Restructuring makes Bombril back to blue in the quarter

The holidays were approaching when Luiz Gustavo Silva, Director of financial advisory Partners was in RK Buenos Aires and received the call from partner Adriano Sebusiani Center: "we need you here." Vacation interrupted and, on 21 December 2015, both dived headfirst into one of the most traditional Brazilian brands-and problematic: Bombril, founded in 1948 to produce the famous steel wool, which today is present in 90% of Brazilian homes.
Upon arrival, the situation was so dramatic that everything was urgent. The year 2015 was hard: the dollar had a strong recovery and 60% of the raw materials used are imported.
The currency issue has aggravated old problems of management of the company, owner of several brands of cleaning products known in Brazil, but with a history that includes up to financial scandal-the time that the Italian Cirio took control, after disagreements in the family founder, Sa Ferreira.
In two months, the RK Partners delivered a diagnosis and Luiz Gustavo assumed as President of Brillo pad to promote an operational review-more than on financial holding company.
The main goal: make the Bombril generate cash. In the first quarter, the goal was given. The company had net revenues of R$ 275.5 million, with growth of 17.5% on the same period in 2015, and earnings before interest, taxes, depreciation and amortization (Ebitda) stood at 15.5 million R$, compared to a loss of R$ 2.9 million the previous year.
The balance of the first quarter also brought the color change in net profit: R$ red 88.1 million, in the first three months of 2015, for R$ blue 20.7 million, from January to March this year.
The performance was achieved, according to Luiz Gustavo, with a set of initiatives, ranging from a hard cost management and product mix to cut on marketing. "And the confidence of suppliers," he added Sebusiani Center, in an exclusive interview to the value. "Without it, there was no conversation. Was essential. "
When the financial advice of Ricardo Knoepfelmacher arrived in Bombril, by advice of the heirs of the controller, Ronaldo Sa Ferreira, was that the most sensitive tip. There were those who were willing to stop the supply. The company had about 150 million in overdue debt R$ in the supply chain and logistics, in addition to the usual monthly swivel-R$ 90 million.
This is the tip of the financial backlog that RK Partners want to tweak and is on the verge of a deal: 36 months time limit for the payment of which is already won, starting in June, and maintenance of the monthly cost.
Total commitments of Bombril, however, go beyond. For the most part, R$ 400 million debt with the IRS and that is already duly splitted in funding programmes-except R$ 100 million to win even this year. There are more than 130 million, approximately R$ in bank debt. Almost all of these salaries refer to discount of receivables. "We want to improve these commitments, swapping them for structured products and longer term," explained Sebusiani Center.
Inside the Bombril, Luiz Gustavo focus is in operation, because the goals for the year are ambitious. The plan of the RK Partners provides Ebitda of R$ 140 million in cumulative 2016-to counter the R$ 76 million from 2015. "We had to show it in detail, so that suppliers accept then," he said. The Ebitda margin for the fourth quarter must be at 15%. "This is an obligation. And we have 18% as a challenge. " In the first quarter, the margin stood at 5.6%.
By the end of the year, there are still initiatives as review of suppliers, the effect of 100 slots cut in April, change of product mix, increased industrial efficiency and in stock trading at the point of sale.
Bombril had a portfolio with 520 cleaning products, whereas every name and all its variations of sizes and fragrances. In these first three months of 2016, this total was reduced by 230. "The Bombril has 290 products today," he said. "It''s easier to to commercial offer."
One of the most traditional advertisers from open TV, Bombril now will save in this account that even in the dramatic year of 2015, consumed 40 million R$. The investment on display on the shelves of the supermarkets, which brought R$ spending 60 million in 2015, also will suffer. "Our possible actions will be fully focused on products," said Luiz Gustavo-and only with planning to show expectation of positive feedback.
The arrival of the RK brought changes that are also sensitive to the eyes. The Board, which spread for individual rooms, now divides space. It was built a sort of "Aquarium" in the Administration, which houses the six directors-four of them of RK.