Companies that proactively undertook transformative actions as they worked toward riding through the disruptive impact of the COVID-19 pandemic saw outperformance by 13 percentage points (pp) based on total shareholder returns (TSR), as compared to reactive transformers, EY Asean Value Creation Leader Sriram Changali told a media conference
Transformative actions can include but are not limited to environmental, social, and governance initiatives, digital transformation, supply chain management, and portfolio optimization.
This was based on a study that the EY-Parthenon teams conducted of the top 70 listed companies by market capitalization across seven sectors in Southeast Asia and reviewed their performance between 2018 and 2021.
Sriram said that during the pandemic, businesses scramble to adopt to new normal and draw up crisis management strategies but many of the transformation action has not translated into value creation for companies.
He said that it was paramount that a more proactive approach be taken by the companies that would see tangible benefits on the company’s long-term goals as opposed to a “reactionary” measure towards the issue.
On imperatives to successful transformation, Sriram said that it is important that there must be a sound understanding of the top management with the CEO and the board aligned to the purpose of the transformation
He said that it is important to set aspirational targets and incentivize success above the “business as usual settings”
In addition, he said that it is paramount that the key stakeholders should be communicated along the journey
Sharing the findings of the study, Sriram said that the impact varies across industries – with some sectors likely to weather the storm better than others.
He said that against the backdrop of the pandemic, this study compared the change in the return on capital employed (RoCE) and noted that all industries in Southeast Asia experienced 0.7pp to 4.5pp decrease in RoCE, with the exception of health care, which registered a 7.0pp increase.
