iStock_000001095558SmallOperational leasing increases profitability from day one

The Danish manufacturing company Bedriften A/S produces niche solutions for the shipping and car industries. The order intake is good and some of the production is automated. In their ongoing efforts to increase production efficiency, management is assessing whether to purchase a new industrial robot at a cost of DKK 25 million.

The robot would be the most expensive machine the company owns, but the company is wondering how appropriate it is to tie up so much capital. Capital is an important performance factor and the company wants the highest possible interaction between expenditure and revenue.

What is strategic?

The company therefore assess what is strategically important with the robot. The conclusion is that the robot is not strategically important in itself, but merely a tool to make production faster and more cost-efficient, so the company's overall economy improves.

However, it is important that the robot operates optimally, operation disruption for maintenance and repairs are scheduled and it is possible to upgrade to a newer and more efficient model when it is worth doing so.

In light of this, management decided that ownership itself is not strategic, but that a stable and predictable cost picture associated with the robot is important.

Bedriften A/S chooses to finance the robot by operational leasing, so that the company enjoys greater efficiency from day one, without any negative effect on the balance sheet. At the same time, operational leasing makes it possible to maintain the quality and functionality of the asset over time, including through exchange options.