CFO Intelligence Magazine – Winter 2022
Ralf Hermkens
Doka USA, CFO
In June 2020, Ralf Hermkens, a veteran CFO with experience on both sides of the Atlantic, along with Asia and Africa, joined Doka USA — the U.S. subsidiary of the family owned company Doka, which develops, manufactures and distributes formwork technology for use in all fields of the construction sector.
The company’s products include formwork components, cost-optimized wall and slab formwork systems and load-bearing towers, high-performing crane-climbed and automatic climbing formwork and comprehensive solutions for building tunnels, bridges and power stations. Hermkens noted that the parent organization was in an enviable position with basically zero debt, but he also spotted a potential problem.
The good thing, he said, is that “We are a capital[1]intensive company, but everything, including capital expenditures, is financed by internal cash flow and company investments. Basically, the only external financing we use involves financial hedges to limit our international currency exposure. We also maintain lines of credit just in case we need them, but any LOC draws are quickly repaid.”
CASH-RICH, INCENTIVE-POOR
The downside to the company’s cash-flush situation was a lack of urgency about billing and collections. “I was surprised when I got here,” he recalls. “For example, because of the availability of in-house financing, a key performance metric, DSO [days sales outstanding], was not considered to be a big item. Funds were always made available after a call to European headquarters. This meant that our salespeople were more likely to give extensive concessions to customers and they did not push very hard when it came to collections.”
Hermkens was worried that this laid-back attitude could eventually crimp the company’s growth. Doka’s formworks are used by heavy construction companies to cast vital concrete components for complex projects — like Long Beach, Calif.’s Gerald Desmond Bridge, where two 516-foot-tall concrete towers anchor cables that support a 2,000-foot-long bridge deck connecting the Port of Los Angeles — that demand long lead times and can take years to complete. “During the life of a project like the new Gerald Desmond Bridge, which took some seven years to complete, we issue rental invoices on a monthly basis,” but he notes Doka USA has to recover its capital “over a long period of time.”