Renzo DemartiniCase studies / Reporting and systems
A loss-making division to A$300K profit in 12 months.
The systems and reporting behind the result: as Head of Finance of an A$40M renewable-energy retailer, I rebuilt the P&L of a commercial division that was losing money.
In short
- A divisional P&L re-engineered so it showed where the loss came from.
- In 12 months the division went from a loss to A$300K profit, at an EBIT margin of 6%.
01 The case · Head of Finance
Situation, what I did and the result.
- A$300KDivision profit, from a loss
- 6%EBIT margin
- 12Months
- SituationAn A$40M renewable-energy retailer, in my role as Head of Finance. Its commercial division was losing money.
- What I didI re-engineered the division’s P&L. The first step wasn’t a cost cut or a price rise. It was reading the division properly: a loss is a symptom, and until the P&L tells you where it comes from, every decision is a guess.
- ResultIn 12 months the division went from a loss to A$300K profit, at an EBIT margin of 6%.
02 For your business
What it means for your business.
A division’s reporting is a system, and a loss is a symptom of what that system hides. Before you decide to fix, reshape or close a division that loses money, make sure its P&L is telling you the truth. Rebuild it around allocations, job costing, pricing and mix. Look for the gap between the margin you quoted and the margin you delivered. Decide on contribution, not on fully allocated profit, and set a time limit and measures.
The method is in Reading a loss-making division. The same thinking runs through the systems and automation I build: reporting that is live, checked and trusted, so decisions are made on the real numbers.
03 Questions
Common questions.
Did the result start with cost cuts?
No. The first step wasn’t a cost cut or a price rise. It was reading the division properly, so the P&L showed where the loss came from.
Can you get the same result in my business?
Results from past roles aren’t a promise of what will happen in yours. A Diagnostic, usually one to two weeks, ends in clear priorities for your division.
Keep reading
Related reading and more case studies.
- Reporting and systems
Reading a loss-making division
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