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CFO Survey Q3 2014

Amid more uncertainty, declining optimism

Corporates are willing and ready to invest provided the long-term perspective is clear.

Diegem, 30 October 2014 – Deloitte Belgium announces the results of its quarterly CFO Survey, conducted between 12 and 30 September 2014. For the first time in two years CFO perception of financial and economic uncertainty has increased. Yet despite a decline in optimism in the third quarter, the overall attitude remains largely buoyant.

Performance-to-budget looks good at the end of the third quarter and attractive financing options are available. Looking forward, capital spending and a growth focus are likely to rise somewhat next year. Moreover, CFOs are positive about the financial and economic priorities set forth by the new regional and federal governments.

Uncertainty rises
The general level of financial and economic uncertainty has gone up for the first time in two years, said Deloitte Partner Thierry Van Schoubroeck, who heads the CFO Survey team. “Geopolitical events, the worsening of the economic outlook for the Eurozone, and concerns about the global economy are driving the mood of CFOs.”

By contrast, survey participants remain optimistic about the growth forecast in the US and the Asia Pacific region. And despite dropping significantly in the third quarter, CFO optimism – one of the survey’s key indicators – remains positive. Yet CFOs at larger companies with mainly international businesses are much more pessimistic than their counterparts at smaller firms with dominantly Belgian activities.

Revenues and margins grow
At the end of the third quarter (and for the third consecutive quarter) two-thirds of survey participants reported their companies’ financial performance at or above budget. In contrast to 2011-2013, when about half of organisations consistently underperformed compared to budgets, the performance-to-budget ratio for 2014 will be good. The majority of survey participants expect to achieve both revenue and margin growth this year, although larger companies expect better performance than smaller ones.

Appetite for risk remains high
Willingness to add more risk to the balance sheet remains significantly above the multiyear average. Companies face few challenges in raising finance: credit is cheaper and more available today than at any time since 2009. “The dominant view among CFOs is that pricing and lending terms will not change in the next six months, and many organisations have internal financing options available,” Thierry Van Schoubroeck remarked.

Defensive strategies such as cost reduction and efficiency improvement have lost some importance. But the survey shows no significant evidence that expansionary strategies are gaining ground. For the internationally oriented organisations, the main inhibitor for investment spending is the rising uncertainty about the global financial and economic environment. For more local businesses, the main inhibitors are low growth projections for Belgium and the Eurozone.

CFOs welcome the new financial and economic policy
The formation of the new Federal Government that began on 11 October was still in progress during the survey period. But for the first time since the launch of the CFO Survey in 2009, CFOs were positive about the priorities for financial and economic policy and the potential impact on the success of their businesses.

CFOs see most benefit from the reduction of the employer social contribution, the decrease in corporate tax and the suspension of automatic wage indexation. All three measures have been retained in the government charter to some extent.

“In the previous survey we reported that many businesses are ready to invest, provided the long-term perspective is clear. Political stability and regulatory predictability are key. It is now up to the new regional and federal governments to live up to that expectation,” commented Thierry Van Schoubroeck.

About the survey
The 2014 third-quarter edition of the Deloitte Belgium CFO Survey was conducted between 12 and 30 September 2014. A total of 66 CFOs completed the survey. The participating CFOs are active in variety of industries. 19% of the participating companies have a turnover of over €1 billion, 36% of between €100 million and €1 billion, and 45% of less than €100 million.

Communication contact

Sophie De Meyer

Deloitte Belgium

+32 2 600 60 21


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