European CFO Survey Q3 2016

The findings discussed in Deloitte’s European CFO Survey are representative of the opinions of 1,148 CFOs based in 17 European countries including Turkey.

European CFOs view the current economic and business environment as challenging, but see potential for growth in their businesses over the next year. CFOs seem confident that, despite the difficult business environment they are currently facing, their businesses will cope and see growth over the next 12 months. With optimism barely improving and perceptions of uncertainty remaining elevated, CFOs continue to be risk averse.

The expectations of the CFOs in Turkey:  

·         Financial performance: Financial prospects barely changed. The percentage of CFOs foreseeing improvement in financial performance dropped from 34% (first quarter) to 30% (second quarter).

·         Revenue: Revenue expectations remain optimistic albeit with a small fall. The revenue expectations of CFOs in Turkey has dropped from 71% (first quarter) to 68% (second quarter).

·         Margin of profit: The percentage of CFOs remaining optimistic about the potential for margins growth has decreased from 60% (first quarter) to 54% (second quarter).

• Investment: The percentage of CFO’s remaining optimistic about the growth in investments remains the same, i.e. 40%.
• Employment: Employment outlook softens. Between the first and third quarters the employment outlook improved in Turkey according to CFOs. Their expectations of employment growth has increased from 36% (first quarter) to 46% (second quarter).
• Uncertainty: Perceptions of external financial and economic uncertainty remain elevated across Europe including Turkey.
• Risk: Risk appetite has improved, the percentage of CFOs not willing to take risks has decreased from 94% (first quarter) to 86% (second quarter). However, risk appetite is still weak, and CFOs remain risk averse on balance.
• Top 3 political and economic risks for CFOs in Turkey: Geopolitical risks, weakness/strength/volatility of Turkish Lira, and the deterioration of cash flow.
• Company priorities: Cost control, cost reduction and organic growth. These priorities underlie that CFOs become more defensive.
• Bank borrowing: Bank borrowing is still a preferred option for financing yet its attractiveness has slightly dropped; the percentage of CFOs in favor of bank borrowing as a source of funding has dropped from 38% (first quarter) to 26% (second quarter).