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... The Effect of the Rand/Dollar/Euro exchange rate on the financial results of Barloworld for the 2002 and 2003 years
1. ... The exchange rate effect on Barloworld
1. ... VBM in Barloworld……………………………………………………… 10
2. ... Barloworld’s exposure to a full blown downturn in world economic activity
3. ... World economic outlook………………………………………………. ... Barloworld and the world economy……………………………………… 13
3. ... Evaluation of the Financial Results of Barloworld
4. ... Applying ratios in Barloworld…………………………………………………. ... 20
Annexure B: Barloworld IAS 39/21 group impact………………. ... 21
Annexure C: The Value-based management System 22
Annexure D: Ratio calculations 23
EXECUTIVE SUMMARY
Barloworld is an international brand company marketing products and services in over 100 countries worldwide. Changes in the exchange rate can have a powerful effect on the economy and Barloworld is particularly exposed to exchange rate risks due to their high volume of international trade. The volatility of the Rand has a trading and translation effect on the financial results for Barloworld. Due to the volatility of the Rand, future earnings, cash flows and fair values of assets and liabilities for Barloworld are subject to uncertainty.
Barloworld successfully implemented value-based management (VBM) to create value for their shareholders. Choosing the correct metric to measure VBM is one of the key parts of VBM and Barloworld adopted the cash flow return on investment measure since it is comparable over time, across industries and across countries. Through their ‘Smart partnership’ approach Barloworld secured substantial deals in a very competitive market, i. ...
A downturn in world economic activity can seriously damage large companies with foreign trading partners. The outlook for world economic growth is not positive except for the Asia-Pacific countries. Barloworld are particularly exposed to the slow growth in Europe and North America. ...
Compared to Imperial Holdings, Barloworld remains a strong competitor in the industry. ...
In view of the volatility of the Rand and the current world economic outlook Barloworld should continue its restructuring processes in order to maximize profits. ... THE EFFECT OF THE RAND/DOLLAR/EURO EXCHANGE RATE ON THE FINANCIAL RESULTS OF BARLOWORLD FOR THE 2002 AND 2003 YEARS
1. ... Introduction
Barloworld is an international brand company with nine main operating divisions: capital equipment, industrial distribution, motor, cement and lime, scientific, coatings, steel tube and financial services and logistics. Changes in the exchange rate can have a powerful effect on the economy and Barloworld is particularly exposed to exchange rate risks due to their high volume of international trade. The author will be discussing the effect of the exchange rate on the financial results of Barloworld. ... (SA Reserve Bank, 2003, Annual Economic Report)
1. ... The exchange rate effect on Barloworld
1. ... However, the appreciating Rand in the first six months of 2003, reduced volumes of sales to foreign countries and Barloworld became less competitive in export markets. ... In this area Barloworld will benefit from the appreciating Rand in 2003 because imports will be cheaper than in 2002. (Barloworld Ltd, 2003, Presentation on reviewed results for 2003)
1. ... ), currency translation has a major effect on the operating profit and revenue results for Barloworld. ...
Except for Africa, the graph below indicates a decline in growth from 2002 to 2003 in the revenue of Barloworld. ... Tony Phillips announced that the strength of the Rand masked growth in the domestic currencies of the geographies Barloworld operate in. (Barloworld Ltd, 2003, Presentation on reviewed results for 2003). If Barloworld reported in Euros or US Dollars the increase in revenue would have been reflected. ...
(Barloworld Ltd, 2003, Presentation on reviewed results for 2003). ... Due to the appreciation of the Rand, Barloworld’s application of IAS 39/21 resulted in a charge of R313 million to the Income Statement. Annexure B reflects the impact of IAS 39/21 on Barloworld’s results. ...
Due to the volatility of the Rand, future earnings, cash flows and fair values of assets and liabilities for Barloworld are subject to uncertainty. ... Introduction
Barloworld’s goal is to ‘align processes and day-to-day behavior in order to continually create value for all their stakeholders.
Approximate Word count = 3280
Approximate Pages = 13.1
(250 words per page double spaced)
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