2015 Q2 Global CFO Signals


2015 Q3 Global CFO Signals™

Standing solid on rocky ground

While CFOs globally are often focused on their own countries’ economy, government, and regulations, many seem to share common concerns in this edition of Global CFO Signals—commodities, currencies, and China. Still, many CFOs remain committed to growth agendas, while at the same time keeping an eye on costs.

How does CFO sentiment in 2015 Q3 break down? What follows is a synopsis by region:

  • Argentina: All eyes on upcoming election
  • Australia: Optimism plateaus amid global uncertainty
  • Austria: Planning to invest despite concerns
  • Belgium: Good performance amid the haze
  • Chile: Facing economic and political uncertainty
  • Finland: Finding the rhythm and the courage
  • France: Consolidated prudence
  • Germany: Growth engine North America 
  • Ireland: Irish growth through global uncertainty
  • Italy: A propensity to consume
  • Japan: Focusing on “Abenomics”
  • Netherlands: CFOs on high alert
  • North America: China’s woes creating broad-based concern
  • Norway: Oil prices dampen outlook
  • Portugal: Confidence restored, caution continues
  • Pan Africa: Staying focused to succeed in turbulent times
  • Southeast Asia: The CFO as talent champion
  • Spain: Optimism ahead of European average
  • Sweden: Positive outlook muted by uncertainties
  • Switzerland: Signs of recovery?
  • United Kingdom: Uncertainty mounts
Download the report for more on CFO sentiment.

CFO Sentiment 2015 Q3

While CFOs globally are often focused on their own countries’ economy, government, and regulations, many seem to share common concerns in this edition of Global CFO Signals—commodities, currencies, and China. Consider:

  • The drop in oil prices may have reverberated positively through much of the global economy, but in countries such as Norway and in the energy and resources sector, the price decline is having a predictably negative impact;
  • The strength of the US dollar, the devaluation of China’s renminbi, the fall of the Malaysian ringgit, and the continued adjustment to the Swiss franc are all weighing on company decisions;
  • The slowdown in China is being felt in countries such as Australia, across Southeast Asia, and in North America, where fears of a negative spillover effect have impacted growth expectations.

All three factors are affecting outlooks of many of the 21 countries and regions reporting—and in many cases driving optimism down. Additionally, the prospect of higher interest rates and concerns about the pace of recovery also seem to be putting a damper on the rising optimism observed in several countries over the past few quarters.

Still, many CFOs remain committed to growth agendas, while at the same time keeping an eye on costs. In the UK, for example, introducing new products and services or expanding into new markets—expansionary strategies—remains the top priority for CFOs. In Pan Africa, CFOs may be prioritizing improving operations, but roughly three-quarters cite growth as their main reason for investing in Sub-Saharan Africa. And in Southeast Asia, 68% of CFOs still expect revenues to rise, as do 79% of Japan’s CFOs.

“Going forward, we may be operating in a very different world,” notes Ira Kalish, chief global economist for Deloitte. “The predicted rebound in oil prices has not happened, neither has the predicted ruinous inflation, and even when the US Fed raises interest rates, we will still have exceptionally easy monetary policy.” For many CFOs, he says, that is cause for optimism and investment despite geopolitical rattling—and reason to remain forward looking.


Regional perspectives


Optimism remains positive in North America (net +14.2). But more than in any other quarter, CFOs voiced strong concerns about how the slowing Chinese growth could hit home. Consequently, their growth expectations, which hit several lows last quarter, did not significantly rebound this quarter and worsened in some cases. Revenue growth expectations, for example, rose to 4.4%* from last quarter’s survey-low 3.1%*, but are still among the lowest on record. Earnings growth expectations held—but at last quarter’s survey-low 6.5%*. Still, CFOs remain buoyed by the strength of the North American economy and their outlooks on Europe stabilized. Meanwhile, in the two South American countries reporting—Argentina and Chile—CFO outlooks are mixed due to economic and political uncertainties.


After consecutive quarters of robust optimism, confidence has plateaued among Australia’s CFOs—despite record low interest rates and a more favorable exchange rate. This quarter a net +5 of CFOs report that confidence levels have increased compared to net +24 in Q2. China is the main driver of decreased optimism, and the associated concerns are escalating CFOs’ perceptions of uncertainty. In fact, more than half of CFOs report that uncertainty is above normal or high, and only 27% believe it is a good time to take risk onto the balance sheet. Similarly, in Southeast Asia, which has a total of 12 countries reporting, CFOs are becoming less optimistic compared to three months ago (net +3), mainly due to external factors. Three-quarters of CFOs in the region view the level of economic and financial uncertainty facing their companies as high or very high. Still, almost half (49%) expect M&A activity to increase, and 46% anticipate adding headcount.


Not surprisingly, there remains much diversity in the outlook across Europe. As reported in the latest European CFO Survey, CFO sentiment has fallen most in northern European economies including Belgium, Finland, Germany, the Netherlands, Norway, and the United Kingdom. The fall in optimism in larger northern European economies is consistent with the weaker export outlook for these countries. Such pessimism, however, contrasts with a brighter outlook reported by CFOs in the south and on the edges of Europe. CFOs in Ireland, Portugal, and Spain are now the most optimistic. Capital expenditure intentions are in general higher and employment intentions stronger than among the CFOs based in central and northern European countries. The outlook for revenues and operating margins for Ireland, and Spain are also well above the European average. CFOs are, however, more united in their focus on cost control. When asked about strategic priorities, CFOs in 11 European countries reporting list cost reduction or cost control as one of their top three for the next year.

Pan Africa

Similarly, among the countries reporting in Pan Africa, there are regional differences. CFOs in East Africa, for example, report a relatively positive outlook for regional economic expansion (6% for 2015), while their counterparts in Southern Africa (which includes South Africa) are more cautious, predicting 3.9% GDP growth, and those in West Africa slightly more optimistic at 4.8%. Many of their risk factors, however, are common and include the political landscape, electricity price increases, and currency volatility. And those risks have CFOs in Southern Africa, and West Africa focused on improving current operations as a top priority, while in East Africa, it comes in second to investing in new capacity.

Given that the Q3 surveys were conducted before the recent Paris attacks, it will be interesting to see how the heightened focus on terrorism affects markets and outlooks as companies close out the year. Operating on shaky ground indeed.

Global CFO Signals - By the numbers

Risk appetite

Falling sentiment and rising perceptions of uncertainty have fed through to a reduction in risk appetite among many European CFOs. Risk appetite in the larger northern European economies has been particularly affected, with large falls in Germany (-20 pp) and the Netherlands (-55 pp). In Australia, the number of CFOs who say now is a good time to take on risk has almost halved since Q1 2015, to 27%.


Uncertainty is on the rise. In Germany, CFOs’ perceptions of economic and financial uncertainty remain the highest among the European countries, followed by the Netherlands and Switzerland. Much lower levels were reported by CFOs in Austria, Ireland, Norway, and Spain. Elsewhere, perceptions of uncertainty rose in Australia, with some 45% of CFOs expecting it to last more than a year, and 52% of Japan’s CFOs currently rate the level as “high” or “very high.”


Revenue expectations appear solid. Some 82% of CFOs in Ireland and 75% in Spain expect their revenue to rise in the next 12 months as do 74% of Portugal’s CFOs. The revenue outlook in Switzerland is also brighter as CFOs have adjusted to the surprise removal of the Swiss franc floor. Margins outlooks are restrained, however, in countries such as Norway and the Netherlands among others. Some 34% of CFOs in Southeast Asia expect margins to decrease. And while in North America, earnings expectations remained stable, they came in at a survey-low of 6.5%*


With rising uncertainty, some CFOs are reluctant to hire. In the UK, 48% of CFOs expect businesses to increase hiring over the next year, down from 70% in Q2. Some 59% of Australia’s CFO expect to decrease headcount at their own companies over the next 12 months. And domestic hiring expectations in North America, are again sluggish, rising only slightly from last quarter’s 1.2%* to 1.4%*. Still in Ireland (56%) and in Spain, (46%), CFOs indicate higher-than-average intentions to recruit.

Corporate strategy

While many CFOs continue to eye growth, defensive strategies are being embraced tighter. Cost reduction and cost control were cited as a top three strategic priority by most European CFOs (the Netherlands did not ask the question). In Southern Africa and West Africa, CFOs are focused on improving current operations. .North America’s CFOs indicate their highest-yet bias toward growing revenues and

M&A activity

The ingredients for increased M&A remain: strong balance sheets, available financing, and perceived opportunities. Some 96% of the Netherlands’ CFOs expect M&A activity to increase in the next 12 months, as do 83% of Spain’s, and the number is 67% among Finland’s CFO if you add in divestitures. In Belgium, 40% of CFOs have expansion through M&A activity on their list of business priorities.


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