Business environment outlook
Central Europe CFO Survey
What challenges do CFOs face? Is the business environment tempting for companies to take risk? Will forthcoming changes in economic law, tax law and the possibility of a negative impact on their company affect bottom lines? How are CFOs perceiving the shortage of specialists in Business & Professional Services, Technology, Media, Telecommunications and Consumer Business sectors?
- With a continuous shift on the employee's market and expected changes in tax law, CFOs are still more concerned about the increasingly stringent regulations and the challenges this may cause.
- The risks outlined by participating CFOs translate into concerns about rising costs, particularly workforce and production costs.
The level of uncertainty
Like last year, 43% of respondents rate the business environment as highly uncertain. CFOs from most countries across the region had similar opinions on the level of uncertainty. Those from Ukraine and Bosnia and Herzegovina are the most negative about the level of uncertainty (delivering Net Balances of -65% and -59% respectively). While Polish CFOs had very mixed opinions, most of them still felt that the level of uncertainty is high. The majority of CFOs from EU countries also see the situation as uncertain with 55% claiming that there is a high level of uncertainty. This contrasts with the views of eurozone CFOs, who believe that the level of uncertainty is moderate (59%).
The way CFOs assess the business environment differs between sectors. The highest level of uncertainty was reported by CFOs in Life Sciences (with a Net Balance of -59%), Financial Services (-45%), Technology, Media, Telecommunications (-40%) and Energy, Utilities, Mining (-39%). CFOs in the Business & Professional Services sector are the only ones in positive territory (with a Net Balance of 10%). It is worth noting that, with the exception of those from Life Sciences, 40% or more of the respondents considered the current situation to be normal.
Workforce and production costs
CFOs expect almost all costs to rise. The greatest proportion (82%) expect workforce costs to rise, which may be related to difficulties in attracting qualified employees. Increase of production costs are also expected (66%).
Many respondents also expect rising costs for real estate (51%) and business-related services (47%). Sales tax, corporate tax and the cost of equity are all expected to remain stable, with 80%, 71% and 63% respectively holding that opinion. Predictions about costs did not differ significantly between sectors.
Internal financing and bank borrowing
Internal financing is still the most attractive source of capital (with a Net Balance of 47% for all companies in a given country and 48% for the respondents' own companies). Bank borrowing (returning a Net Balance of 26% for all companies in a given country and 21% for the respondents' companies) was also considered attractive.
Most CFOs, meanwhile, had a neutral opinion about equity (11% for all companies and 5% for their own). CFOs were also somewhat neutrally disposed to corporate debt, but tended to view it as unfeasible for their companies (with a Net Balance of 7% for all companies in a given country and -2% for the respondents' companies). EU funds were the subject of mixed opinions.