One of the best ways to contribute to the good performance of the company, especially in times of high uncertainty like the current one, is through budget planning.
We invite you to make the budget for 2021 during September, which will be your guide when setting priorities, facing changes and risks; and making the right decisions to achieve flexibility in fixed costs.
The aforementioned is set within the framework of an agile culture, so that we are capturing progress and important agreements throughout the year without necessarily having achieved the final result of all businesses.
Some measures you should implement when planning the budget
- Review all contracts that consider fixed costs, so that we can incorporate flexible alternatives in the event of significant changes in sales volumes.
- Review the inventory of materials and spare parts available so that purchases are completely aligned with the availability in the inventory.
- The budget for the main contracts or interventions must be fully aligned with the optimization of rates and conditions achieved in the most recent negotiations.
- The budget must consider all those sustainable efficiencies achieved during the management of the 2020 health crisis.
- The budget must include the efficiencies derived from the operational excellence plans defined for each of the businesses in each region.
- Explicitly allocate a budget to initiatives that we consider generate value for the company, this is part of the ZBB methodology with which we can be more assertive in the allocation of resources according to the strategy that the company wants to develop or leverage.
We continue to apply the Zero Base Budget (ZBB) methodology
For the second consecutive year, we will have the possibility of implementing the Zero Base Budget (ZBB) methodology. We will maintain the maintenance cells in both businesses, both Cement and Ready mix, and we will include some additional account groups. In addition to the accounts considered (Maintenance and External Services) in the 2020 budget exercise, for 2021, we will include these items: Travel, Miscellaneous and all the accounts of services and fees, which were not considered last year. All the resources planned in these account groups must be duly justified in the template that will be available for such purposes.
What is Zero Base Budgeting?
It is a multi-year effort that challenges the organization to work collaboratively between functions, regions and teams from different geographies, with different levels of evolution, in the availability of information and different ways of understanding their corresponding operations based on real business needs and not historical records.
Why do we implement the Zero-Base Budget?
To ensure a more efficient allocation of resources between departments, production centers or business units.
Schedule to plan your budget for 2021
Review, optimize and adjust your budget taking into account the dates established by the company:
- Delivery of expenses in the Design and Service Areas: September 23.
The corporate vice presidencies must deliver, both their expenses and regional corporate expenses, in each of the companies where their execution takes place. The first one will be input for the P&L of the companies and the second one for the P&L of the regional companies. Regarding the latter, the regions will announce the deadlines that will be implemented in each country.
On this same date, other operating income / expenses and financial income and expenses must be delivered.
Regional income, costs and expenses: These will be determined by each region according to the dynamics of the country and must be aligned with the P&L upload date in the consolidation tool. If you have any questions, check with the contact established at the end of this communication.
- P&L consolidation tool upload: October 23.
The upload to the financial consolidation tool will be done by company up to net income. To proceed with it, prior approval by the corresponding region’s vice presidency is required.
Each region will define the deadlines to carry out the activities that lead to the budget of their results in 2021.
- Annexes and context for presentation to the Board of Directors: November 10.
Macroeconomic variables:
Below you will find information regarding inflation and the estimated exchange rates for 2021, by country.
Source: Bloomberg.
