La Fantana: Cost cuts drive operating income up 13%

La Fantana saw its operating income go up by 13%, despite an 8% sales decline in the first nine months of this year, as the company slashed distribution costs and dropped training programmes and part of its business trips.
La Fantana, the biggest bottler of water for watercoolers domestically, this year counts on flat EBITDA from 2008, at 6.7m euros. The company, controlled by Innova Capital investment fund, reported 8% lower revenues in the first nine months of this year compared with a year ago, amid the falling number of clients. First half figures stagnated, showing the bottler's turnover started following a downward trend in the third quarter of the year. La Fantana's clients are mostly companies or state institutions buying watercooler-bottled water for employees.
Amid market contraction, many companies have given up this service to save money this year. Moreover, many companies have been either closed or cut their number of subsidiaries. Thus, La Fantana lost around 20% of its clients in the first half of 2009, pushing the company to step up its client retention activities.
At the same time, the bottler moved to slash costs by giving up training programmes, business trips and part of employees. "So far, we've mainly reduced logistic costs, through a more efficient reorganisation of product distribution and by adjusting the organisation to sold volumes," stated Ioana Ciungradi, a CFO with La Fantana Romania.
In the first half, the number of employees was cut by 10%. In late 2008, the bottler had 524 employees. "We also reduced administrative costs (...) Last but not least, we significantly cut marketing expenses", Ciungradi also said.
Last year, La Fantana posted 25m-euro sales on the two markets it operates on, Romania and Serbia, and reached 6.7m-euro EBITDA. In the past five years, the company's turnover has risen four times, posting annual growth rates of above 20%, but for 2009 the company's first half estimates indicated flat sales from 2008.
La Fantana's development plans last year also included the acquisition of a producer in the region, but as a result of the financial market turmoil, Innova put the project on hold.
The company currently has two water bottling facilities, in Bucharest and Sibiu county.