European Ceramics: Flexible when it counts
By Hayes Knight - 11 October 2016
Like most businesses involved in the construction industry, European Ceramics has had to adjust to the ebbs and flows of an ever-changing market. It’s an imperative that’s given rise to its mission statement: to ‘morph, adapt, change and evolve’.
If you've been to Smales Farm, Holy Trinity Cathedral, Botany
Downs Shopping Mall, the ANZ Tower or Sky City Grand Hotel, you'll
have walked on or seen tiles supplied by European Ceramics.
The family business founded 30 years ago, has built a solid
reputation as the go-to supplier for quality natural stone,
porcelain, ceramic, limestone, marble and granite tiles. It sources
its stock from around the world and works closely with specifiers,
providing product for large commercial developments, hotels,
apartment blocks, aged-care facilities, group home builders and
high-end residential projects.
Owner and managing director Jason McGranaghan took over the
company from his parents just as the global financial crisis hit.
The economic downturn battered the building industry, but European
Ceramics weathered the storm, thanks in part to its reputation and
"It was a difficult period for the industry but the longstanding
relationships we have with key developers and specifiers helped us
get through," says Jason.
"We've been involved in some of the most prestigious projects in
New Zealand and we've been operating in this space for three
decades so we have a lot of experience and expertise. Our clients
come to us for exclusive and custom-ordered product ranges, so that
sets us apart."
In 2015, Craig Stachurski became a partner in the business and
this has further solidified their future. Jason and Craig bring two
different points of view that effortlessly blend together, creating
a more dynamic approach to business.
In the interests of ongoing improvement, the company recently
undertook a full review of its operations and systems. This
resulted in it taking on Hayes Knight as its accounting supplier
and working with Scott Travis
"We wanted fresh approaches to every area of the business and to
keep up with innovation and technology," says Jason.
"Having an accountancy firm that supported this vision was
paramount. We've been working with Scott, Jaimee and the team now
for over a year. Hayes Knight have added value to our business
while offering advice from an outside perspective. They've helped
us with financial reporting, tax, forecasting, due diligence, and
shareholding advice, all resulting in better overall business
performance. It's essential for us to have accountants assisting us
on a pragmatic, nononsense basis. Scott and Jaimee fit that bill
with their practical advice, taking a genuine interest in our
business and keeping an eye on what's best for European
Scott and Jaimee worked to identify areas where European
Ceramics could improve its operations.
"They have a solid business, but Jason was looking at ways to
improve things from an efficiency point of view, and around how the
business was financed," says Jaimee.
She has begun working more closely with Jason and his team to
provide advice regarding cash flow reporting and stock management.
Managing cash flow and building the company's cash reserves are
priorities. The challenges lie in establishing how much to invest
in stock, what type of products to buy, and keeping stock levels
manageable to ensure the business is healthy from a cash
perspective. Having an awareness of the hidden costs of holding
stock, such as insurance, financing costs, storage, obsolescence,
damage and leakage provides additional motivation to manage stock
levels effectively, and look after the bottom line.
The business operates in a fluid, design driven market where
trends can change quickly so staying in tune with these and
aligning product offering is a critical function of the management
In order to generate growth, European Ceramics has focused on
three important areas.
"Doing quality work for quality clients is their goal," says
Scott. "While it's vital to make the most of a buoyant market, you
don't want to just grab at anything. Jason either looks to work
with clients he's successfully worked with before, or conducts due
diligence on prospective clients so that he is comfortable with the
level of risk."
Fine-tuning payment terms has seen clients pay for products
before or when they're shipped, meaning European Ceramics isn't
left to carry the cost. This is particularly important in large
"With our AAA credit rating, international suppliers are eager
to secure our business and provide generous payment terms," says
Jason. "We review foreign exchange rates daily and secure forward
rates, which gives us time to manage creditors and debtors
effectively, and to offer our commercial customers alternative
payment terms. Our market is predominantly specification, so our
procurement is mainly indenting products on order."
While growth is important, lessons learnt from the GFC mean that
Jason prefers a measured approach rather than growth for growth's
sake. Becoming a large organisation with big overheads and too many
staff, and taking on the risk profile associated with that isn't
Jason's goal, adds Scott.
"It certainly looks like there is a lot of blue sky on the
horizon in the construction industry, however at some point the
market will ease so the business needs to be robust and agile
enough to cope. Having us on board has given Jason the confidence
to seek more growth knowing the core business is in good shape.
He's also looking to build equity in the business for the
shareholders so that the balance sheet is more robust and the
company can take those curves in the economy. Rather than stripping
out the profit as you go, it's about creating a business that's
resilient and able to respond to changes in the market."
"They've over-achieved their budget for last year and have a
good number of jobs lined up, including a lot of big developments,"
says Jaimee. "Jason is positive but realistic. His philosophy is
very much 'plan for the worst but hope for the best', however
having Hayes Knight work alongside has provided more clarity."
With this in mind, discussions with Hayes Knight about strategy
and future planning are high on the agenda. Jason's vision is to
stay innovative and keep the business future-fit. His goal is to
balance work and lifestyle and to grow wealth while protecting the
company's assets - he knows that keeping flexible is key to
remaining on the right track.