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Case study: Verda NZ holding its own in the exporting market

Breaking into competitive export markets can be tough. A tailored funding solution from BNZ helped one New Zealand company hold its own in the lucrative European timber products market.

Breaking into competitive export markets can be tough. It’s pretty remarkable when a company can grow from nothing in six short years to exporting to markets in Asia, Australia, the Pacific, the US and Europe.Grant Butterworth (left) with Darren McGarvie, BNZ managing partner

Despite a significant downturn in the local construction industry due to the global economic crisis, Rotorua-based company Verda NZ Ltd has done just that.

Founded by Grant and Jane Butterworth in 2002, Verda manufactures high-quality outdoor living products from sustainable New Zealand clearwood timber. Among its range are pre-finished decking, balustrades, outdoor furniture, fence panels, and landscaping and structural timber. Before the recession business was good, so Butterworth decided to look offshore for other opportunities.

Abroad for the summer
“In early 2007 we began looking at France, Germany and the UK in more detail, and realised they were most likely our best option,” says Butterworth. “We were looking for a counter-seasonal market to our markets in New Zealand, Australia and the Pacific, which have very good sales during the Southern hemisphere summer.”

After 18 months of market sales and testing, March 2010 saw Verda gain a foothold in this lucrative and highly competitive market, differentiating its products as a sustainable alternative to tropical hardwoods, and leveraging off its brand story and that of the New Zealand outdoor lifestyle.

“Europe is an incredibly busy market. It’s big and can pay, so it attracts everyone: Brazilian, Southeast Asian, Scandinavian, German, Baltic and US timber producers, as well as manufacturers of plastic-composite products. We still believed that there was an opportunity for us there, but we knew that our products had to be exceptionally good—so we had to focus on the consistency and quality angle and go to the high end of the market.”

However, Butterworth admits that the timing couldn’t really have been worse. But with a sound business model and the help of BNZ, he felt confident enough to forge ahead despite the recession.

Breaking through
“It was a horrible time to try and move into Europe. Our traditional business was getting smashed with the downturn. We either had to commit or scrap everything we’d done. We made the decision to pursue it and we’ve made sufficient ground to justify that decision. Last year and 2009 were incredibly challenging years, but BNZ helped us through that process and encouraged us to continue with our goal of breaking into Europe. We had the master plan and a series of smaller goals to provide a roadmap.”

BNZ has been with Verda since the company was founded, and was excited about Verda’s expansion project. Managing partner Darren McGarvie could see that this was a great opportunity for Verda, so introduced Andrew McKerrow, sector partner cashflow solutions, to customise a scheme to enable the company to target Europe.

McKerrow created a full trade-cycle solution that accelerates Verda’s access to cash at higher levels than a traditional bank could fund. The solution came through a mix of trade, stock and Invoice Finance options designed to meet domestic and export sales demand. It will continue to allow Verda to grow its total business to meet customer demand, using unique market-leading cash flow products that match rapid sales growth.

Bridging the gap
“Our goal is to support Verda domestically as well as with their exports,” says McKerrow. “We worked to match their trade cycle on an export and domestic front to see where they overlap and to ensure they always had money available to manufacture and move product before they received payment from their customers.”

Verda will soon be able to access a new online system that will enable it to track invoicing and funding on a daily basis.

“We’ve grown quickly,” says Butterworth, “and BNZ has helped us immensely in terms of providing alternate funding mechanisms as opposed to the traditional funding lines. We now hold stock and have distribution centres in Europe so traditional funding models don’t work due to the lag of our production through shipping, stockholding, and invoicing, to the receipt of cash. BNZ understood what we were trying to do and tailored a suite of funding options to suit. The new model gives us the best control of our products and our markets.”

Looking ahead
Verda is just beginning to build brand equity in Europe, cementing its position there and gaining recognition with the designer and specifier market. The company has spent a significant amount of time and money on its European expansion, but Butterworth understands that marketing products in Europe takes time and he anticipates good levels of growth in 2012.

Contact
To find out more about BNZ Partners, please contact 0800 955 455.