. “Once you have the targets, you can come up with the strategy to achieve it. The next step for us is to sit down with the CFO and decide which processes and sites to focus on.”

Patrik Peterson, Group Controller at Hilding Anders

Working capital management is now at the top of the management agenda, every month. Thanks to the Nordea analysis, we know where we have issues, and we have the data and scenarios we need to set our targets. Once you have the targets, you can come up with the strategy to achieve it.

“

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Hilding Anders — Releasing up to €36 million in trapped cash

To facilitate these discussions, Nordea presented Hilding Anders with more than a dozen proposals for ways to improve working capital. Some involve changes to internal process and operations: such as revisiting payment terms or invoicing practices. Others employ a range of financial products and instruments — from SEPA Direct Debit to receivables financing — to cut days from the DWC number.Peterson and Appenrodt are now busy working through these proposals, building a strategy for the coming months and years. “We have to prioritise, for sure,” says Peterson. We have a lot of projects going on, not just in working capital, and we have a relatively small central finance team. So we need to be focused and go step by step. That for us means following the 80:20 rule and identify where our efforts can have the biggest impact. There are some sites where just a one- or two-day improvement in working capital would have a big cash result.”

As the 2015 organisational changes have bedded in, the mood across Hilding Anders has been re-energised.“Our new structure is having a positive influence on how people are working; the spirit is good and the initiatives are all coming together,” says Peterson. There’s a real ambition for change, and the finance team is confident about the journey ahead of them. “Working capital management is a critical priority to the business going forward. Thanks to the work from Nordea, we know exactly what to aim for and how we can get there. The rest is up to us.”

About Hilding Anders

Hilding Anders is a globally

leading furniture manufacturer

which produces its own ranges of

designer beds as well as private

label goods for large corporates

such as IKEA. Headquartered in

Malmö, Sweden, the company

has been giving the world a good

night’s sleep for over 75 years.

Today the company has €1 billion

annual sales and employs 9,500

people across 40 markets.

With special thanks to:

Patrik Peterson, Group Controller

at Hilding Anders

Jenny Appenrodt, Group Finance

Director at Hilding Anders

Henrik Anbelin, Working Capital

Specialist at Nordea.

www.hildinganders.com

Nordea is our closest bank.I always get the feeling that they have our interests at heart and do what’s best for us — that’s clear as soon as you start working with them. And whatever the subject that we need advice on, Nordea always has an expert there to help.I see them as our consultants.”

“

Jenny Appenrodt, Group Finance Director at Hilding Anders

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Hilding Anders — Releasing up to €36 million in trapped cash