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Digby report to shareholders
- 1. Digby’s Report toShareholders Industry #C59908 Presented by Eric Willinsky, Francis Naccarati, Maite Schloesser, Clare Singley, Stephanie Radziminski, Mark Rapposelli
- 2. Promise to ourShareholders Steady 10% annual increase in stock prices over 5 years
- 3. Industry Stock MarketSummary
- 4. Previous & FutureCompany Drivers 1. Cost Structure and Stability 2. Market Share Dominance 3. Dividend Payout
- 5. Previous Cost StructureStrategy● ● Higher prices for quality products ○ Aligns customer-targeted pricing with higher R&D budget ● Early investment in TQM ○ Lowered Variable costs by 12.9% avg ○ Lowered Administrative costs by 60%
- 6. TQM Results Digby's TQMResults 2019 2020 2021 2021 Industry Avg. Material Cost Reduction 11.80% 11.80% 11.80% 8.85% Labor Cost Reduction 14% 14% 14% 4.67% Administrative Cost Reduction 60% 60% 60% 44%
- 7. Previous Cost StructureStrategy● ● Higher prices for quality products ○ Aligns customer-targeted pricing with higher R&D budget ● Early investment in TQM ○ Lowered Variable costs by 12.9% avg ○ Lowered Administrative costs by 60% ● Emphasis on Capacity ○ Takes advantage of competitors’ unmet demand and eliminate second shift variable costs
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- 9. Continuing Cost StructureStability • Due to prior success in cost management, important profitability & efficiency ratios are growing but at a sustainable pace as compared to competitors o Growth Rates (YoY): ROE = 10.5% CM = 1.25% Profit Margin = 7.1% • Lower ROE compared to competitor can be attributed to lower profit margins. Innovative methodology for improvement of profit margins includes: o Automation Investment (lower variable costs outweigh initial cap. ex) o Inventory Management (targeted inventory levels to prevent excess inventory costs)
- 10. ROE & ProfitMargins for Industry
- 11. Market Share Dominance ●Focus on high market share to offset fixed costs ● Differentiate semi-homogenous product lines in a competitive market through early promotional marketing and bolstering R&D to mitigate competitors power ● Digby’s Accessibility rate of 100% and Awareness rate of 83% ultimately resulted in Market Dominance
- 12. Average Product Awareness AverageProduct Awareness (2019-2021) 2019 2020 2021 Andrews 41.60% 51.30% 51% Baldwin 92.30% 94.70% 96% Chester 54.70% 54% 55% Digby 81% 81.80% 82.60%
- 13. Market Share MovingForward • Lower ROE also attributed to lower sales than competitor • Opportunity to gain additional awareness and increase competitive advantage by increasing the promotional budget & reducing sales budget • Continued adherence on R&D and increased focus on catering product lines to consumer demands mitigate customer power o Product Age o Product Price o Product Reliability
- 14. Dividend Payout ● Onlycompany paying dividends at .5% ● Potential to offer increased dividends in the future to match sub-sector average at 2% *cited from dividend.com
- 15. Why Should YouInvest? ● Digby’s cost structure stability, market dominance, and dividend payouts has contributed to its positive profitability ● Historically, Digby has outperformed its competitors and holds the highest stock price coupled with the strongest EPS showcasing our current strength ● With a changing environment, Digby has prepared a strategy moving forward that includes provisioning infrastructure, revising inventory management protocols, and strategically increasing dividend payouts
- 16. Appendix ● Dupont Model ●SWOT Analysis ● Porter’s Model
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