The Deloitte Belgium second quarter CFO surveyPreparing for a slow recovery |
Diegem, Belgium, 27 July 2009 – Deloitte Belgium has released its Chief Financial Officer (CFO) survey: “Preparing for a slow recovery”. This is the second edition in a series of quarterly polls of chief financial officers and group finance directors of Belgian companies. These polls capture the attitudes of Belgian CFOs towards financing and financial management throughout the economic and financial cycle.
The survey shows that although CFO optimism strengthened somewhat in the second quarter, Belgium is still very far from business as usual. In fact, there was a clear indication that the Belgian economy is unlikely to recover within the next twelve months. Recovery will be slow and credit conditions will remain tough. Focus on cost control – including reducing employee numbers - and reduced investment spending are signs of continuing crisis management.
Representing both listed and non-listed companies, 51 CFOs participated in the second quarter survey. It was conducted from 9 June, when the Belgian regional election results were published, to 30 June, when coalition talks on regional governments began to take shape. “CFO’s didn’t express much confidence that the outcome would have a positive effect on government economic policy, although they certainly see room for additional action to stimulate the economy,” comments Thierry Van Schoubroeck, Partner in charge of Deloitte’s CFO Services. “CFOs expectations on the timing of the Belgian economic recovery have been pushed back with 6 months since the previous survey in March.”
Key findings
Deloitte CFO Survey 2009 Q2: key findings
Belgian CFOs have little hope for quick recovery of the economy. As compared to the first quarter survey, expectations on the timing of the recovery have been delayed with 6 months till the second semester of 2010.
Around 80% of surveyed companies will further cut costs, reduce employee numbers and limit capital expenditures on top of actions that have been taken before. Crisis management remains almost universal in response to the recession, with continued focus on cost reduction.
Confidence in the impact of economic policy making is low. With the results of the Belgian regional elections, 85% of CFOs do not expect significant improvement in effectiveness and efficiency of economic policy making. 35% is even pessimistic on the change. 50% of respondents see additional room for government action to stimulate the economy.
Credit conditions remain tough but have slightly improved in the second quarter. 50% of CFOs however do not expect a significant improvement in credit conditions before the second half of 2010.
Optimism related to the prospects of their own company has increased with 10% in June. 25% of CFOs expect free cash flow to decline in the next 12 months, compared to close to some 40% in the first quarter survey.
Corporate debt is still the most attractive means of external financing, though bank borrowing has become slightly more attractive. Issuing equity is still out of favour.
85% of CFOs do not think it is a good time to take additional risk on the balance sheet. Some 40% of respondents feel corporate balance sheets are at present overleveraged.
CFOs are positive about the outlook for mergers and acquisition activity. Sentiment has improved significantly in June.
Some 75% of CFOs expect the Bel 20 Share index to be higher in 12 months time, not withstanding an increase of 16% in the second quarter.
Going forward
“The value of the survey data increases with the ability to identify trends and possible turning points,” explains Thierry Van Schoubroeck, partner Deloitte Consulting. “We are looking forward to the 2009 third quarter Deloitte Belgian CFO Survey to see the evolution in this matter”
The report
To download the results of the Deloitte CFO Survey, visit www.deloitte.be. For further information about the survey or about taking part in the next edition, please contact Thierry Van Schoubroeck.
This article is also available in Dutch and French, please see Attachments.
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