Facing rapid industry disruption with an underperforming, complex portfolio of business units that reflected the oil industry of bygone decades, an Asian oil refinery business sought to develop a strategy to return to profitability within three years.
KPMG’s Global Strategy Group (GSG) identified which parts of the portfolio to grow through investment, which to exit, and how to align business and operating models across the portfolio to realize greater synergy – resulting in a transformation of the business and a successful turnaround.
GSG professionals began by working closely with the client to understand their financial ambition and risk appetite. Challenging client leadership on their definition of business units as core or ‘untouchable’, the engagement team helped them to raise their expectations of what was possible.
Clarity on the financial ambition allowed GSG to look holistically across the 9 Levers of Value to understand the client’s portfolio of businesses and each unit’s alignment with that ambition. Step by step, GSG then built a clear portfolio strategy, including what to enter, exit, defend or grow, based on standalone attractiveness and synergies. Some synergies were obvious, others less so, among them less cash rich but also less cyclical adjacent businesses.
By mapping out the future state, GSG identified the interdependencies, focused on a shortlist of meaningful initiatives and defined a suitable role of the center that would support both the M&A-led transition of the portfolio, and the longer-term management of the future state. KPMG Deal Advisory and Tax specialists were engaged to help realize key divestments and acquisitions, and better structure the holding entity for its changing footprint. Not only had the organization shifted in sector focus to emerging and higher margin services around its traditional core competencies, but geographically, it had gained a more balanced exposure to developed and developing economies, and key energy trade corridors.
In doing so, the client had transformed itself financially. It had changed where it played, and how it played, while remaining true to its oil sector heritage. Well thought through and executed enterprise-wide transformation had changed its path from potential bankruptcy to an example of sector profitability.
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