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Optimising Working Capital at Numico

by Albert Hollema, VP Treasury, and Ramon Tolk, Treasury Accountant, Numico

Numico is a high growth, high margin, specialist baby food and clinical nutrition company, acquired by Danone in October 2007. Acknowledged as the European and Asia Pacific market leader in infant nutrition and medical nutrition, products range from infant milk formula to specialised nutrition for babies and mothers. For people with specific nutritional requirements, Numico offers a complete range of enteral clinical nutrition, diet products and disease-specific nutrition. An important element in retaining the company’s competitive position has been a focus on optimising its working capital. For example, the Introduction to the Financial Statements as part of the 2006 Annual Report read,

“We were able to generate healthy cash flows through continued high levels of profitability and substantial reductions in working capital”

Tying up large amounts of capital adds no value to the company.

To achieve this, Numico established an internal initiative to reduce working capital within the company, This article explains the objectives of this working capital project and how we achieved these in practice.