Highlights fourth-quarter edition
Deloitte Belgian CFO Survey Q4-2010
CFOs enter 2011 in a more buoyant mood with a new focus on growth and revenue. Growth is expected to be slow, but sustained – no fears for the double dip. Financial results for 2010 have been good, with the vast majority of survey respondents reporting they were on budget – over 50% even report having done better than budgeted.
Confidence remained high and appetite for risk increased markedly, and seems to have led corporates to shift from more defensive to well thought-out expansionary strategies. Introducing new products or services or expanding into new markets are high on the priority list for corporates in 2011. If 2010 was the year of balance sheet and cost cutting, 2011 looks set to be the year in which corporates will restart spending.
As they enter 2011, CFOs are positive on the outlook for revenues and margins and are focused on growth opportunities. The greatest opportunities for their businesses are investing and making acquisitions at cheaper valuation, growing organically and expanding emerging markets. The world economy and the changed economic environment generate on the one hand (attractive) exits and on the other hand make expansions possible by organic growth or acquisistions. The growth in the BRIC countries and the sustained demand from Asia, will create new markets. The launch of new products and open new markets are becoming a bigger opportunity in a recovering economy.
Attractive credit conditions are also likely to have contributed to rising optimism and risk appetite: credit is widely available and reasonably priced. Debt finance fell out of favour at the beginning of the financial crisis. But improving availability and lower interest rates have led to a marked change in attitudes. For the first time since the start of the financial crisis, bank borrowing is considered the most attractive means of financing.
Going forward cost control, cashflow management and credit remain important points on the agenda of the CFO. Over the past two years corporates have been strengthening balance sheets and cutting costs. Those strategies have worked: profitability has risen, debt levels have declined and many companies have generated increases in cash flow. The evidence from this quarter’s survey is that from this position corporates are increasingly planning for growth in 2011.
Major concerns are the evolution of the world economy and the competitive environment in Belgium. Some of the other challenges identified include protecting investment decisions and making successful acquisitions. The changes in the world economy seem to be at the same time the greatest opportunity and concern.
For CFOs, government should focus on the management of the public deficit, on measures oriented to the labour market and on increasing the active labour forces.