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CFOs’ Future Outlook Is More Optimistic Compared To Six Months Ago

“The slight optimism among CFOs in the Czech Republic translates into the willingness to start the growth using additional external sources,"

- Martin Tesař,
Partner in Charge of the Audit function of Deloitte Czech Republic

Prague, 11 December 2012 – Despite the fact that the economic outlook is not too positive, Czech CFOs show more optimism than six months ago. While 27% of CFOs anticipated a positive financial development six months ago, the latest survey reveals an optimistic mood among 40% of them. To date, revenue growth remains the priority on the current as well as on new markets. A similar trend can be seen in maintaining focus on cost savings. Other priorities include investments. These are the results of the survey conducted by Deloitte in September and October of this year among 362 CFOs from major companies in Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania, Slovakia and Slovenia.

“The slight optimism among CFOs in the Czech Republic translates into the willingness to start the growth using additional external sources. Six months ago, only 5% of CFOs planned to increase the debt burden of the firms in the following twelve months; currently, 20% of CFOs are planning to increase their firm’s debt burden. The declining tendency in the intentions to decrease the level of indebtedness is apparent,” said Martin Tesař, Partner in Charge of the Audit function of Deloitte Czech Republic.

“A significant position of Czech banks and low interest rates are one of the reasons for this attitude. Banks are very willing to provide funding to clients under attractive conditions. In addition, the survey shows the belief in the sustainability of favourable financial conditions rather grows,” added Luděk Niedermayer, Deloitte’s economic expert.

The debt funding is treated by more and more CFOs as attractive and fewer and fewer CFOs believe that the cost of funding will grow. Only 44% of respondents talk about the increase in the cost of funding. Six months ago, it was 66%. An increasing number of CFOs mention the increasing ability of the firm to control its debts. On the contrary, CFOs are still hesitant to increase funding using equity and they usually take a neutral attitude. 

 “This could indicate that for most Czech firms, the effort to reduce the financial leverage to ensure the stability of the company is no longer relevant and lending banks do not require it from their clients,” commented Ladislav Šauer, Director in the Audit function of Deloitte.

The survey has shown that an increasing number of firms are considering restructuring their business model. Restructuring the business model is being considered by 23% of CFOs, 11% more than six months ago. 

“A certain level of prudence in companies is a clear response to short-term and long-term uncertainties regarding the functioning of the economies. The comprehensive view of our findings additionally indicates that the companies are significantly more prepared for possible fluctuations than before the start of the crisis in 2008,” said Luděk Niedermayer.

Pursuant to Mr Niedermayer, managers see their financial teams as sufficiently strong and they definitely do not complain about the lack of talented employees. Nevertheless, the retention of talents in their team is regarded as one of the key issues. In a wider perspective, the quality and cost of manpower will be the key factors that will decide about the success of firms and entire economies.

A lesser focus on reducing costs is a welcome finding, which indicates both the higher consolidation of firms and strategic focus as not only savings, but also the quality of production and the ability to sell decide success.

Contrarily, items with a lower priority confirm the knowledge of a certain prudence in activities on an unstable and non-growing market (in a wider-than-national context) and the achievement of a significant improvement in the financial and liquidity position .

Key Trends and Findings of the CFO Survey:

  • In spite of not-very-optimistic outlooks of the economy, Czech CFOs are more optimistic than they were six months ago;
  • We noted more enthusiasm towards significant changes in reorganising and changes in the business model;
  • The principal priorities of our CFOs remain the same – growth in sales and reduction of costs;
  • An increase in credit funding is one of the ways to spur growth; and
  • Prudence remains in the asset and capital structure of Czech companies.

In a regional comparison, the outlooks among Polish and Slovenian CFOs have worsened the most, while a growing optimism can be seen not only among CFOs in the Czech Republic, but also in Croatia, Romania, Slovakia and Bulgaria.

CFOs in most countries expect to face high external financial and economic uncertainty. Similar to the last survey, Croatia and Romania (and now Slovenia as well) are the countries where “high” or “very high” levels make up the largest proportion of the poll, possibly reflecting a cautious attitude to the potential financial impacts of external economic conditions.

For more information, please visit www.deloitte.com/cecfo.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/cz/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's approximately 182,000 professionals are committed to becoming the standard of excellence.

© 2012 Deloitte Czech Republic

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