Barloworld moves to slash salaries, cut jobs in response to COVID-19 shocks

Barloworld, a logistics and automotive group based in South Africa, has announced significant cost-saving initiatives in response to the challenges posed by the COVID-19 pandemic. The company revealed plans to reduce its workforce by 20 to 25 percent and implement salary cuts due to a decrease in demand, volatile commodity markets, and disruptions in its supply chains. Barloworld reported a 12.2 percent decline in interim revenue and a 28 percent decrease in operating profit. The CEO of Barloworld, Dominic Sewela, shed light on the factors impacting the company's financial performance. Sewela highlighted that certain business segments, such as AVIS Rent a Car, motor retail, logistics, and equipment, experienced significant declines in activity. Particularly, the equipment business faced losses in areas like the GRC region, leading to impairments of nearly 600 million and 700 million in AVIS Rent a Car and equipment South Africa, respectively. The CEO emphasized the challenges posed by the cash grid during the lockdown period, affecting the company's financial position. In response to the financial pressures, Barloworld has taken proactive measures to streamline its operations and reduce costs. Sewela mentioned that the company has implemented salary cuts starting from senior leadership to supervisor level, along with cutting KPIs and discretionary expenses. By taking these steps, Barloworld aims to ensure sustainability in the face of prolonged economic uncertainties. Sewela acknowledged that the company's reliance on the South African economy, heavily impacted by factors like tourism, consumer confidence, and construction, necessitated these difficult decisions. Despite some optimism about potential growth in the economy in the third and fourth quarters, Sewela expressed caution regarding the timeline for recovery. The CEO emphasized the inherent challenges in forecasting amidst the ongoing impact of COVID-19 and existing economic difficulties, such as recent credit rating downgrades. Sewela indicated a conservative outlook, suggesting that meaningful recovery might only be visible beyond the next 24 months. As part of its cost-saving measures, Barloworld anticipates a reduction in its workforce, potentially affecting around 3,750 employees out of the current 15,000-strong workforce. The company is engaging in consultations with relevant stakeholders, including unions, to navigate the process with sensitivity and diligence. The decision to reduce staff numbers underscores the severity of the economic climate and the company's commitment to adapting to the evolving business environment. In conclusion, Barloworld's proactive approach to addressing the challenges posed by the COVID-19 pandemic reflects the broader landscape of economic uncertainty and operational disruptions faced by companies worldwide. By implementing strategic cost-saving measures and workforce reductions, Barloworld aims to ensure its resilience and long-term sustainability in a challenging business environment.