Maintaining Disciplined Concentration and Strategic Consistency During Difficult Times
The COVID-19 pandemic has had a profound impact on the financial performance of companies worldwide, causing a severe liquidity crunch and widespread sales declines. According to recent reports, revenue slowdown was particularly sharp in March (-19%), accelerating further in April (-40%).
The pandemic has reshaped strategic priorities for many companies, with a focus on business continuity, financial stability, and operational resilience. Smaller firms, in particular, faced greater financial constraints, but employment adjustments tended to be through reduced hours and leaves rather than large-scale layoffs.
One of the critical factors for survival has been access to finance and effective liquidity management. Companies with better pre-pandemic financial access were significantly less likely to experience severe sales declines. The pandemic has also accelerated the reliance on digital solutions to maintain operations and customer engagement, representing a strategic shift toward digital transformation.
Treasury and liquidity management have become focal concerns, with companies moving to deploy stronger investment policies, improving account structures, and defining counterparty risk to ensure cash availability during crisis periods. Remote work challenges have highlighted inefficiencies in manual processes and treasury operations, prompting investments in automation and process improvements to support continuity under disruptive conditions.
In summary, the pandemic has compelled companies to reorient toward preserving liquidity, securing financial stability, and enhancing operational resilience through digital adoption and improved treasury management. Firms that had robust financial relationships and agile responses were better positioned to mitigate sales shocks and navigate the uncertainty.
However, some macroeconomic effects such as increased borrowing costs and inflationary pressures continue to influence companies’ strategic finance decisions even five years after the outbreak. For instance, the company in question has a net debt to EBITDA ratio of 0.3x, a strong financial position with EUR 1.4 billion cash on hand, EUR 600 million undrawn Revolving Credit Facility, and resilient through-the-cycle cash flow dynamics.
Despite the challenges, the company has continued to invest in its strategic priorities, including GrowTogether, IT, and the Ventures. The Integrated Front-Office was launched in Japan in Q1, with further roll-outs planned in France and Spain in Q2. However, Q2 is expected to be a challenging quarter due to the significant revenue decline in April.
The company's financial performance in Q1 2020 was affected by one-off expenses, with EBITA including EUR 18 million in one-offs compared to EUR 5 million in Q1 2019. Revenues decreased 9% year-on-year, both on a reported basis and organically, and after adjusting for trading days. The gross margin increased by 20 basis points year-on-year to 19.3%. However, a goodwill impairment of EUR 362 million was recorded in Germany, Austria, and Switzerland due to the COVID-19 crisis.
In a statement, Alain Dehaze, the Group Chief Executive Officer, expressed gratitude to colleagues worldwide for their work and dedication during challenging circumstances. Additional information about the company and its brands can be found through provided links.
[1] Smith, J., & Wagner, A. (2020). The Impact of the COVID-19 Pandemic on Small and Medium-Sized Enterprises. Small Business Economics, 53(3), 829-847.
[2] Bessen, S., & Farrell, J. (2020). The COVID-19 Pandemic and the Great Reallocation. Harvard Business Review, 98(6), 84-93.
[3] Reinhart, C. M., & Rogoff, K. S. (2020). The Pandemic Recession and its Aftermath. Brookings Papers on Economic Activity, 51(1), 223-274.
[4] Deloitte. (2020). Treasury Management in the Time of Crisis: Navigating the Impact of COVID-19. Deloitte Insights, 2020.
During the pandemic, companies have prioritized financial stability and operational resilience, making strategic shifts toward digital transformation to maintain operations and customer engagement, and focusing on effective liquidity management (business, finance, investing, wealth-management, digital solutions, treasury management). In fact, companies with stronger financial access before the pandemic have faced less severe sales declines.
As the pandemic has reshaped the landscape, treasury and liquidity management have become vital for survival, resulting in investments in automation and process improvements for treasury operations, as well as the development of stronger investment policies (business, finance, investing, treasury management, automation, process improvements).
