Navigator Consulting has successfully completed a commercial due diligence and business plan assessment project in the packaging sector in Ukraine, Russia, Belgium and Germany.
The objective was to evaluate the structure and success probability of a € 33.2 million investment programme in packaging equipment expansion between 2018 and 2024.
Our client was founded to provide high quality, innovative packaging solutions to the fast-moving consumer goods (FMCG) sectors in Ukraine and abroad. Founded in 1990, by 2016 the company had grown to include an 18,000 square meter production facility, sales of € 38.5 million, exports to 47 countries, and stable customer relationships with some of the largest and most noteworthy Ukrainian and international firms.
Our client produces an range of packaging materials including:
Polyethlene Film Production (3- and 5-layer)
Laminated Films & Combined Materials
Self-adhesive and Souvenir or Decorative Labels
Bottle Closures and neckings, including polylaminate caps and neckings; polyvinyl chloride (PVC) caps and neckings; and sparkling wine capsules
Bag in Box and Superpouch Packaging
Sales take place in Ukraine, Russia and a number of CIS and European countries. A key objective of the investment was to expand sales into Europe, thus gaining hard currency income and mitigating risk from local currency sales in the CIS.
There were several innovative aspects of the investment:
Our client planned to install the first cast film, or co-extruded combined film production line in Ukraine with a capacity of 2000 tonnes per year. This line features the simultaneous co-extrusion of two or more materials to form a combined film, typically used for food packaging. This also included a foil / polyethylene / foil combined film that will be moisture-proof and fat-resistant, and suited for packaging butter, spreads, ice cream, confectionary products and other related food products.
Our client planned a new production line for printing and thermolacquer coating application on aluminium foil is planned. Foil packaging is widely used in pharmaceuticals and food industry. In pharmaceuticals, foil-based packaging is used for “blister packs”, which contain individual pills in convenient, pop-out packages. In the food industry, foil-based packaging is used to package processed cheese slices, lids for yoghurt cups, individually-wrapped chocolate foil packaging, etc. The annual capacity objective was for a 3,000 tonne production line.
A new line for 220 litre superpouch production for wine and juices was planned. This packaging is intended for HORECA and home consumption, as the latter trend is growing in countries like Poland and Germany.
Navigator implemented a detailed commercial and financial due diligence.
Key methods included:
Porter Value Chain Analysis
Porter Competitive Advantage Analysis
Market Analysis, including 7-year forecast, for Ukraine, Russia, Belgium, Germany
Competitor Analysis and Competitive Benchmarking
Financial Analysis, including Key Financial Ratios
Financial / Operating Dynamic Model Assessment
Price Analysis and Pricing Volatility, including Price Waterfall Analysis
Raw Materials & Sourcing Analysis
Customer interviews with 10 clients in Ukraine, Russia, Poland, Lithuania, Germany and Belgium were also implemented.
The project was completed in November 2017 and is currently being evaluated by the financial institution that contracted us to implement the project.