CFOs reveal the changes they've had to make to survive lockdown and post-lockdown
CFO Community Conversation looks at the industries hit hardest by Covid-19 and how they survived.
On Wednesday evening, 10 June, some of South Africa’s leading CFOs gathered online for the 11th edition of CFO Community Conversation. Executives from some of the industries that have been hit the hardest by Covid-19 discussed how they’ve had to innovate and become more creative in order to ensure the continuity of their businesses.
One of the industries that has been hit the hardest by the lockdown and Covid-19 is the travel industry. “We’ve been at the forefront of being impacted by Covid-19,” says Flight Centre Travel Group CFO Euan McNeil. “Where a lot of companies felt the brunt when lockdown was put in, we saw the impact of Covid-19 from late January as it spread through other countries.”
He explains that Flight Centre slowly started seeing the restrictions on travel from other countries impacting South African air travel. “It was quite an interesting seat to have, seeing the different travel options being pulled off the table.”
Flight Centre had nothing to sell as 100 percent of its volumes disappeared and they had to start thinking of a contingency plan. “We had to take on a very long-term view when considering the changes we’ve had to make, not just to survive lockdown but after Covid.”
The public sector is also having to come up with contingency plans as the government plans to cut budgets in order to reprioritise R130 billion to help fight Covid-19. “This will have an effect on most departments’ and public entities’ budgets,” says the Competition Tribunal head of finance Devrani Moonsamy. “So processes have been put in place to drop expenditure and reprioritise funding.”
She explains that reprioritising funding may result in the Competition Tribunal having to drop their targets, because with lower funding, departments and public entities may not be able to do as much as they planned. “It is extremely important to make sure that the right objectives and programmes are prioritised to avoid a negative impact on service delivery.”
For Adcock Ingram, which was deemed essential at the start of lockdown, the challenge wasn’t to make up for lost revenue, but to incur additional costs in order to continue operating under lockdown regulations. “Although our factories follow certain cleaning protocols, we had to put in additional and more frequent sanitising measures in our manufacturing plants as well as in our offices,” explains CFO Dorette Neethling. “We also provided transport to our employees to coincide with their shifts and provided them meals in an effort to limit their exposure to people.”
Adcock Ingram also decided to partner with a private laboratory and pay for Covid-19 testing should a staff member show any symptoms of the virus. “Testing of employees, as well as their primary contacts which costs between R800 and R1,000, was well worth it as results would be available within a day and the appropriate action could be taken to ensure our operations could continue.”
In the retail industry, Verimark has had both challenges and opportunities arising from Covid-19. “When lockdown first started, we were doing forecasts and realised it wasn’t going great,” says FD Bryan Groome. “But when we started operating again, we realised there is a lot of opportunities.”
Verimark is in a space where it offers unique products, especially in the cleaning space. “We’ve been in the fortunate position where our products work with the dynamic that Covid-19 has created. People are working from home and cleaning their own homes.”
Cushman & Wakefield | Broll MD Ken Gerber says that, with Covid-19 and lockdown impacting a lot of businesses, some tenants – particularly in the retail sector – have been struggling to pay their rent. “This, in turn, impacted on our property management business, which derives much of its income from collections.”
In an attempt to overcome this very clear problem, Cushman & Wakefield | Broll engaged with its landlords, who in most cases, agreed to pay a guaranteed minimum fee during lockdown.
“We also cut all non-essential expenditure and salaries, but we desperately wanted to minimise the financial impact on our people,” he says. “We managed to negotiate with our pension and provident fund managers to get a holiday on employee contributions, which covered a portion of the salary cuts, so the impact on our employees’ pockets was reduced.”
Ken explains that It is these kinds of partnership approaches that, for Cushman & Wakefield | Broll, largely defines how the company can overcome this crisis.