Majority of Irish CFOs planning expansion
1 May 2013 - Net optimism amongst CFOs increases by 16%
Promissory note deal welcomed as positive for Irish economy Managing individual company performance remains top challenge
Seven out of 10 (69%) respondents to the Deloitte Quarter 1 2013 CFO Survey of major Irish companies have indicated that their corporate strategy is now expansionary, more than twice the number (31%) who report their strategy to be defensive. The survey also shows that CFO confidence has increased markedly on the last quarter, and now stands at net 33%, up from net 17% at the end of 2012.
Continuing in this positive vein, 39% of respondents believe that their company has already returned to growth. In addition, 65% indicated that they expect revenues to increase over the next 12 months while both operating costs (41%) and bank borrowing (35%) are expected to decline.
These are some of the findings of the latest Deloitte CFO Quarterly Survey, which seeks to provide a barometer of business trends and economic outlook among publicly quoted companies, large private companies, and Irish subsidiaries of multinational companies.
Commenting on the findings, Shane Mohan, Partner, Deloitte commented:
“It has been a recurring theme over the last 18 months that while on one hand the CFOs of large Irish companies were satisfied that their businesses were solid, on the other hand they were unwilling to commit to further investment until there was greater clarity on the question of Ireland’s solvency. The deal on the promissory notes and other recent measures to improve the State’s debt profile may now be acting as a catalyst for CFOs to begin loosening the purse strings. The findings in this survey are among the most positive in the 15 quarters since the Deloitte CFO Survey began.”
Promissory note deal, jobs and growth
When questioned in relation to some of the recent external developments, over three quarters of CFOs indicated that they are satisfied that the recent promissory note deal is an effective means of reducing Ireland’s immediate debt burden to the EU. Furthermore, 88% believe that the deal will be beneficial to the Irish economy. However, just 44% believe the benefits will trickle down to Irish businesses.
A year after the Government announced its ‘Action Plan for Jobs’, opinion is divided amongst Irish CFOs on how achievable the targets are. Half of CFOs are confident that the strategy will have some impact on economic and fiscal matters; just over half (56%) believe that the target to create 100,000 new jobs by 2016 is achievable, while 61% believe that the 2020 target to have two million people in employment is achievable.
In terms of a return to growth in the eurozone, 44% of CFOs believe it will be the latter half of 2014 before this materialises. Opinion is divided as to when the Irish economy will return to growth – 29% believe it will be in H1 2014, 12% in H2 2014 and 29% in H1 2015.
Role of the CFO in challenging times
Respondents to this quarter’s survey have indicated that the greatest challenge currently facing them in their role is managing their individual company’s performance, as identified by
40%. This was followed by the multiplicity of stakeholder relationships and dealing with uncertainty.
“Encouragingly CFOs are recognising the need to place greater emphasis on managing change to drive business transformation. The role of the CFO is expanding and respondents have indicated that they are placing a greater emphasis on developing relationships with other senior executives to ensure that they are fully aligned on strategic decision making and financial objectives. Irish CFOs are confident in their ability to manage and be involved in the strategic direction of the organisation,” Mohan said.
About the survey
This is the 15th in a series of quarterly surveys by Deloitte of Chief Financial Officers of major Irish based companies. The survey was conducted in March 2013. The Deloitte CFO Survey is the only survey that seeks to establish the views of CFOs in relation to the financial markets, economic outlook and business trends on a quarterly basis.
Many of the charts in the Deloitte CFO Survey show the results in the form of a net balance. This is the percentage of respondents reporting, for instance, that bank credit is attractive less the percentage saying bank credit is unattractive.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ie/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
The information contained in this press release is correct at the time of going to press.
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