Rising uncertainty is challenging Australian CFOs and impacting their confidence about the financial prospects of their businesses going forward. The latest edition of Deloitte’s biannual CFO Sentiment survey finds that over half (54%) of CFOs remain optimistic about the future, but this is down from 68% in the previous six months. The rising uncertainty is increasing CFO cautiousness, with almost 40% of CFOs remaining neutral about their financial prospects in the future, up from a quarter of CFOs in the last half. Only 8% say they are pessimistic. 

It is important to note that many of the survey responses were received before the worst of the bushfire season and the emergence of the coronavirus (COVID-19). We would expect both factors to exacerbate the levels of uncertainty noted by CFOs in this survey.

Key findings are that:

• Overall sentiment amongst CFOs is more optimistic than negative, with net optimism at 46%
• Net uncertainty about economic conditions has grown since mid-2019 – from 66% to 75%
• 58% of CFOs are expecting profits to decrease or have no change over the next 12 months
• 58% also believe they will face increasing risks (but also opportunities)
• 50% expect interest rates to fall further through 2020.

Deloitte partner and CFO Program leader, Steve Gustafson, said: “In comparison to when we last surveyed CFOs in mid-2019, CFOs optimism has fallen, with a distinct uptick in CFOs identifying as neutral regarding the financial prospects for their business. This has coincided with 58% of CFOs expecting profits to decrease or remain neutral and 58% of CFOs bracing for an increase in risk/opportunity over the next 12 months.

“The climb in neutrality may indicate that Australia’s CFOs are adopting a cautious approach as the complexity of recent global events unfolds and their full impact is yet to be completely realised. Although it is pleasing to note that the numbers that are pessimistic remain low.”