Værdiansættelse af ecco

HA-almen Bacheloropgave Erhvervsøkonomisk institut (BSS) Anslag: 152.910 (uden mellemrum)

Forfatter: Dennis Normann Rosenring Buch

Studie nr. DB65646

Jan Haugaard Juncher Pedersen

Studie nr. 201400168

Vejleder: Palle Nierhoff

A valuation of the Danish shoe company ECCO SKO A/S

Værdiansættelse af ECCO SKO A/S

Aarhus School of Business and Social Sciences Maj 2015

Bacheloropgave

Værdiansættelse af ECCO SKO A/S

Dennis Buch / Jan H. J. Pedersen

Abstract

The main purpose of this thesis is to determine the value of the Danish shoe company ECCO SKO A/S. ECCO was founded back in 1963 by the shoemaker Karl Toosbuy in Bredebro. The company got its big breakthrough in the late 70s when they introduced the famous shoe model JOKE that today still are being sold in newer versions. As an expansive growth by increasing exports during the years, ECCO established foreign manufacturing plants around the world. Alongside their shoe production, ECCO started producing their own leather and established their first tannery in Indonesia back in 1991, followed by tanneries in the Netherlands, Thailand and China. In the year 1992 the production reached 1 million pairs of shoes a year and in the year 2013 the production of shoes went over 20 million pairs per year. The company has today 18.500 employees over 50 different nationalities and selling shoes and accessories through 15.000 shops in 87 different countries. The thesis based on a hypothetical situation in which a private capital fund has seen an opportunity to buy ECCO T ECCO of the economic development in recent years and the preparation of a standard budget for the next 5 years. In addition to the regular budget, an additional budget made for the capital fund, showing the development and performance for ECCO during the next 5 years where the capital fund is leading the company. T T external and internal environment of the company. The external part is conducted through a PESTEL-analysis and P F F T capabilities through value chain analysis and the VRIO model. The result of strategic analysis shows that ECCO has a strong brand, which is known around the world for their comfortable shoes. They have an ability to produce high-quality leather, good opportunities to increase revenue in several Asian countries. The locally as well nationally marketing estimated for being weak compared to the competitors on the market for shoes. The next step is to analyze and to reorganize the financial statements of ECCO. This is to derive the key financial indicators of the company. The DuPont-model, which has three levels, used in this situation, also a common-size analysis are conducted. The result shows that ECCO have managed to create revenue growth over all the years (2009 2013), they have also been able to increase their equity set by the increase in return on equity (ROE). The increase in return on invested capital (ROIC) due to a steadily increasing profit margin as the asset turnover in the period has remained at a very stable level. The third step is the developing of the budgets; it appears that the decline in the growth rate continues until its hits 3% where we assume will find its natural level. The outcome of the standard budget shows that the EBIT margin increase as the result of ongoing efficiency and possible capitalization of economies of scale. This results in a rising profit margins and a turnover rate that T budget based on a capital fund ownership, shows that the result of the intensified advertising increases sales growth rate to find its steady state level at 10 %. Increased costs will push the EBIT margin in the first period. At the end of the budget period the EBIT rise again as the result of the advertising with improved efficiency and additional capitalization of economies of scale. Next introducing the models used in the further valuation of ECCO. The two models are the discounted cash flow model and the EVA-model used for validate the results. There prepared two valuations, one for the base case, the other on for the best case. The results from the base case scenario estimated a present value of the ordinary Equity at DKK 41.218.160 (000). The result from the best-case scenario calculated a present value