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Time for companies to look at transformation for greater returns

Time for companies to look at transformation for greater returns

KUALA LUMPUR: Ernst & Young (EY) reckons that now is the right time for companies to look at transformations to reap greater returns.

According to one of its studies, companies that undertook a transformation during or before a recession managed to generate a 25 per cent increase in total shareholder returns.

“As you can see, there is a potential global recession in the near future, and companies that underwent a transformation in this environment are the ones that see an outsized return,’’ EY ASEAN value creation leader Sriram Changali told a media briefing today.

He said a recent EY-Parthenon study of the top 70 listed companies (by market capitalisation) in Southeast Asia also found that companies that undertook transformative actions during the Covid-19 pandemic saw their businesses outperforming those of their peers.

He noted that companies with holistic agendas tend to have a greater chance of success, adding that environmental, social and corporate governance, digitalisation, partnership and supply chains are the main areas of interest for large enterprises.

Sriram also highlighted that there has been a very interesting discussion on whether a company’s performance is determined by the sector or the company itself.

“I think the answer for us is really company-specific, as we see companies outperforming in a sector that is struggling, and vice-versa,’’ he said.

Hence, companies that may already be in their stress cycle should seriously consider undergoing a transformation, he added. — Bernama