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CFO Survey Q1 2015

Cautious Eurozone optimism contrasts with more buoyancy in Belgium

Amid uncertainty, the mood of European CFOs is showing some improvement. In Belgium, the year-end optimism noted in our previous survey continued into the first quarter of 2015.

Diegem, 18 May 2015 – Deloitte Belgium announces the results of two complimentary studies on current business attitudes: the Belgian quarterly CFO Survey and Deloitte’s first European CFO Survey. Both reports polled CFOs during the first quarter of 2015. The European study found CFOs expressing cautious optimism for their businesses, while the quarterly Belgian study showed that CFOs feel distinctly more positive, fuelling enthusiasm for business expansion.

True, overall growth expectations across the Eurozone remain modest and are unlikely to return to pre-crisis levels anytime soon. But one third of Europe’s CFOs say that their confidence about financial prospects for their companies has improved in the past three months.

Diverse levels of optimism
Deloitte’s first European CFO Survey collated the results of national surveys run during the first quarter of 2015 by Deloitte member firms in Austria, Belgium, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Poland, Russia, Spain, Switzerland and the United Kingdom.

An analysis of the views of over 1,300 CFOs revealed that on average, 33% say they are more optimistic about their company’s outlook, compared to 18% who are less positive. Optimism is lowest in Switzerland where the net balance of optimism stands at -58%, followed by Norway (-25%) and France (-11%). CFOs in Spain are the most positive (67%), followed by Finland (34%) and the Netherlands (33%). Levels of optimism are higher among countries in the Eurozone (20%) than those outside it (4%). Commenting on these results, Chris Gentle, Head of EMEA Research at Deloitte, said, “Good news on Europe’s economy has been in short supply but major companies, particularly in the Eurozone, are now beginning to see a brighter future.”

High uncertainty continues
Fully 55% of CFOs say their businesses faced high levels of uncertainty, while only 23% report that now is a good time to take risks onto their balance sheets. Of the 14 countries participating in this survey, 12 report higher levels of financial and economic uncertainty. Despite this, 51% of respondents expect revenues for their business to improve in the next 12 months, with 1% expecting operating margins to increase. In Eurozone countries revenue optimism is at 58%, but at only 37% in non-Eurozone countries. Similarly on operating margins, a net 32% are positive in the Eurozone, compared to -3% outside it.

Asked to rate their five most urgent strategic priorities, European CFOs show they remain on the defensive. Cost control is identified as either the first or second biggest priority in 11 out of 12 countries responding to this question. This is followed by organic expansion and introducing new products and services. Increasing capital expenditure is only mentioned as a top-five priority by CFOs in six countries, and even then this rank as only the fourth or fifth most important strategy.

Strong support for structural reforms
Regarding the most significant risks facing their business, CFOs across Europe generally ranked geopolitical risk, potential declines in domestic or foreign demand and increased regulation as their biggest worries. Internal business risks, including the availability of skilled workers and the cost of labour generally, rated lower.

CFOs believe more national structural reforms will improve competitiveness in Europe: 93% say this will be effective or very effective in supporting growth. Increasing public and pan-European investment spending also rates highly, with 83% of CFOs saying it would help growth and 56% calling for an end to austerity measures.

An average of 8% favour dissolving the euro (3% in Eurozone countries and 17% outside), while 36% of CFOs in the Eurozone support redistributing political powers to national governments, compared to 67% in non-Eurozone countries. “There is consensus around how growth can be supported,” remarked Chris Gentle. “National structural reforms – many on hold during the financial crisis – and single European market initiatives are at the top of CFO wish lists.”

The full survey results, including country-by-country breakdowns are available at

In Belgium the positive mood continues
By contrast, Belgian CFOs entered 2015 in an optimistic mood and corporates’ financial results for the first quarter did not disappoint. “Among our survey participants, 27% expect their company to perform better than last quarter,” said Deloitte Partner Thierry Van Schoubroeck, who heads the CFO Survey team. “Performance-to-budget ratios have not been this high since the end of 2010.”

Financing is cheap, and bank borrowing has never been more attractive since the launch of the CFO survey in the beginning of 2009. Perceived levels of financial and economic risk have dropped significantly and the appetite for risk is on the rise. Key concerns remain the pace of economic recovery, the ability of companies to compete, and the impact of regulatory changes. But a shortage of skilled labour has climbed up the list. Few CFOs seem to worry about the stability of the Eurozone.

Opportunities abroad
Corporates see opportunities mainly outside the EU. The survey finds that more internationally oriented companies have double the CAPEX projections compared to local firms, as well as slightly higher revenue expectations. CFOs remain positive about the Belgian government’s financial and economic priorities, although the extreme enthusiasm reported by the survey when the government came into office has faded. “The government must either manage expectations or take action,” concluded Thierry Van Schoubroeck.

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