Deloitte: CFO financial optimism hits new high
CFO optimism about the financial prospects for their companies has reached the highest level since the Deloitte CFO Survey began over two years ago

Fuente:   Fecha: 5.01.2010

Deloitte: CFO financial optimism hits new high

UK CFOs are looking to 2010 in a more confident mood than might have seemed likely a year ago, according to the findings of the latest quarterly Deloitte CFO Survey. Optimism about the financial prospects for CFOs’ own businesses has risen to the highest level in more than two years. The willingness to take financial risk, a key gauge of confidence, is running at levels last seen in early 2008 when the general expectation was for a modest slowdown in global growth.

However, the CFO Survey also strikes a clear note of caution with 48% of CFOs saying the economy is their greatest concern for 2010, with many citing fears of a “double dip” recession.

Margaret Ewing, Deloitte partner and vice chairman, comments: “Two stories seem to be playing out. On the one hand, the degree of financial risk facing the corporate sector has fallen as the financial system has stabilised. The strategies adopted by CFOs to deal with the recession have also paid dividends, particularly those focussed on controlling costs, boosting cash flow and staying close to investors.

“On the other hand the outlook for the economy remains uncertain and fears of a “double dip” are widespread. Credit conditions have improved, but they remain difficult.”

CFOs’ concerns have changed significantly in the last year. In December 2008, the list of CFOs’ concerns was dominated by worries about shortages of liquidity and credit, with 55% of CFOs citing such threats. A year later there was only one reference to cash flow and not a single reference to liquidity. Indeed, the majority of CFOs, 78%, say that they believe the UK banking system is strong enough to sustain the recovery.

Credit conditions – in terms of the price and availability of credit - have gradually improved in the last year. But most CFOs continue to rate credit as hard to obtain and costly. The big change has come in attitudes to financing companies, using corporate bonds and equity.

For many corporates, particularly larger companies, equity and bond issuance offers a far more attractive way to finance their business than borrowing from the banks. With most CFOs believing that now is a good time to issue corporate bonds or equity, the wave of issuance seen in 2009 seems likely to continue into 2010.

Ian Stewart, Deloitte chief economist, commented: “The responses to the fourth quarter Survey suggest that the liquidity and funding crisis that gripped the UK corporate sector in early 2009 has eased. Action by the authorities, in the form of interest rate cuts and aid to the financial system, has played a major role along with decisive action by corporates themselves. Economic uncertainty persists, so the top priorities for CFOs in 2010 remain focused on reducing costs and increasing cash flow. This is a strong indication that CFOs anticipate a weak recovery. However, balance sheet and liquidity risks have reduced in the last year meaning corporates should be in a much stronger position to withstand any possible “double dip”.

“And, despite the uncertainties, CFOs are also deploying a series of strategies designed to expand market share and increase revenues as growth returns. The third priority for CFOs is introducing new products or services, followed by expanding into new markets and by acquisition.

Ian Stewart added: “CFOs recognised that a financial crisis required a focus on costs, cash and investor confidence. That response has paid off. Today businesses are lifting their eyes from the recession and are looking for growth in 2010. The economy and the financial system are a long way from normal but things are looking up.”