Executives of the Largest Firms in Central Europe Look Ahead with Cautious Optimism

Prague, 24 September 2009 — Cautious optimism is the encouraging finding of Deloitte's first Business Sentiment Index – a research-based analysis of the opinions and predictions of Chief Executive Officers (CEOs) of the largest companies within six countries in Central Europe, including the Czech Republic.

Around three quarters of those surveyed felt the economy in the next year was either going to get worse or remain the same. Going against this trend of caution and pessimism, the survey found that business leaders were conversely quite optimistic about the prospects for their individual enterprises, with only around 15% having negative views about the future.

“The diversity of views in the Index reflects the diversity of the region and how it is being affected by the current downturn,”

—Mike Barrington,
Chief Executive Officer
Deloitte Central Europe

“The diversity of views in the Index reflects the diversity of the region and how it is being affected by the current downturn,” says Mike Barrington, CEO to Deloitte Central Europe.

Of the countries surveyed, Poland is the most bullish about its prospects – both in terms of its economy and from a company perspective. Poland has enjoyed continued consumer demand compared to other countries in the region. Croatia, on the other hand, is very pessimistic about the economy, with 89.7% of respondents giving negative responses.

Set out below are selected statistics based on the net totals of the Index:

• Despite perceived credit issues globally, almost three-fifths (57.9%) of respondents feel credit is still available to them if necessary, with almost one-fifth feeling it is easily available.
• Over half believe payment terms are still safe, with over 45% thinking they are fairly safe.
• Almost half (45.3%) expect sales revenues to increase over the next 12 months.
• Over half are optimistic (with 44% fairly optimistic) about launching new products/ services in the next year.
• Reflecting the trends globally, opinions about employment levels continue to be pessimistic, although over half (52.1%) expect levels to remain broadly unchanged, with 31.6% believing they will reduce somewhat.
• The likelihood of M&A activities is unsurprisingly very slim, with 60% thinking it unlikely for their company to entertain thoughts of takeovers at the moment.
• Over half (51.6%) believe EU grants will be hard to obtain, compared to just over a quarter (25.5%) who believe them to be available.

The publication of the first index, which this year has been included in Deloitte’s CE Top 500 report, could not have come at a more significant time as the global and regional financial markets look firmly to the future after a period of turbulence. The report will act as a regular ‘barometer’ that gauges the thoughts of those with the greatest influence on the future direction of the economies and largest companies in Central Europe.

Their responses include views about the current and future business environment, ranging from employment prospects and payment trends to new product development and capital expenditures. The findings have been collated into an index, which this quarter equals 97 Next quarter’s index (to be released early December) will compare the differences and similarities of views and attitudes across national boundaries and between industrial sectors.

The index provides a much-needed outlook based not on statistics and balance sheets, but on the reactions and opinions of influential executives, who are crucial not only to their company’s success but, by extension, to the recovery and renewed growth of individual economies and those of the region as a whole.

Executives were surveyed about the following issues:

• Economic outlook
• Company financial perspectives
• Credit availability
• Regulatory environment
• Payment terms
• Sales
• New product development
• Employment
• Investments
• M&A activities
• EU funds (extra question)

The nearly 200 respondents were drawn from Poland, Hungary, Czech Republic, Slovakia, Croatia and Romania and from the following sectors:

• Automotive
• Banking
• Technology
• Media and telecommunications
• Consumer business and transportation
• Insurance
• Construction
• Energy and resources

Methodology

Key facts about the research methodology of the BSI:

• A series of 10 - 12 minute interviews were conducted
• We interviewed CEOs and CFOs professionals
• Sample size: N=190
• Fieldwork administration: 23 July – 10 August 2009
• Data collection method: Telephone interviews (95% of the sample)
• Languages of data collection: Local or English

For more detail please visit: www.deloittece.com/bsi

Full research: Business Sentiment Index.pdf

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