|Company Description||Leading furniture manufacturer in Lithuania using modern honeycomb technologies|
|Amount Invested||EUR 5.4 million|
|Realised Value||EUR 60.4 million|
The history of the company goes back to 1883, when it started as a small workshop. Prior to its privatisation by Invalda, Vilnius Baldai was a furniture manufacturing company owned and managed by the state, fully vertically integrated and with high production capacity.
Change of management. After heavy investment period, in 2006 new CEO was hired. Within 3 years sales increased by 35%, while the number of employees decreased by 54%, which led to the highest net margin in its history in 2010, when Vilniaus Baldai achieved sales of EUR 57.1 million with net profit EUR 8.1 million (14% margin).
Alignment of interests. Introduced blue collar employee remuneration scheme.
Manufacturing process optimisation. Implementation of lean processes in manufacturing.
Efficiency. IKEA (strategic customer of Vilniaus Baldai) is known for its attention to cost control, operational details, and continuous product development. We focused management on IKEA requirements and were able to increase sales by 35%, while number of employees decreased by 54% within 3 years.
Cost efficiency and working capital management. Cooperation with IKEA requires constant price improvements. To improve profitability and efficiency we focused management on continuous cost efficiency management, pricing and inventory optimisation.
Supply chain trough procurement optimisation.
Best in class. The outcome of these changes and the investments made turned the company into a world class example of efficiency. It was used as a case study by IKEA for training of its other suppliers around the world.
Contract manufacturing for strategic client. The business model was shifted from diversified client portfolio to contract manufacturing for a strategic client – IKEA.
Significant investments. Invested c. EUR 30 million into new equipment for further manufacturing process improvements, which consolidated the profit margins with further growth.
Value creating add-on acquisitions:
Total realized value – EUR 60.4 million, out of which EUR 22.9 million were dividends received within the investment period.
The investment generated 11.2x cash on cash multiple and IRR of 27.8%. At the time of exit Vilniaus Baldai were valued at P/E ratio of 10 and EV/EBITDA of 6.9.