The sustainable improvement in financial performance is not just about increasing the accounting result in the short term. It is based on the company’s ability to generate a return on capital employed (ROCE) after tax above its cost of capital (WACC), thus creating a  positive Economic Result (EP or EVA).

Here are the main operational levers, classified by nature:

1. Improvement of the Operating Margin (Commercial Profitability – ROS)

This is the most intuitive lever: to increase the operating result for each sales unit.

• “Pricing Power”: Increasing selling prices to protect margins, especially in times of inflation. However, the sources warn against abusing this leverage. If the increase in prices is to the detriment of volumes and excludes part of the customer base (the case of Unilever), it threatens value in the long term. Conversely, knowing how to sacrifice margin in the short term to maintain market share (the case of Philip Morris’ “Marlboro Friday”) can be the guarantor of sustainability.
• Cost management (Productivity): Reducing costs improves EBITDA. However, a distinction must be made between “bad costs” (e.g. waste) and costs that are in fact investments (R&D, training, marketing, maintenance). Cutting these expenses (like Boeing or Kraft Heinz) boosts the immediate result but destroys the industrial tool and the long-term value.

2. Optimization of Capital Employed (Asset Turnover – ATO)

Performance also depends on the “size” of the balance sheet needed to generate the result. Improving asset turnover (generating more sales with less capital) mechanically increases ROCE.

• Working Capital Requirement (WCR) management: Reducing inventories or negotiating longer supplier payment terms reduces the capital invested (be careful with associated costs). A halving of inventories can generate significant economic value, equivalent to a sharp increase in operating profit in terms of performance and value creation.
• “Make-or-Buy”: Outsourcing production allows assets to be taken off the balance sheet (reduce CAPEX) and reduce WCR (mechanical increase in Accounts Payable). This increases ROCE facial. However, this carries a major strategic risk: the loss of control of the value chain and quality, as shown by the failure of Coca-Cola’s “49 solution” or Boeing’s problems with its subcontractors.

3. Growth as an amplifier (and not as a source)

Growth is only a lever for improvement if the intrinsic performance is already positive.

• The amplification principle: If the ROCE is higher than the WACC, the growth creates value (the mass effect). If the ROCE is lower than the WACC, growth destroys value faster. It should be noted that sales growth can have a positive impact if it results in a reduction in unit costs reflecting economies of scale
• Wise investment: Growth consumes cash (investment in working capital requirement and CAPEX). For it to be sustainable, it must be financed by sufficient profitability (the concept of sustainable growth) without deteriorating the financial structure.

4. Managerial flexibility (optional approach)

In an uncertain environment, value comes not only from static optimization, but from the ability to adapt operations.

• Optimization Options (PORO): Investing in flexibility (plants capable of producing multiple models, ability to temporarily close a mine site if prices fall) allows you to capture market increases while limiting losses in the event of a downturn.
• Growth Options (GORO): Investing in intangible assets (R&D, human capital, customer relations) creates future opportunities (new markets) that are not yet visible in the current P&L but that ensure the survival and rebound of the company.

5. Customer Satisfaction (The Ultimate Lever)

Finally, the professionals insist on the fact that financial performance is only an output.

• Customer focus: The obsession with the financial indicator (EVA, EPS) leads to underinvestment. The real sustainable lever is customer satisfaction. As shown by the example of Amazon or the backsliding of Coca-Cola (which ended up buying its bottlers to control customer relations), it is the customer who brings the turnover. It is not necessary to “choose between the customer and the shareholder”, but to serve the customer in order to remunerate the shareholder.

In summary, sustainable improvement in financial performance is based on a balance: maximizing ROCE (via margin and rotation) while continuing to invest (even at the cost of a temporary decline in ROCE) to build  future growth options and maintain customer confidence.