CFO Sentiment | Edition 9

Article

CFO Sentiment | Edition 9

Up for the COVID challenge

A COVID induced reality has hit hard at CFOs, with net optimism falling drastically, uncertainty at an all time high, revenues expected to fall and working pressures rising. Reality has bitten but CFOs are up for the fight.

Australian CFOs are under no illusions when it comes to the challenges facing corporate impacts wrought by the COVID-19 pandemic.

Optimism is down, uncertainty is high, and revenues are under enormous pressure. But many remain positive, and resilient, and looking to take hold of opportunities that will help them not only survive the virus, but also thrive on the other side of it.

According to the latest edition of Deloitte’s biannual CFO Sentiment survey, and covering the first half of 2020:

  • Net optimism compared to 6 months ago has fallen significantly to negative 30%
  • Net uncertainty about economic conditions has reached a record high of 92% (up from 75%)
  • 53% still remain optimistic about the future
  • 76% expect to see some level of revenue decrease in the second half of 2020
  • 57% still expect revenues to be lower than their pre-pandemic expectations in 2021
  • 43% see M&A as an opportunity to help their COVID recovery
  • Navigating uncertainty, accelerated transformation, cutting costs out of operating margins and cyber risk are among the top issues CFOs need to confront – now and into the future.

Deloitte partner, and CFO Program leader, Stephen Gustafson, said: “When we surveyed Australian CFOs earlier this year, and covering the second half of 2019, we identified what looked like a positive turning point for business sentiment.

“CFOs appeared to be more comfortable with prevailing uncertainty and external risks, and sentiment on outlook and risk appetite was in positive territory.

“Not surprisingly, things have changed more than a little since. A COVID-induced global economic downturn, the largest since the Great Depression, has hit hard, net optimism has fallen drastically, and uncertainty is at an all-time high.

“Three out of four CFOs expect their companies’ revenues to fall, relative to pre-COVID-19 forecasts, in the second half of 2020, and more than half are expecting more revenue falls in 2021.

“Reality may have bitten, and so much uncertainty is clearly taking a toll, yet while many see business conditions as worse than six months ago, they’re also not pulling down the shutters.

“Encouragingly for Australia, CFOs appear to be up for the recovery fight. The challenges are clearly numerous and far-reaching, but more than half are optimistic, or even ‘highly optimistic’, about the future.

“And M&A, supply chain reform, long-term flexible working provisions, reductions in physical workplace footprints and increased use of new technologies and AI are all on the opportunity table.”

CFO Sentiment | Edition 9
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