Report about The company Euroland foods.

 Table of Content

1.      Introduction of Euroland foods

The company Euroland foods, in Brussels the company headquartered situated, Belgium, Euroland Food Company famous in producing high-quality products such as yogurt, ice-cream, fruit juice as well as bottled water. Throughout Britain, Scandinavia, the Netherlands, Belgium, northern France, western Germany as well as Luxembourg Euroland Foods company product were sold. By Theo Verdin the Company was founded, a farmer Belgian, as his dairy business consequences. To product development through his keen attention as well as marketing intelligent, over the years the business grew steadily. In 1979 the company went public, for trading on the London, Frankfurt, as well as Brussels exchanges was listed by 1993. EUR 1.6 billion the Euroland food had this sale in 2001. For the 60 percent of the company’s revenue ice cream accounted; in 1982 yogurt was introduced as well as contributed 20%. Among fruit juice as well as bottled water the remaining 20% of sales equally divided. “Rolly” was the Euroland Food’s flagship brand name, in farmer’s clothing by a fat dancing bear that was represented.

The leading product of the company is ice-cream and also for the customer it’s a loyal base on its high-butterfat content who sought, large chocolate chunks, nuts, fruit, as well as original flavors wide range. Since 1998 the Company Euroland foods sales had been static, in northern Europe to low productivity growth which management attributed as well as in some areas market saturation. Moreover, outsides Observers, in new-product introductions faulted recent failures. To expand the company market presence as well as to boost sales introduce the newer product the members of management wanted this. Increase in the market analysis, as well as sales, enhanced the market value of the company managers of the Euroland Foods Company hoped that. Just below the book value at 14 times earnings is currently the Company’s stock. As compared to other companies this price ratio is below the trading multiples, as well as because of this, it gave the smaller value to the brand of the company.

For the past two decades in Europe in the dairy as well as water market the Euroland food company has been a prominent player. Moreover, the company is struggling to grow because of the market shifts as well as new competition. For the Company in serious debt at increasing the market share a recent attempt at increasing, even worse. For the 2001 financial year, with shareholders becoming anxious as well as on spending a limit, in implementing new expansion strategies the company must be creative that will impact both open new markets as well as existing markets as well. In the Company for market expansion, this report looks to examine and clarify the current option as this is depicted in the various board members of the project. IRR and a payback frame; this is the requirement of all the projects; this is the current evaluation system as the plan is rejected if project goals are not meet. Two traditional hurdles were found in the first data analysis (Banerjee, 2012).

2.      Background of the firm of Euroland foods

Euroland Foods S.A. Belgium Headquartered. It is one of the leading European manufacturers of fruit juice, bottled water, yogurt, and ice-creams. All over in Scandinavia, Netherlands, Britain, Belgium, etc. its product was sold. In 1924 Theo Verdin established the company, a farmer of Belgian as an offshoot of his business of dairy. About hi keen focus on the marketing of shrewd and development of the product, over the years the market grew steadily. In 1979 the company went in public and 1993 it was listed for trading in London. Brussels and Frankfurt’s exchange. About almost 1.6 billion EUR had sales by Euroland in 2000. Sixty percent of ice cream accounted for the revenue of the company. In 1982 yogurt was launched shared about 20 percent. The remaining 20 percent of sales were separated equally among bottled water and fruit juices. “Rolly” was the brand Euroland food, demonstrated by a fat dancing bear in farmer clothing. The ice cream was leading product of this company, had a loyal based customer who so finds out its high content of butterfat, large chocolate chunk, nut, fruit and a colossal number of original flavors. In the Board of Directors, the capital budget was explained. Consideration was up to the total to EUR 316 million for eleven significant projects. Still, at EUR 120 million the range was set. The senior management of Euroland Foods S.A. was to assign funds was a challenge for them between a limit of project compelling. (kthosani, 2012)

Control of Euroland suggested that the solution to their upcoming financial upcoming issues was to cover up the projects in that they thought will develop the most value all over for the firm. In 2001 the board directors voted that EUR120 Million should be in a range of capital spending on all over the projects. The management of committee commonly implement the plans. By one of seven senior managers for thoughtful analysis, each professional project must be promoted first. Further, a period of explanation concluded and voting which type of projects are the best fitting in the firm and automatically which category of the budget of capital should be selected. Ranks of management lie on two kinds of test financial, the Internal Rate of Return and the Payback Period.

Some of the restrictions of developing Method of payback it is easy to get clear about it. There are some drawbacks that it ignores the value of money and lie for long time projects. As well as, it is better that Euroland uses the methodology to calculate with a method that is accurately investigating money’s value according to time (IRR). One benefit of using IRR is that it is friendly understandable because the higher level of percentage indicates the more effective proposal. We study each recommendation in the situation and analysis from which project we can avail more returns. Usually, NPV and IRR are strictly the same so here investigating both by Euroland does not make any sense. Analyzing the IRR, there are few drawbacks are that we can cause different IRR’s in the project. IRR does not differentiate among borrowing and investing.

3.      Statement of situation of Euroland foods

The Company Euroland Foods has the two main problems that are compared by peers. The debt-to-equity ratio is one of the thigh problems, and the other one is a low price to the earnings ratio. Whereas the debt-to-equity ratio is approximately 125% that is cre4ated through the Banque du Bruges, as well as a bank of Euroland also, could keep silence. Then the Banque du Bruges has actively pushed the debt reduction Euroland program. In this case study of the Euroland, there is no projected that can be financed, if leverage level beyond the current for the debt-to-equity is low. Price to earnings ratio is meager, where the stock price is also inadequate. During the case study of Euroland, the stock price is small than the average of the peers. The current ratio of the Euroland is approximately 14, where the market value of the Euroland is meager from its book value. For the introduction of the new product, the Euroland company failed. In 1998 the sale of the Euroland Company had been stopped. The Banque du Bruges as well as Creditor worrying about the ability to pay the debt back of the Euroland Company. Venus Asset management is one of the most significant stockholders is concerning regarding the cutting off of the dividends (lopez, 2013)

 To develop the capital of firms’ budget reached by Euroland Food’s senior manager for the way year, there is an evaluation of totaled €316M eleven projects, By chance, the director of the board had implemented investing the range of capital of plan of the only €120M. Euroland food structured the 11 programs, so it should be analyzed that which project has the most significant profit margin for the company.

Constraints on Euroland foods

The matter of policy, as well as investment of the proposals at the Euroland S.A, is subjected for the two tests of financial for the IRR along with the payback;

Type of project	Minimum IRR acceptable	Maximum acceptable Payback
Markets /New products	12%	6 years
Market extension/ product	10%	5 years
Improvement of efficiency	8%	Four years
Environmental safety	-	-

 

In 1998 the revenue of the Euroland Food S.A was remained constants, by the attribute of management in the low population growth for the northern European as well as the saturation of market in various areas. The Stakeholder believed, for the slackening of the increase is due to the faulted; in the recent failures. Numerous of the board of members expand the Euroland Food S.A market presence as well as to introduced the great products plus to boosted the sales. There are several constraints for the Euroland Food S.A for the board of members to expands their business. But for the budget restricts the Euroland Food S.A can go ahead by the few projects. Committee of the senior manager in the Euroland prepared the capital budget as well as a present for the approval of the board members. There are five managing directors in this committee, like the Finance director, president general director. Because of the high level of debt to equality, the board director suggested limiting the capital spending to EUR 120 million. On the table, there were 11 projects and approximately a total of EUR 316 million.

4.      Organizational Strengths of Euroland foods

The Euroland Company was the multinational producer for the high-quality yogurt, ice cream, fruit juices, as well as bottled water. In different parts of Europe, England, Germany, Sweden, Denmark, and Belgium they had the various ten plants.

Euroland Foods Company has the following strengths in an organization. Powers are the capabilities of any Company as well as resources it could use to develop, sustain the competitive advantage as well as design in the marketplace. As we talked about the Euroland foods company depicted the presence of broad geographic. In delivering efficient services to the customer’s project 2001 has extensive network dealer as well as network associates that help on this but in Finance and accounting industry competitive challenges help in managing. The other strength of Euroland Foods Company is the position of market leadership. This company has a strong leadership position in the market as their leading product is ice-cream and it’s very famous among their customer. And this thing builds the believed on the customer mind so their other product also easily buys as it's successful when producing the new product in the market (James & Bess, 2012).

Reliable recognition of brands is another strength of the Euroland Foods Company in the industry of Finance and accounting industry project 2001 products have a keen appreciation of the brand. To charge a premium, this has enabled the company in budgeting; financial analysis study compares to its competitors. Outside the Finance and accounting sector over the years Euroland Foods S.A various business has ventured. To develop diversified revenue, this has enabled company stream beyond the segment of Finance & Accounting as well as Finance & accounting sector. In the Finance & accounting strive to innovative even though the most players, 2001 project at customer-driven innovation has an unbeaten record. Within budgeting, financial analysis segment this is the different customer segments brand catering. In the finance & accounting segment to penetrate different customer segments, the projects 2001 have helped the company by offering an extensive product. To diversify revenue streams, it has also supported the organization (F, S, & Opitz, 2018).

5.      Possible solutions of Euroland foods

The Euroland Company, choose the different project to increase the sales, and these projects are selected under the EUR of the approximately 1230 million limitations of budget, restriction of minimum IRR, as well as the restriction of the maximum payback. The Euroland Company used total present value, payback period, and the internal rate of the return analyze for every project.

EUROLAND FOODS S.A.
	Project		1		2		3		4		5		6		7		8		9		10
			Expansion of truck fleet		Installation of new plant		Expansion of the current plant		Moving into snack foods		Introducing Automation		Expansion in south		Expansion in East		Moving into Sweetener		Control of Inventory		Acquisition strategically
Investment
Property and Plant		$ 30.00		$ 37.50		$ 15.00		$ 22.50		$ 21.00		$ -		$ -		$ 22.50		$ 22.50		$ 45.00
Net Working Capital		$ 3.00		$ 7.50		$ -		$ 4.50		$ -		$ 30.00		$ 30.00		$ 4.50		$ -		$ 15.00
	Years		EXPECTED FREE CASH FLOWS
	0		$ (17.10)		$ (45.00)		$ (15.00)		$ (9.00)		$ (21.00)		$ (30.00)		$ (30.00)		$ (27.00)		$ (18.00)		$ (25.00)
	1		$ (11.85)		$ 3.00		$ 1.88		$ (9.00)		$ 4.13		$ 5.25		$ 4.50		$ 4.50		$ 8.25		$ (30.00)
	2		$ 4.50		$ 7.50		$ 2.25		$ (9.00)		$ 4.13		$ 6.00		$ 5.25		$ 6.00		$ 8.25		$ 7.50
	3		$ 5.25		$ 8.25		$ 2.63		$ 4.50		$ 4.13		$ 6.75		$ 6.00		$ 6.75		$ 7.50		$ 13.50
	4		$ 6.00		$ 9.00		$ 3.00		$ 4.50		$ 4.13		$ 7.50		$ 6.75		$ 7.50				$ 16.50
	5		$ 6.75		$ 9.38		$ 3.38		$ 6.00		$ 4.13		$ 8.25		$ 7.50		$ 7.50				$ 19.50
	6		$ 7.50		$ 9.75		$ 3.75		$ 6.75		$ 4.13		$ 9.00		$ 8.25		$ 7.50				$ 22.50
	7		$ 10.50		$ 10.13		$ 2.25		$ 7.50		$ 4.13		$ 9.75		$ 9.00		$ 7.50				$ 25.50
	8				$ 7.50		$ 2.25		$ 8.25				$ 10.50		$ 9.75		$ 7.50				$ 28.50
	9				$ 7.88		$ 2.25		$ 9.00				$ 11.25		$ 10.50		$ 7.50				$ 31.50
	10				$ 8.25		$ 2.25		$ 9.75				$ 12.00		$ 11.25		$ 7.50				$ 88.50
Total - Not Discounted		$ 11.55		$ 35.63		$ 10.88		$ 29.25		$ 7.88		$ 56.25		$ 48.75		$ 42.75		$ 6.00		$ 198.50
Payback			6.14		6.19		6.50		7.30		6.91		5.45		5.00		5.70		3.80		5.10
Max Accepted Payback		4		5		5		6		4		6		6		6		4		6
Internal Rate of Return		7.83%		11.31%		11.23%		13.44%		8.66%		21.39%		18.77%		20.47%		16.17%		27.47%
Minimum Accepted ROR		8%		10%		10%		12%		8%		12%		12%		12%		8%		12%
Difference		-0.17%		1.31%		1.23%		1.44%		0.66%		9.39%		6.77%		8.47%		8.17%		15.47%
NPV @ WACC 10.6%		-2.88		1.49		0.41		3.74		-1.31		17.99		13.49		13.43		1.75		69.45
NPV @ min ROR		-0.19		2.81		0.82		1.79		0.48		14.85		10.62		10.97		2.67		59.65
Annuity		-0.04		0.46		0.13		0.32		0.09		2.63		1.88		1.94		1.03		10.56

 

For project 1, in Exhibit 3 the expansion as well as replacem41ent of the truck fleet, and in for project the New plant, for project 3, plant expansions, for project 4 Snack foods rollout, as well as development, and the last project 5 automation of plant as well as the conveyor systems is eliminated, on the behalf of maximum payback period.

All the remaining projects are considerable. In this case study of Euroland Company, the individual plans are the effluent of the treatment of water at four plants. The category of water treatments for environments as well as safety belongs because there are no measurements presents. The Euroland Company see the future expenditure as well as if the Leyden was right. Then it spends approximately 16 million EUR today and 15 million EUR for four years later. For the Euroland, these projects will save a lot in the future. These types of project are also going to be mandatory for the late four years.

6.      Recommended solution 

By the analysis of the case study of the Euroland Company, I have approved the project 11, if I was on the board directors. Leading acquisitions for the Schnapps brand as well as the connected facilities is analyzed for the project 10 in Exhibit 3. For project 7 in Exhibit, the market expansion of the southward is examined plan six that is also present in exhibit 3. The introduction, as well as development for the project 9, is the new artificially ice cream, sweetened yogurt this is analyzed as project 8 in Exhibit 3. For the three projects, the capital budget is approximately 60 million EUR, 30 million EUR and the EUR 27 million correspondingly, that gives the total 117 million. Almost EUR 3million we have still for use, as well as I would propose the method of the treatment of the effluent water in the four pants of projects,

Multiple types of assumption and techniques analysis that can be implemented for the correction of several factors, affecting every project separately. e.g.

·         The value of money by time can be accounted through the methodology of discounting such as IRR or NPV.

·         Evaluating the NPV t infinity can account for not equal to the lifetimes of the projects.

·         By increasing the rate of hurdle level of risk can be minimized.

Their huge factors invalidate the important project’s NPV investigation. They include:

·         Risk

·         Political considerations

·         Issues of regulatory consist of health, environmental and safety

·         Incompatibility with the corporate strategy

·         Availability of Resource

·         corporate image or Impact on brand

·         Certainty and Quality of the data used for investigating the several projects

·         Synergies among the projects