Essay about Euroland Food

863 Words4 Pages
Euroland Foods S. A. Case Report

Prepared by Lisa Simth

October 18, 2010

Euroland Foods S.A. Case Analysis
I. Introduction
Euroland Foods Company was a publicly traded company since 1979. Theo Verdin founded the company in 1924 as a result in developing his dairy business. Euroland Foods Company saw itself as a multinational producer. The four products were high-quality ice cream, yogurt, bottled water, and fruit juices. Each product accounted for 60%, 20%, 10%, and 10% of the company’s revenue respectively. The company’s headquarters was in Brussels, Belgium. Since the day the company was founded, it has experienced steadily development.
II. Background of Firm
The board of directors of Euroland Foods Company had 12members.
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Its sales had been stopped since 1998. The creditor, Banque du Bruges, was worrying about the Euroland’s ability to pay its debt back. The one of the biggest stockholder, Venus Asset Management, was worrying about cutting off the dividends.
IV. Constraints on Solution
Due to the high debt-to-equity ratio, the board of directors decided to limit capital spending to EUR 120 million. There were eleven projects on the table, and up to total EUR 316 million. There was estimated minimum acceptable IRR and maximum acceptable payback years. (Table 1)
V. Possible Solutions In order to increase the sales, Euroland Company has to choose projects wisely under the EUR 120 million budget limitation, minimum IRR limitation, and maximum payback period limitation. Net present value, internal rate of return, and payback period are the main measures Euroland Company used to analyze each project. According to Exhibit 3, project 1 replacement and expansion of the truck fleet, project 2 a new plant, project 3 expansion of a plant, project 4 development and roll-out of snack foods, and project 5plant automation and conveyor systems are eliminated for the over maximum acceptable payback period. The left projects are all considerable. The special project in this case is the effluent-water treatment at four plants. Because it belongs to the safety or environments category, there is no measurement yet. Euroland Company could see it as a future expenditure, and if Leyden was right, we can

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