Turning Around a Loss-Making Plant Hire Company
Introduction
A construction group’s plant hire division had been operating at a loss for a prolonged period, placing financial strain on the entire group. The ongoing losses weakened the company’s ability to secure financing, as lenders became increasingly concerned about its viability. Josef was brought in to identify the root causes, improve financial reporting, and implement corrective actions to restore profitability.
Situation
Despite generating revenue, the division was consistently unprofitable, forcing the group to justify losses to banks and auditors. The lack of clear asset profitability data, incorrect depreciation policies, and inefficient pricing were key issues dragging the business down. Without intervention, the division risked becoming an unsustainable burden on the group’s overall financial health.
Obstacles
- No visibility into individual asset profitability, making it difficult to identify loss-making equipment.
- Incorrect asset depreciation schedules, leading to misleading financial reports.
- Underpriced equipment, reducing potential revenue.
- Weak financial reporting, making it difficult for leadership to make informed decisions.
Action
Josef took a data-driven approach to pinpoint and resolve the issues:
✔ Worked with IT to generate a profit summary for each asset, breaking down income, direct costs, and overall profitability.
✔ Identified which assets and asset groups were profitable and which were generating losses.
✔ Discovered that many loss-making assets had inappropriate depreciation policies, distorting financial results.
✔ Adjusted depreciation schedules to better reflect the actual useful life of the assets.
✔ Benchmarked hire charges and increased pricing on underpriced equipment to improve revenue.
Result
✅ The plant hire division became profitable, reversing years of losses.
✅ Financial reporting improved, strengthening the group’s credibility with banks and auditors.
✅ The company no longer had to justify losses, reducing pressure on the leadership team.
✅ The group’s directors gained renewed confidence in the plant hire division, knowing it was now contributing to the business rather than draining resources.
Conclusion
Josef’s intervention not only turned a loss-making division into a profitable one but also strengthened the entire construction group’s financial position. What had once been an area of constant concern and financial strain was now a stable, revenue-generating part of the business.
Beyond simply fixing the numbers, the implementation of clear asset profitability reporting, accurate depreciation schedules, and strategic pricing adjustments created a sustainable framework for long-term success. The leadership team could now monitor asset performance with confidence, ensuring that loss-making equipment was either restructured or removed from operations.
By improving financial transparency, Josef also helped strengthen the group’s credibility with banks, making it easier to secure financing and investment in the future. The company was no longer viewed as a business struggling with an unprofitable division but as a well-managed and financially sound enterprise.
This transformation also had a cultural impact within the business. Teams now had access to accurate performance data, allowing them to make informed decisions rather than relying on assumptions. With the right pricing strategies in place, the division could now compete more effectively in the market without under-pricing its services.
Ultimately, what started as an effort to fix a financial problem evolved into a long-term strategic improvement, ensuring that the plant hire division would continue to operate efficiently, contribute to group profits, and support future growth. The company not only achieved profitability but also regained control over its financial destiny.
