Optimistic Swiss CFOs with increasing appetite for risk
Results of the 19th Deloitte CFO Survey
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Zurich, 8 May 2014 - The positive mood among Swiss CFOs is continuing: In the first quarter of 2014, 76% of Swiss CFOs are feeling optimistic about the economic outlook. A minority of just 7% believe that Switzerland will experience a recession in the next two years. One noticeable trend is an increased risk appetite among CFOs: Nearly half of the survey respondents (47%) feel that now is a good time to take greater risks. This is the highest figure recorded since the first survey was conducted four years ago. However, CFOs are concerned about increasing regulations and political risks. These results and more are shown in Deloitte's latest CFO Survey in Switzerland.
Swiss CFOs’ view of the economic situation has stabilised at a high level in the first quarter of 2014. This positive outlook is prevailing with regard to both, their own companies and the economic environment in general. At the moment, 76% of the surveyed CFOs are feeling optimistic, compared with 80% in the previous quarter. At just 7%, concerns about a recession are very low. In addition, 37% of the 111 Swiss CFOs surveyed by Deloitte are feeling more optimistic about their companies' financial outlook in comparison with three months ago.
Michael Grampp, Chief Economist at Deloitte in Switzerland, commented on CFOs' current perceptions: "Optimism in relation to the economic situation remains intact among Swiss CFOs. One particularly positive sign is the increased risk appetite. This optimism is clouded only by mixed expectations on margins, as well as increasing concerns about political risks and the associated new regulations. In this respect, a certain feeling of insecurity is apparent among CFOs."
Rising revenues, stagnating margins
Around 80% of CFOs are expecting revenues to increase during the next 12 months. However, this is the first time in two years that a slight downward trend in margins has become apparent. One quarter of the survey respondents (24%) are assuming that margins will fall – one percentage point more than in the previous quarter. Thirty-five per cent of CFOs are still expecting margin increases, and 41% expect margins to remain unchanged. Companies are apparently finding it difficult to increase their margins against a backdrop of rising revenues.
Risk appetite reaches a new high
While a majority of Swiss CFOs report a decrease in risk on company balance sheets, company decision-makers seem to be demonstrating an increased willingness to assume risk. Almost half (47%) of Swiss CFOs feel that now is a good time to take greater risks. This is the highest figure recorded since the Deloitte CFO Survey was launched in Switzerland more than four years ago. This significant increase in risk appetite emphasises companies' optimistic view of the future. Worries over risks within their own companies have also fallen for the third time in a row.
Concern about risks outside the company
In contrast, CFOs perceive increased risks outside of their companies. Forty per cent of the respondents are concerned about new foreign trade barriers, while 65% view new regulations in Switzerland as the greatest regulatory risk facing their company. The strong Swiss franc is still regarded by 60% of CFOs as a continuing disadvantage, however almost 14% also perceive advantages through lower purchasing costs in the euro area.
CFOs also feel that political risks have risen sharply. For example, 88% of the CFOs surveyed assume that the popular initiative “against mass immigration” could have a negative impact on Switzerland as a business location. The disadvantages stated include potential difficulties with recruitment or deteriorating relations with the EU. When it comes to possible benefits of the initiative, CFOs stated a reduced pressure on property prices and opportunities for better regulation.
Michael Grampp sums up: "CFOs remain optimistic, they are looking ahead and already preparing for future challenges."
About the Deloitte CFO Survey
Every quarter, Deloitte in Switzerland conducts a quarterly survey of Chief Financial Officers (CFOs) and Finance Managers of major Swiss companies. One hundred and eleven CFOs took part in the 19th survey carried out at the end of the first quarter of 2014. Around 30% of the CFOs surveyed represent listed companies, 70% are CFOs of private companies from all relevant sectors of the Swiss economy. Deloitte's CFO Survey is the only one of its kind in Switzerland and is conducted by Deloitte DTTL in an additional 20 countries.
About Deloitte in Switzerland
Deloitte is a leading accounting and consulting company in Switzerland and provides industry-specific services in the areas of audit, tax, consulting and corporate finance. With approximately 1,100 employees at six locations in Basel, Berne, Geneva, Lausanne, Lugano and Zurich (headquarters), Deloitte serves companies and institutions of all legal forms and sizes in all industry sectors. Deloitte AG is a subsidiary of Deloitte LLP, the UK member firm of Deloitte Touche Tohmatsu Limited (DTTL). DTTL member firms comprise of approximately 200,000 employees in more than 150 countries around the world.