WHY HAVE WE CHOSEN THIS COMPANY?
Introduction
Campofrío is a Spanish company of power established in Madrid, but created in Burgos. Campofrío is the leading company processing and sale of meat products in the countries of Europe and one of the largest in the world in the sector. The company is headed by Pedro Ballvé, and currently employs more than 12,000 workers in several countries.
Revenue that gets Campofrío in Spain is 40 of its total revenue. In addition to Campofrío has several factories distributed throughout the country production.
The reasons for which we have chosen the company Campofrío are: * Campofrío is one of the best known companies in the market of meat products and has an excellent positioning in Spain.
* Due to its good market position Campofrío carries exerting its activity for quite some time in Spain and its products are sold in almost all supermarkets so it is one of the brands preferred by consumers are familiar with this brand.
* It is one of the leading companies in the food sector of meat products in Europe with subsidiaries in several European countries such as Portugal, France, Italy, Belgium, Switzerland, Germany, the Netherlands and Romania and one of the most important in the world.
HOW IS THE COMPANY?
Campofrío is a company of Spanish power aimed at the market of meat products being the European leader in processed meat products and one of the most important in the world.
Campofrío is a company that focuses on the consumer, has investments in several countries, whose products reaching 260 million consumers in more than 40 countries. You have the guidance of an international company since it is present in several countries in addition to an expansive growth equipped with the latest technologies.
Campofrío has achieved a good positioning in the most important markets, those countries with strong economies, as well as those who are developing a rapid economic growth.
Campofrío food group sells mainly pigs, cattle and poultry meat products (fresh, frozen or processed). It currently produces more processed products because they are the products most demanded by consumers.
To gain a foothold in the international market Campofrío uses a strategy of Alliance with companies with a good positioning in the markets of the countries where you want to go by investing in them and contributing with their technology as well as what is the name of your brand.
Once a time has elapsed and after verifying that that country is profitable Campofrío decides to begin to open factories there as it has for example in Russia, Romania and Portugal.
Campofrío revenues are of 1.271 million EUR, of which the 61.3 corresponds to the 38.7 abroad and the domestic market. It currently has more than 11,800 employees around the world.
Campofrío food group as the number one company in the Spanish market, offers a variety of food products that offer excellent value for money. Campofrío food group, is concerned about the welfare of their consumers, which advances worrying about their future, Campofrío seeks always to meet the needs of its customers, with a good quality in their products with their own methods offering a total confidence to customers and using the most advanced technologies.
Campofrío offers diversity in their products, each of them with characteristics and different properties, but by ensuring that its products are 100 natural and healthy. Some of their products are cooked ham, sausages, sausages, ham, salami, pizzas, salads.
He is owner of one of the most advanced industrial parks of the market. It has several production plants that are distributed throughout the country.
Campofrío is the leading company on the market of meat products and its secret lies in that commits itself to consumers advising them and offering them products based on their power and their ways of life guaranteeing quality and flavor, worrying about health and making sure good food.
What represents Campofrío is healthy living through such important values in a company such as innovation and change to offer products consistent with the evolution of consumers and "culinary fads" current, but always maintaining the quality of life. To the needs of its most demanding consumers and offer their customers the most complete range of products, the company manufactures products that encompass all segments of the market for the enjoyment of everyone.
The brands that sells Campofrío are: Campofrío, Oscar Mayer, Revilla, Navidul, d'Aoste (France, Germany and Belgium), Nobre (brand favorite in Portugal), Stegeman (Holland), Marcassou (Belgium), Justin Bridou (France), Jean Caby (France), Cochonou (France), Fricanes (Portugal), Bistro, Calixte, Pollofrio, Pavofrio and Weight Watchers.
Balance sheet
RATIOS 2010
- LONG-TERM SOLVENCY = TOTAL REAL ASSETS / TOTAL LIABILITIES 1.604.975/ 482.227= 3’32
- SHORT-TERM SOLVENCY = CURRENT ASSETS / CURRENT LIABILITIES 487.346 / 482.227 = 1’01.To be between 1 and 2 is short term solvent.
- LONG-TERM DEBT= FUNDS OUTSIDE / OWN FUNDS (547285+482227)/ 571708=1’8007. Is not optimal because it is not between 0.4 and 0.6 therefore it is possible that in the future it may not cover their expenses, is assuming risks
- SHORT-TERM DEBT = FUNDS OUTSIDE/ OWN FUNDS 482.227 / 1.604.975 = 0’3004. There is little short-term risk.
-CASH RATIO (AVAILABLE WORKABLE) CURRENT LIABILITIES 333,347/482227 = 0’691. It is not very good because it does not approach 1 but is decent means the liquidity that has the company without stocks.
-WORKING CAPITAL 487.346 – 482.227 = 5119. With which does not need financing.
RATIOS 2011
-LONG-TERM SOLVENCY = TOTAL REAL ASSETS / TOTAL LIABILITIES 1.769.674 / (599.805+648.058)=1,418. It’s solvent.
- SHORT-TERM SOLVENCY = CURRENT ASSETS / CURRENT LIABILITIES 438.353 / 599.805 = 0,7308. Not short-term solvent.
- LONG-TERM DEBT= FUNDS OUTSIDE / OWN FUNDS 1247863/518024 = 2’4088. Is not optimal because it is not between 0.4 and 0.6 therefore it is possible that in the future it may not cover their expenses, is assuming risks.
- SHORT-TERM DEBT = FUNDS OUTSIDE/ OWN FUNDS 599.805/1769674=0,338. There is little short-term risk.
-CASH RATIO (AVAILABLE WORKABLE) CURRENT LIABILITIES 276.349 / 599.805=0’4607.It is not very optimal because that not approaching 1.
-WORKING CAPITAL 438.353 – 648.058=-209.05. You need funding via a passive short-term negotiable.
With respect to the ratio of solvency in the short term, we note that in the year 2010 is of 1'01 and in 2011 is 0.73. Within the year 2010 is in the limit to be considered solvent and in 2011 is no longer solvent in the short term, this is due to the increase in borrowing that is necessary to be able to finance and to the decrease in revenues and profitability.
Noting the value of the working capital we see that in 2010 the company can still be financed by itself but in 2010 leaves a negative balance and have to get external funding.
Regarding cash ratios we find has values a little away to 1 which is when I would consider optimal, that means that you have not active enough liquid to cope with their debts in the short term.
Balance sheet
Some conclusions that we obtain are:
In 2010 the total investment is 1.604.975, long-term investment is 1.117.629 and the investment in the short term is 487.346.
In the year 2011, the total investment is 1.769.674, long-term investment is 1.331.321 and the investment in the short term is 438.353.
The active current cannot be observed there is a considerable increase of the long-term investment due to the acquisition of property, plant and equipment. In addition to that there is an increase of investments which performs Campofrío with companies associated with them.
The active current shows a decrease in non-current assets held for sale between the years 2010 and 2011, this means that many current assets that the company used, has now decided to sell them as for example a building where played an activity of the company, now sells.
It reflects an increase of stocks that may arise from an increase in the purchase of raw materials, because although their incomes have decreased production has increased every year. Decrease trade receivables from 108.572 in 2010 to 92.505 in 2011, therefore that have claimed debts that were with us. Campofrío focuses on investments in the long term by reducing its investment in the short term.
Total liabilities or financing in 2010 was 1.029.412 and in 2011 from 1.247.863
There is an increase in long-term provisions in the current liabilities, they are obligations we do not know exactly when to pay them. It is observed that there is an increase in the long-term debt due to loans that we are asking for funding.
There is an increase of total liabilities due to debts to group company and associated short-term and commercial creditors and other bills to pay. With respect to equity notes a decrease due to the increase of the total liabilities, i.e. of the increase in debts with creditors outside the company.
Profit and loss account
It follows the account of losses and gains that there has been a significant reduction in operating result from 53961 in 2010 to 9.357 in 2011, although Campofrío has increased revenue in its sales can be seen that an increase in operating expenses occurred for example in the staff costs where costs invested in salaries have increased, wages and assimilated.
There is a reduction in the operating margin (operating income) of you company that goes from 5'84 to 0'14
It is also due to the increase in consumption of raw materials and other consumables materials and damage and losses.
Despite the negative operating result, Campofrío has had a positive financial result.
He has obtained a result before positive taxes with respect to 2010 and a result of positive exercise compared to 2010. http://tools.morningstar.es/es/stockreport/default.aspx?tab=11&vw=pr&SecurityToken=0P0000A5TZ]3]0]E0ESP$$ALL&Id=0P0000A5TZ&ClientFund=0&CurrencyId=EUR If we focus on the years 2010 and 2011 we observe that there is a sharp decline in its operating margin and the margin on profit before tax. This is due to investments and its high indebtedness in the long term.
State accounts and the equity
Notes that the reserves in 2009, 1010 and 2011 years increase, that means that there are benefits that have not distributed among the shareholders.
There is a decrease of the profit for the period of 2010 to 2011.
Total own funds experienced a growth of the year 2009-2010 and a reduction in the year 2010 to 2011.
HISTORY AND EVOLUTION
The Campofrío’s company was founded in 1952 in Burgos, in its early days, the company had a slaughterhouse. Halfway through the fifties the company begins to produce its first products but wasn't until 1960 when developed in the market of meat products. Campofrío food group began trading on stock exchange in 1988.
The company started its international expansion during the 1990 beginning to expand through Russia, through a company together called Campomos, which later became a subsidiary of the group.
At the end of the 1970s sells half of its shares to Beatrice Food, buying back then causing benefits to the enterprise
In 1999, Campofrío bought Telepizza and Montagne (Noire French company) which was sold in 2007. At the end of the 1990s he also bought Morliny, meat products in Poland and Romania Tabco company. In Spain it also buys the company called Delicass.
In the year 2000 Campofrío acquires a company that today is one of the best-known brands (Oscar Mayer) and merged with the company Navidul. Thanks to the purchase and merger with companies, Campofrío manages to settle and get status in the market.
Despite being the market leader in Campofrío continues to develop strategies to improve their competitiveness by continuing with the improvement of its products and the acquisition of companies.
In 2004, Smith Fields group buys the Morliny subsidiary to Campofrío.
Campofrío Food Group from the merger of Campofrío and Group Smithfield was created in 2008.
The purchase and merger of Campofrío with other companies has resulted in an increase of the company's sales, however to be able to buy these companies has needed to invest in them by what their indebtedness has increased.
MACROECONOMIC AND MICROECONOMIC VARIABLES
Macroeconomic variables in Spain
Inflation
The graph shows levels of inflation during each month of the year 2011 until September 2012.
http://www.reeditor.com/columna/6224/11/economia/cual/sera/nuevo/impuestoel/impuesto/silencioso
As you can see from January until April 2011 is experienced a rise in the CPI to be lowered down gradually until early 2012. Due to the new VAT tax declared by the Government meat products are affected by the VAT by two points. This can impact on Campofrío because by increasing prices, consumers will buy less products and that can have an impact on the revenues and profits of the company.
In addition Campofrío increases costs due to the increase in the price of raw materials so you have to spend more to buy the same amount. The increase in the prices of raw materials, can impact on production and the benefit of Campofrío. This year Campofrío has reduced a 72.6 your benefit and one of the reasons has been the rise in prices of commodities due to the measures of the Government
The graph shows that from 1995 to 2008, Spain has a positive growth in GDP being this slightly more reduced last year, from 2009 produces a growth negative GDP reaching - 3.7 points due to the economic crisis, in the years 2010 and 2011 has been a small recovery in GDP growth progressively.
Campofrío food group to become a national company that produces in this country and also exports its products contributes to GDP and GNP. A drop in GDP tends to result in increased unemployment and a decline in wages, these factors affect the consumption of the products giving rise to a reduction in the consumption and therefore a reduction of sales. Interest rate
It is the amount of money that a person, company, or any entity must pay for using money they have given you. How does it affect variations in the interest rate on the economy and businesses?
If there is a drop in interest rates, this has repercussions on the growth of the economy giving rise to positive growth. Low interest rates helps the growth of consumption and increases the demand for products. Higher consumption of products, more grows the economy. However this increase in consumption can contribute to a rise in inflation.
High interest rates cause a decrease in consumption and inflation and an increase in savings, but there is a downturn in economic growth.
The following graphic shows the evolution of the interest rates in the zone euro, us and Japan.
A gradual increase in interest rates occurs in the zone euro from 2006 to 2007. In 2009 the ECB decided to keep the constant rate to revive the ailing economy by the economic crisis. This constant rate was changed between April and June 2011 when he climbed a 1.25. The interest rate is currently 0.75, its all-time low.
Campofrío might be affected by the rate of interest due to the debt that the company has collapsed. Campofrío food group debt is subject to variation in interest rates in the Eurozone due to the evolution of the Euribor.
Exchange rate
It is the relationship that exists between the value of a currency, therefore is the monetary value which has a currency expressed in a country with another currency.
As Spain is a member of the eurozone with a single currency, it has no exchange rate with other countries in the euro zone. Depending on the value that has currency in foreign countries Spain can have benefits or losses.
Companies may see by the exchange rate. For example if a company receive raw materials from the United States, the company always will be affected by the euro-dollar exchange rate, if there is an increase in the appreciation of the dollar exceeded the value of the euro, United States from raw materials will be more expensive and will increase production costs.
Since Campofrío operates mostly within Europe, it does not suffer many losses by exchange rate since most of the countries using the single currency, which is the euro. Although if it can suffer losses due to non-European exports with foreign countries but these are minimal.
Balance of payments
They are the accounts that covers all economic transactions that have a country with the rest of the world. The following graphic shows the deficit current account.
http://economy.blogs.ie.edu/archives/2012/05/deficit-exterior-espanol-en-el-primer-trimestre-de-2012-fue-del-55-del-pib.php
Since 2008 that started the crisis, the external deficit of Spain has been reduced every year. Although this is the highest external deficit just below United States and the current account deficit is proportional to the 3.2 of GDP was still higher than the deficit of the United States.
The current balance of 23.249 million 16877, thanks to the reduction of the trade deficit and a surplus in the balance of services (tourism) has been reduced.
The imbalance in the balance of payment affects the capacity of Spain to obtain external financing through capital inflows. Income from abroad do not come to Spain.
http://decigarrasyhormigas.files.wordpress.com/2012/10/1-exports-less-imports-spain.jpg
One of the main problems of the economy of Spain is both public and private indebtedness that has Spain with abroad, because the deficits of current account by spending more than what is produced. This was possible thanks the external funding.
The crisis has affected imports, Spain increasingly more reduces imports. But there is a positive development in exports being the value better than in other neighbouring countries. This improvement in exports is due to our cost reduction and the improvement of competitiveness.
A drop in exports would affect Campofrío because the international market represents 60% of your income
Unemployment
Spain has the highest unemployment rate in the euro zone and one of the highest in the developed countries. This graph shows the evolution of the unemployment rate.
http://www.publico.es/dinero/431082/el-paro-se-desboca-ya-hay-5-639-500-personas-sin-trabajo
Spain ended 2010 with an unemployment rate of 20, 2011 with a rate of 22,85 and in 2012 the unemployment has reached 25.3 than double the rate of the euro zone. The youth unemployment rate is above 50. The rise in unemployment has a direct impact on consumption causing a decrease of this. This affects companies that reduced their income and profits.
Consumption
The following graph shows the rate of consumption of food in Spain
http://www.elconfidencial.com/opinion/grafico-de-la-semana/2012/07/20/el-consumo-de-alimentos-baja-a-tasas-maximas-9530/
It notes that there is a decrease in consumption during 2010 then began an upward trend in 2011. Currently there is another decrease, this is due to the increase in VAT on food. A drop in consumption affects the sales and profits of the company
Microeconomic variables
Campofrío competes in a perfect competition because: * It’s main activity is the production and sale of processed products and develops in the food sector, a market in which there are several producers, therefore it is not the only one.
* There are many consumers in the market where it operates.
* You must study their competitors because any change of decision to competitors about prices or other factor can affect them.
* Although Campofrío is leader in the production and sales of meat products and has the largest market share, there are other brands that offer the same products by what a brand never can be with total control of the market.
* There are no any restrictions for entering this market (meat products).
* SWOT analysis
MACROENVIRONMENT
Demographic environment. * Campofrío operates mostly in countries of Europe, a continent whose demographic population is in recession and also the population is ageing rapidly, all this accompanied by a decrease in the birth rate and a change in the structure of the family (persons living alone) therefore Campofrío is investing in Latin America where there is an increase in the population where families are more numerous and therefore adapting to prices they can get more revenue and profits due to the size of the population.
* Campofrío products can be consumed by all segments of the population, from children to elders, therefore Campofrío produces a variety of products that encompass the entire population.
* Due to a change in the patterns of family because now people have fewer children, the incorporation of women into the labour market and the participation of men in household chores. Campofrío now runs his advertising to everyone in the family including men, not like before, it focused only on women.
Economic environment. * Campofrío guarantees all its products a good relationship for money so that they can be purchased by all social classes, classes already are low, medium or high.
* In spite of the economic crisis, Campofrío has managed to maintain an excellent level of sales of their products proving that their products have a good price and are of good quality.
* Campofrío is set in countries adapting to the purchasing power and consumer spending patterns.
Environmental environment * Campofrío ensures the development of all its activities respecting and conserving the environment through strict environmental policies that will continue in all its activities giving rise to products whose manufacture do not impact the least possible environmental. Campofrío fosters collaboration and participation in caring for the environment.
* One of the objectives of Campofrío is the impact of their activities on the environment. Campofrío takes into account in its decisions all the negative consequences that can occur in the manufacture of products, while respecting all the laws of protection in force environments.
* Protection of the environment is important because contamination can affect the raw materials that get Campofrío who come from a variety of animals. Campofrío uses renewable energy in many of its factories and hopes to expand the renewable energy in all of them.
Political environment * Campofrío is responsible for complying with policies and laws established in each country in which it operates to adapt and respecting the legal framework of each country where it sells its products.
Technological environment * One of the fortresses that Campofrío is using highly advanced technology within the food sector. This technology enables you to increase production by reducing costs, giving rise to an increase in their efficiency and giving them a competitive advantage over their competitors. Campofrío has managed to adapt to technological changes and using new technologies for a more efficient advertising.
* Campofrío makes large investments in ID for the improvement in the production, sale and distribution of its products to meet the needs of consumers. Campofrío factories often accompanied with a technology that stands out from the other companies and developed to measure, making their factories to increase their profitability.
Cultural environment * Campofrío shows consumers their vision and philosophy of "healthy life" trying to eat well but worrying about your health. This is important because today people are much concerned about its image and are more interested in maintaining a living healthy, the cult of the body and the need to be in good shape.
* Campofrío represents values such as commitment, family union, attitude of self-improvement, leadership consumers give their confidence to brands that can satisfy your needs, Campofrío is one of those companies therefore have great loyalty and trust in market share.
MICROENVIRONMENT.
Providers
* Campofrío centralizes all your purchases into a single Department that directs and plans all purchases and negotiations of the enterprise to improve procurement efficiency and establish their products more effectively. Campofrío food group has a large number of providers (expected this figure to continue to increase). Campofrío has developed a computer system of purchases that facilitates the relationship and negotiating with vendors.
Clients
* Campofrío is a customer-oriented company, the main objective of the company is the satisfaction of customers and the recognition and customer loyalty. Why Campofrío not repaired expense effort in the study of consumers to provide them what they need.
Competitors
* Campofrío shares market share with other companies in the so-called free market competition. Campofrío does not realize misleading advertising against their competitors.
* The main competitors of Campofrío are: El Pozo, Guisonna, Argal and Casa Tarradellas food Corporation. The following image shows the market share of Campofrío and its competitors.
