Accelerated demand expected in 2010 |
CFOs are looking to 2010 in a more confident mood than might have seemed likely one year ago. Overall optimism has stabilised since the third quarter, but some measures still indicate further improvements in financial optimism. For the first time since the survey started in the first quarter of 2009, the expected timing of the recovery has not shifted backwards: as in the third quarter survey, an important majority of CFOs think that recovery in their own markets will come in 2010. Three quarters of CFOs don’t expect significant changes in their strategies for the next twelve months. For the first time in a year, we see a significant reduction in the number of companies that plan to further focus on typical crisis management measures, such as further reducing headcount and future hiring, cutting back on marketing and advertising or reducing capital spend. Corporates more and more think beyond the
crisis.
Whereas the third quarter survey showed a significant improvement of sentiment – with the optimists outnumbering the pessimists for the first time in 2009 – optimism has not increased compared to last quarter (slightly decreased). Concerns among CFOs about the speed of the recovery remain widespread
On the positive side, the expected timing of the increase of demand for product and services has for the first time in 2009 not shifted backwards: 65% expect growth in the demand for their products and services to accelerate in 2010. Larger organisations (> 500 million turnover) are however more pessimistic about the timing of demand acceleration than the total survey population.
CFOs were quick to identify corporate activity as being one of the activities that would emerge from the recession. Already nine months ago three-quarters of CFOs said they thought the downturn would provide opportunities to acquire companies or other assets at a discount. Since then optimism about corporate and private equity activity has remained high. Over 90% expect corporate activity to rise over the next twelve months.
About two thirds of the Belgian survey respondents expect their companies might take part in corporate activities in the next twelf months, either as buyer or seller.
Business seems to be getting a bit of fresh air: expectations for the free cashflow evolution have improved significantly over the last year. The number of companies anticipating a decline in cashflow has fallen back from 37% in the first quarter to 13% in the fourth quarter.
Corporate strategies for the next twelve months also seem to suggest that business might get a bit of fresh air again. For the first time in a year, we see a significant reduction in the number of companies that plan to further focus on typical crisis management measures, such as further reducing headcount and future hiring, cutting back on marketing and advertising or reducing capital spend.
This does not imply that cost management does not remain very high on the corporate agenda. Now that much of the low-hanging fruit has been harvested, structural cost reduction measures, such as off-shoring of support functions (ICT, HR and finance) as well as core activities (R&D and production), are prominent on the radar. The low percentage for finance falls out of tune. It might indicate that many organizations have shifted finance functions already earlier.
