DLH sets new targets in a Go To Market strategy

DLH sets new targets in a Go To Market strategy

Having seen strong development in 2010, DLH has achieved a number of key milestones in its recovery strategy, "Back to Black", one year ahead of expectations. As a result, DLH is now launching a new strategy plan known as "Go To Market", which focuses on growth in the Group's established core markets.

CEO Kent Arentoft comments:

"After much hard work and commitment, DLH is Back in Black ahead of schedule and the time has come to set new targets. We're now implementing the next phase of the process that will transform DLH into a leading global timber wholesaler." 

DLH: a market leader aiming for growth

Between 2011-2014, the Go To Market strategy will strengthen DLH's unique position as a focused global wholesaler in the market for timber, sheet materials and wood-based products and will provide a platform for DLH's leading position as a timber wholesaler in selected markets. As a key element in the strategy, DLH will create a homogenous and streamlined organisation in the Group's markets in order to achieve organic growth rates of between 8-10 per cent. This will, in part, be achieved through the following:

• Launching sheet materials in France, Poland and the US
• Regional expansion on the basis of already established positions in the US and Russia 
• Expanding trading activities in India through own sales offices
• With the anticipated closure of DLH's African hardwood production, the associated sales channels will be wound up in the UK and Germany, which are expected to account for total sales of approx. DKK 200 million in 2010. 

Simplification of DLH's organisation and management structure

The Go To Market strategy will result in the further simplification of the organisational and management structure and create a clearer division of responsibilities. With effect from 1 January, 2011, an organisational readjustment will ensure that:

• DLH's markets in the US, Russia, the Nordic countries, Western Europe (France and the Benelux countries) and Eastern Europe (Poland, the Czech Republic, Slovakia and Ukraine) will be covered by strong regional sales units going forward
• The Global Trading function will be optimised and centred on units in Denmark, India and Hong Kong. The office in Switzerland will be closed 
• The Global Sourcing unit will be strengthened and made responsible for ensuring high and consistent quality across the Group as well as for the development of new business areas and DLH's ongoing CSR activities.

Moreover,

• The management structure will be simplified with the appointment of two commercial directors to the Group Management. At the same time, two regional management functions will be disbanded. As a result, two current members of Group Management will step down. 

A total of 90 positions worldwide will be abolished.

The changes are expected to release working capital of between DKK 70-80 million during 2011 (compared to the expected working capital at the start of 2011). The reduction is expected to be achieved by curtailing the UK and German activities concurrent with the expected annual cost savings of between DKK 30-40 million with a full year effect from 2012.

Kent Arentoft, CEO comments: "It is always regrettable to have to say goodbye to colleagues who have been an important part of DLH for many years. Our choice of strategy means that as a global timber wholesaler, we will be a smaller and more focused organisation. I am confident that we have taken the first and important step towards becoming a strong and redefined DLH."

The Go To Market strategy's most important targets for 2014

The objective is for DLH to have achieved the following:

• A turnover of DKK 4.5-4.8 billion
• A profit margin (EBIT margin) of 4.5-5%
• Net working capital/sales of up to 25% 
• ROIC above 12%

Expectations for 2010 maintained

The latest forecasts for 2010 are not affected by the decision concerning the change in strategy. 

         Contact
         Please direct any inquiries relating to the announcement to President and CEO Kent Arentoft on telephone no. +45 43 50 01 01.