Central Europe CFO Survey

Positive expectations in a testing time

The economic expectations of Chief Financial Officers (CFOs) across Central Europe have undergone a significant change for the better over the last 12 months, and the region’s CFOs are looking at the outlook for their companies with considerable optimism.

However, they do have some major concerns about the health of the overall business environment, with forthcoming changes in economic and tax law, downwards pressure on prices and the impact of Brexit all contributing to a widespread unwillingness to take business risks.

  • Over a fifth (21%) of Central Europe’s CFOs expect GDP growth in their countries of more than 2.6%, and 73% expect the Consumer Price Index to grow over the next 12 months.
  • 71% of CFOs expect their company revenues to grow during 2017, 75% expect operating margins to improve or stay the same, and 42% expect their workforces to grow.
  • However, 65% do not see this as a good time to take more risks and 43% believe they are facing a high level of external financial and economic uncertainty.

The report is divided into four main chapters, on the economic outlook, the business environment, company growth prospects and the role of the CFO. Key findings in each chapter include:

Confidence in growth remains high…

CFOs across the region anticipate solid economic growth in 2017, with 21% anticipating high or very high increases in GDP (2.6% - > 3.6%) and no respondents expecting GDP to fall. Employment prospects remain good, with 82% expecting unemployment to fall or remain the.

Despite concerns about workforce mobility and trade barriers, there is a three-way split in opinions regarding the impact of Brexit, with roughly a third of respondents each anticipating negative, positive or non-existent impacts from the UK leaving the EU.

…despite uncertainty about the business environment

It is widely recognized that the business environment is somewhat unstable, with just 9% of respondents calling the level of uncertainly “low”.

Cost increases are widely expected, with CFOs anticipating more expensive workforces (82% of respondents), production (66%), real estate (51%) and business-related services (48%).

Difficulty in attracting suitably qualified employees and downward pressure on prices are seen as the biggest risks business face in 2017, while worries about increasingly stringent tax and financial laws have implications for future profitability.

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But the company growth outlook is positive

Practically half of CFOs (49%) are bullish about their companies’ financial position in 2017, with just 16% expecting theirs to worsen during the year.

But there is no sign of over-confidence affecting financial prudence. While confidence is reflected in expectations of increasing capital expenditure (capex) and hiring, cost control is the biggest priority for CFOs during 2017.

How CFOs see themselves…

For the first time, this year’s Deloitte Central Europe CFO survey included a section on how respondents see their own roles – in particular, which are the most important aspects of their jobs. Containing quotes from some of the region’s most prominent CFOs, this clearly shows that responsibilities associated with managing company finances are still their key priority. Others, including overseeing company processes, team management and representing the business are important but not mission critical.

According to Deloitte Partner Gavin Flook, who leads the CFO programme across Central Europe,

This year’s report gives an overall picture of a region with strong economic prospects and a profession that’s committed to driving growth with caution and rigour amid an uncertain business environment. It will be extremely interesting in early 2018 to see how the views and predictions of our respondents have stood the test of time.

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About the study

This annual questionnaire tracks the latest thinking and actions of CFOs representing largest and most influential companies in the Central European region. It explores top-tier CFO issues across five areas:

  • business environment,
  • company priorities and expectations, 
  • finance priorities,
  • CFO role.

The findings discussed in this report represent the opinions of almost 600 CFOs based in 12 Central European countries: Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Lithuania, Poland, Romania, Serbia, Slovakia, Slovenia and Ukraine. The survey was conducted between August and October 2016.