Overview and progress
| Barloworld is a constituent of:
Dow Jones Sustainability Emerging Markets Index, Global Compact 100 Index and the JSE Socially Responsible
Investment Index |
Sustainability in strategy
Our Value Based Management (VBM) approach underpins sustainable development in Barloworld. This requires the integration
of activities addressing economic, environmental and social aspects, and balancing the short and long-term interests of all
stakeholders, including the communities in which we operate. This is institutionalised through structured strategic planning and risk
management initiatives, a leadership philosophy and management approach that entrenches accountability for sustainable value
creation, stakeholder engagement, and a commitment to consistent, transparent and comparable reporting.
Central to our VBM approach and sustainability are these commitments to:
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Enhancing our customers’ success by providing the integrated and environmentally sound solutions they require
to remain competitive and meet their own sustainability objectives. |
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Mutually beneficial relationships with our principals and representing them in a way that enhances their success
and reflects their sustainable development objectives. |
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Providing a safe and healthy workplace for employees where all have equal opportunities, are inspired to fulfil
their ambitions and be proud ambassadors of Barloworld. |
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Conducting our operations in an environmentally responsible manner. |
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Identifying profitable growth opportunities and executing our strategic plans effectively and efficiently. |
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Engaging our stakeholders and being a responsible corporate citizen for all of them, including contributing to
social and economic development of the communities in which we operate. |
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Delivering top-quartile returns to our shareholders through responsible business practices. |
We recognise that a strong commitment to sustainable development is an important aspect of securing the skills required to realise
our strategic goals, central to participating in legitimate value chains and at the core of responsible corporate citizenship.
Our 10 Pillars of Sustainability are used to guide our activities, assess progress, and act as a filter against which future opportunities
are considered.
Executing our strategy
Barloworld 20153
Our current strategic approach is underpinned by a suite
of operations with similar business models and core
competencies, common customers and realisable synergies.
The business model includes delivering our products and
services into identified markets, growing these markets and
realising the aftermarket opportunities. Successful execution
of this cycle results in growth, resilience and the ability to
create long-term value for stakeholders.
The group’s strategic planning process is a combination of
its “top-down” strategic framework with the overall group
structure and major investment decisions being made centrally,
complemented by strategic and operational planning, and
execution, being decentralised into its divisions.
Divisions’ strategic plans are consistent with the group
framework and guided by an aligned process. A robust and
systematic identification of risks and opportunities is central
to our strategic planning process.
Divisional plans are presented to the group executive on an
annual basis and key aspects are consolidated into a group
strategic plan, which is presented to the board for review
and endorsement.
Through a consistent strategic framework and an aligned
approach, strategies are efficiently and effectively executed
throughout the group addressing stakeholder issues and
group risks.
The board monitors the implementation of plans and divisional
executive teams are accountable for fulfilling their strategic plans,
meeting objectives and achieving key performance indicators.
Strategic plans are executed through elements of our
comprehensive Integrated Employee Value Model which
includes accessing, harnessing and directing the group’s
collective wisdom. The framework also includes a structured
performance management system ensuring attention to
top imperatives and value drivers, and enables employees
to benefit appropriately from value created. An Integrated
Financial Value Model highlights areas of focus to optimise
value creation activities (value drivers), measures progress
against objectives and provides relevant peer comparisons.
These aspects enhance the group’s value creation capability.
In line with the SFAs of improving our financial returns and
profitable growth, the group has set hurdles for allocation of
financial and other resources to opportunities and continually
assesses the performance of existing operations against these
hurdles. Businesses are exited where it is believed that they
will not be able to meet the required performance level and
investments are made into opportunities that align with
the group’s strategic direction. Examples are: exiting our
Australian motor retail business and Handling’s international
Lift-truck operations and a number of investments by the
Automotive and Logistics division. Internal structuring and
resource allocation have directed focus on our Global Power
business, which is well positioned for expansion.
With 2014 being the penultimate year of our current five-year
strategic plan, focus has been on achieving our 2015
objectives while extending our strategic perspective to 2020
and beyond, and defining a strategic framework for the period
2016 to 2020 is receiving attention.
2014 progress
Key performance indicators have been set to track our progress against our Strategic Focus Areas.
| Strategic Focus Area |
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Strategic objectives |
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Key performance indicators |
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2014 performance |
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2015 outlook |
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Achieve targeted compound growth in total
shareholder returns over five years to
September 2015. |
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Top-quartile growth in total shareholder
returns over five years to 2015 |
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Increase group operating profit by
executing turnaround and growth
strategies |
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Execute identified growth projects
for each division |
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Share price compound growth of 18.6% off
September 2010 baseline |
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Operating profit up 16% in current year |
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EMPR enhances solutions offerings |
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Global Power growth strategy continues to gain
momentum |
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Niche acquisitions and growth projects implemented
in Automotive and Logistics |
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Pursue identified strategic growth and value creation
opportunities |
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Build an organisation that adds value to
employees as our success is based on inspired,
aligned, empowered, results-driven, globally
competitive, passionate people who create
value through strategic innovation and
continuous improvement. |
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Drive employee engagement: Individual
Perception Monitor (IPM) overall score
above 75% for all businesses |
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People development and succession
aligned with strategic growth priorities |
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Leadership development and retention |
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Provide a safe and healthy work
environment |
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Overall divisional IPM scores range from 2.78 to 3.30 |
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Individual Career Reviews and Talent management
discussions and planning completed |
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Leadership and executive development programmes
conducted |
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LTIFR increased to 1.23 despite safety focus |
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Tragically, there were three work-related fatalities in
motor vehicle accidents |
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Continue entrenching employee value model to drive both
employee productivity and increased engagement reflected
in improved IPM scores |
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Ensure leadership succession and development through
structured knowledge transfer initiatives |
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Continued drive on inculcating a safety culture, reflected
in a reduced LTIFR and eliminating work-related fatalities |
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Manage and adjust headcount and employee profile to
match business activity |
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Drive market leadership through competitive
differentiation by accelerating the evolution of
our business model from pure distribution to
the provision of flexible, value-adding,
integrated customer solutions. |
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Market leadership in targeted segments
through delivery of integrated customer
solutions |
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Market leadership position retained across most businesses |
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Successful integration of the former Bucyrus distribution
and support businesses provides expanded product range
to customer base in surface and underground mining |
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Niche acquisitions in Automotive and Logistics continue to
expand customer solutions and support business model |
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Leveraging technology in our integrated solutions to assist customers achieve their objectives |
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Develop products and services to capitalise on
emerging sustainable business opportunities,
realise cost savings though energy efficiency
and other sustainable business practices, and
enhance Barloworld’s reputation by leading in
sustainable development. |
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Aspirational target of a 12% efficiency
improvement in non-renewable energy
consumption and greenhouse gas
emissions (scope 1 and 2) by end of
2014 financial year (2009 baseline) |
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Cumulative cost savings through
sustainability initiatives |
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Pursue emerging commercial
opportunities |
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The majority of our operations performed ahead of our
aspirational group target. However, relatively higher energy
and emissions intensities in our expanding logistics road
transport operations negatively impacted progress and the
group did not achieve its target being 27% and 10%
worse than target on energy efficiency (GJ/Rm revenue)
and GHG emissions efficiency
(tCO2e/Rm revenue)
respectively |
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Forty-two Energy and nine water-savings initiatives
implemented in operations with related savings |
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Investment in re- provides a platform for pursuing
environmentally sustainable commercial opportunities |
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To maintain momentum, we have set another aspirational group target of a 2% efficiency improvement against a business-as-usual perspective for our non-renewable
energy consumption and related greenhouse gas emissions (scope 1 and 2) for the end of our 2015 financial year off a 2014 baseline year. The short term target continues our
focus on these aspects, while the group develops its longer-term five-year plan and objectives for the period 2016 to 2020 |
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Continue to pursue sustainability business opportunities
and cost savings |
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Enhance competitiveness, credibility, legitimacy
and reputation in the eyes of all stakeholders
by leading in broad-based empowerment and
transformation |
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Department of Trade and Industry’s B-BBEE
Level 2 or 3 rating for each South African
business unit |
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Leadership position |
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Drive gender equality, localisation, support
for people with disabilities and diversity
across the group |
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Ranked as number 1 in general industrial sector in B-BBEE
for the fifth consecutive year |
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Preliminary reports for all South African operations indicate
a Level 2 or 3 B-BBEE rating |
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Preliminary reports indicate group B-BBEE Level 2 rating |
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General staff trust shares to the value of some
R281 million vested in 11 531 employees |
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Initiated and conducted five supplier diversity workshops in
South African divisions covering some 300 suppliers |
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Education Trust sponsored 16 bursars to the value of
about R1.6 million |
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Initiated plans to align SA operations to dti’s revised
B-BBEE Codes of Good Practice to continually enhance the
group’s competitive position |
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Continue with supplier workshops aimed at increasing our
efficiency and diversity of our supplier base |
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Continue to engage identified principals to develop
appropriate localisation strategies |
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Continue to focus on diversity including gender and
minorities representation across the group and at all levels |
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Achieve top-quartile financial returns as
measured against peer groups in each of our
chosen business segments |
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Top-quartile financial returns on average
through the cycle (at or above our cost of
equity, and measured against relevant
peer groups in our chosen business
segments) |
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Achieve return on equity target (15%) |
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Achieve return on net operating assets target (20%) |
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Internal targets and hurdle rates set for all businesses |
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Release capital from underperforming assets |
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Group return on equity declined from 12.2% to 11.6%
following trading losses and restructuring costs in Spain |
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Group return on net operating assets improved from
18.0% to 18.8% |
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Strong improvement in returns from the Automotive and
Logistics division |
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Realised R1.3 billion on disposal of Australian motor retail
business to reinvest in higher returning growth
opportunities |
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Cost management to drive margin improvement |
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Improve returns on underperforming assets |
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Reallocation of capital to achieve optimal returns |
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Optimise debt levels through efficient working capital management |
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Continue to entrench the financial value model in our
operation |
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2015 revenue outlook ranges provided for major
operations |
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Barloworld 2020
Our 2020 strategic framework will be communicated to our top leadership at our Global Leaders Conference in March next year
and will inform our approach for the strategic period 2016 to 2020. The draft framework builds on central aspects of our current
approach, intends to refine our approach to sustainable value creation for our stakeholders and seeks to establish credible key
performance indicators for progress assessment and reporting. A collective approach is being adopted in developing this plan
which includes a significant contribution from executive teams participating in our executive development programme.
