Pan-Europe Foods S.A. Case Study

CASE STUDY REPORT: PAN-EUROPE FOODS S.A.

Assignment 1

Prepared By:

Robert Jenkins

Dr. Andrew Griffith

DNSC 6202 Introduction to Project Management

05 February 2015

Question 1

• Pan-Europa is facing a tipping point coming out of the price wars. It’s increased need to reduce its debt ratio points to a strategy of needing significant increased infusion of revenue through investment in low-risk, high-return capital projects that will contribute to sustained long-term profitability.  The challenge remains in selecting projects that will not significantly increase their current debt threshold and not eclipse the earmarked funds for capital investments.  It is recommended to select investments that will not necessitate cuts to normal business operations- share dilution or current dividend rates- but lead to greater performance within their marked budget and profitability to shareholders (increase in stock price).

• Increasing Net Income, Earnings per Share and Shareholders Equity (market value) are critically important, as they have steadily declined and are directly correlated to increased overall debt the company is currently holding. Also of high importance is Gross Sales, even though they have been proportionally static despite seeing profitability and earnings steadily decline. Investing in projects that are low-risk, profitable (short and long-term) and promote Growth Sales will result in greater performance over future years and contribute to paying down the current portfolio of debt weighing down the company’s profitability.                                   .
  
• Despite what some investors have stated, increasing Total Assets does not lead to overall profitability if those invested assets are not performing efficiently with profitable effectiveness. Pan-Europa should focus on financing capital projects from current available cash flow reserves that lead to either increasing the efficiency of current operations or explore seeking a new product line (or diversifying existing product lines) to increase Growth Sales in existing markets, with high potential to expand into new markets. It is important that either option utilize currently available internal financing without taking on additional debt financing (take on additional debt to finance projects to potentially alleviate current debt situation).
  
• It is recommended Fabienne Morin lead, as his resume supports vision and growth, while successfully managing risk.  Second or joint choice would be Nigel Humbolt since he seems to equally support aggressive expansion, growth and profitability. They seem to have mirror strengths and vision.

Question 2

NPV at Corp WACC

NPV at Minimum ROR