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Deloitte CFO Survey Q4 2014

Outlook 2015: Reasonable year, prudent growth

Diegem, 28 January 2015 – Deloitte Belgium announces the results of its quarterly CFO Survey, conducted between 8 December 2014 and 8 January 2015. Concerns about competitiveness, geopolitical risks and slow growth in the euro area and emerging markets have all sharpened the sense of uncertainty among survey participants.

Yet they also report grounds for optimism. Financing is cheap and available. Respondents are enthusiastic about the financial and economic priorities that have been set by the Belgian government. Between uncertainty and optimism, the latter seems to be winning out. CFOs are preparing prudent strategies for a year of growth, with more companies planning to increase capital expenditure in 2015 than in previous years.

Worries, worries
Preparing for the start of 2015, close to 80% of the CFOs in our survey admitted that the level of uncertainty about their businesses is above normal. And over 30% consider the external financial and economic uncertainty high or very high, over double the figure for a year ago.

What are they worried about? “Stagnating growth in the Eurozone, competitiveness of their companies, ongoing geo-political risk and the effects on their businesses of Western economic sanctions against Russia,” said Deloitte Partner Thierry Van Schoubroeck, who heads the CFO Survey team. “Also, Greece leaving austerity or quitting the monetary union, which would further threaten the Eurozone recovery”

Although official forecasts place Eurozone and Belgian GDP growth at around 1% in 2015, CFOs remain sceptical, expecting less than half that. Looking at the next two years, one third of respondents think a new Eurozone recession is possible. Belgian CFOs continue to worry about the competitiveness of their companies.

Now for the good news
Financing is cheap and plentiful. “In fact, the perceived cost of bank credit has never been lower since we launched the survey in 2009,” noted Thierry Van Schoubroeck. It is also likely to stay that way, he pointed out, which should stimulate investment in 2015. Oil and other commodities are cheap as well. The IMF thinks cheap oil will boost growth in 2015, specifically in the commodity-consuming economies of Europe, China, Japan and North America.

Thus CFOs remain generally upbeat about their businesses, with optimism recovering somewhat from the third-quarter decline. Over 70% of participants expect topline growth in 2015 with respect to their own business, up from 50% last year. 30% of those participants even anticipate a topline growth of more than 5%.

In addition, the vast majority of CFOs feel positive about the economic priorities set by the Federal and the Flemish Regional governments. They are especially pleased about the labour, tax and immigration policies.

Prudent growth strategies
About half of survey respondents are planning for growth in 2015. With risk appetite well above the long-term average, over 40% of CFOs want to increase capital spending in 2015, up from just 30% last year. The focus is on prudent growth strategies through organic expansion and by introducing new products and services in existing markets. More aggressive growth strategies, such as acquisitions, are lower on the agenda.
Companies with most of their turnover in Belgium are looking towards the long-term growth of products and services. Those earning money mainly abroad see opportunities in developed economies outside the Eurozone, and in emerging markets.

The big story will likely be decent global growth in 2015. But as always, it will not be synchronised across countries. “Growth in the Eurozone, and specifically Belgium, will probably be significantly below average. This will bring more challenges to companies focusing on these regions,” concluded Thierry Van Schoubroeck.

About the survey
The 2014 fourth-quarter edition of the Deloitte Belgium CFO Survey was conducted between 8 December 2014 and 8 January 2015. A total of 70 CFOs completed the survey. The participating CFOs are active in variety of industries. 32% of the participating companies have a turnover of over €1 billion, 39% of between €100 million and €1 billion, and 29% of less than €100 million.

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