Helping you get your Business Brexit Ready October...

Helping you get your BusinessBrexit Ready

October 2017

2

Cost inflation impact – The Brexit Problem

The increase driven by the factors below:

• Tariffs will apply to both EU imports andexports with the UK applicable to both rawmaterials and finished products

• Non-tariff barriers such as customscompliance will come into effect adding furthercost and complexities

• Supply chain lead times will become longerdriving logistics costs

• Price increases will need to be absorbed withinthe business or passed on to the customer

• Greatest impact will be on exporters ofFinished Goods due to higher tariffs.

• Tariffs on raw material imports tend to belower.

Brexit adds additional cost throughout all stages of the value chain.Additional costs driven by imported raw materials and finished goods

ValueAdding

Cost

Margin

Logistics

PrimeCost

Landed Cost

COGSINCREASE

Pre-Brexit Post-Brexit

Tariffs on raw materials willapply and drive cost increases

Increased logistics costs drivenby longer lead times and need

for additional stock holding

Three additional costs:1. Custom duties working capital implications

2. Custom administration charges3. Tariffs on finished goods The Challenge

2

Brexit Assessment Tool – Key Findings*

3

85%Of respondents who tradeIn the UK face competition

From UK base suppliers

68%Of respondents unsure as towhether their supply chainpartners are Brexit ready

80%Respondents who have not

considered the VAT cashflowimplications of Brexit

69%Companies that ship EU

purchases through the UK

* Bord Bia Brexit Barometer Industry findings

PwC

6 Key Areas Requiring Assessment

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1 2 3

Tariffs will apply to bothEU imports and exports

with the UK. These tariffswill vary by product and

lead to cost increases.

Tariffs Customs

Compliance

Route toMarket

This will driveincremental cost for

organisations as they seekto comply with theadditional customs

requirements both on theEU and UK sides.

5 6

People RegulatoryDivergence

Issue of regulatorydivergence /

regulatory drift willcreate ongoing

complications for EU-UK trade

Mobility restrictions needto be reviewed.

Restrictions will createbarriers to obtaining the

right people with the rightskillset

UK market access willbecome more difficult asEU imports become more

expensive versus UKcompetitors.

4

Supply Chain

Supply chain lead times willbecome longer and more

expensive as suppliers andretailers need to allow for

increased inventory withintheir supply networks.

PwC

Where are you in the Brexit Planning Process?

• Is Brexit a real businessthreat?

• Is business wide Brexitanalysis required?

• Identify impacted areas

• Develop Key assumptions

• Business Impact Assessment

• Build a ProgrammeStructure and projectplan

• Mobilise andimplementprogramme

Phase 2: BrexitMateriality –“Understand the Impact”

Phase 3: In-depth BrexitExposure Analysis –“Analyse the Risks”

Phase 4: BrexitMitigation – “Buildthe Action Plan”

• Do companies believeBrexit will alter EUUK trade dynamic?

• Should companieswait for significantBrexit negotiationinfo?

Phase 1: BrexitPlausibility – “Waitand See”

Phase 1 Phase 2 Phase 3 Phase 4

5

Actions you can take immediately

What do youneed to do

now?

Step 1

Step 2

Step 3

• Create a baseline set of concise assumptions. It isimportant that everyone is working off the same set ofassumptions.

• Utilising the assumptions built out in step one, stepthrough the core element of your P/L and assess thefinancial impact on your business.

• On completion of the detailed Risk analysis, assess theresults. This should allow you to identify the risk areas anddevelop suitable mitigating actions for your business.

Create a baseline set of assumptions

Analyse your business

Develop mitigating actions

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Brexit Framework Key impact areas common to all sectors

Tariffs will apply to both EU imports and exports with the UK. These tariffs will vary by product and lead to cost increases.

Tariffs

1Customs Compliance will drive incremental cost for organisations as they seek to comply with the additional customs requirements on both the EU and UK sides.

CustomsCompliance

2UK market access will become more difficult as EU imports become more expensive versus UK competitors.

Route to Market

3Supply chain lead times will become longer and more expensive as suppliers and retailers need to allow for increased inventory within their supply networks.

Supply Chain

4Mobility restrictions need to be reviewed.

Restrictions will create barriers to obtaining the right people with the right skillset.

People

5Issue of regulatory divergence / regulatory drift will create ongoing complications for EU-UK trade.

Regulatory Divergence

6

Brexit

PwC Brexit Taskforce Members:

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.© 2017 PricewaterhouseCoopers. All rights reserved. PwC refers to the Irish member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.pwc.ie

Feargal O’Rourke Managing Partner

[email protected] 792 6480

Paul O’ConnorBrexit Taskforce-Dublin Partner


John O’Loughlin Leads PwC Ireland’s Global Trade andCustoms team


Ken OwensFinancial Services Brexit Leader, Asset and Wealth Management Regulatory and Advisory Partner


Billy Sweetman Brexit Taskforce – Wexford Partner


Karen DonnellyBrexit Taskforce-Senior Manager in our Regulatory and Advisory Practice


David McGeeBrexit Taskforce Leader,Markets and Strategy Leader


Martin FreyneBrexit Taskforce – Waterford Partner


Owen McFeelyLeads PwC Ireland’s Retail, Consumer and Foods consulting practice


Helping you get your Business Brexit Ready October...

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