Deloitte CFO Survey | CFO optimism drops in Q2 2012

Published 1 August 2012 

The findings of the Deloitte Q2 2012 survey reveal a drop in business confidence with one in five Irish CFOs now optimistic about their company’s financial prospects, down from 32% in the first quarter when CFO sentiment was at its highest point in a year. Net optimism, which tracks aggregate optimism on a quarterly basis, stands at zero, down from 17% in Q1, indicating that Irish CFOs increasingly have mixed views in terms of overall optimism on future performance.

Despite the decline in overall optimism, sentiment on turnover and profitability remain steady. 51% of CFOs expect turnover to have increased in six months’ time, down slightly from 53% last quarter. 46% also expect profitability to increase in the next six months.

With regards to the Irish economy, 92% of respondents do not believe that the economy will return to growth before Q1 2013. Sentiment with regards to the eurozone is mixed – 37% believe a break-up of the Eurozone is likely, and 38% believe it is not.

These are some of the findings of the latest Deloitte CFO Quarterly Survey, which seeks to provide a barometer of business trends and economic outlook among publicly quoted companies, large private companies, and Irish subsidiaries of multinational companies.

Shane Mohan, Partner, Deloitte commented on the findings:

“While it is somewhat disappointing that optimism has fallen amongst Irish CFOs from the high point achieved in the first quarter of the year, it is no doubt a reflection of the continuing uncertainty in the eurozone. Optimism is likely to ebb and flow among Irish CFOs as work continues within the EU to bring stability, and as markets react to new developments. However, as we have seen in previous quarters, CFOs are maintaining confidence in the ability of their own companies in terms of profitability and turnover, two key financial measures. In a marketplace that is continually changing and faced with challenges, this is very encouraging indeed.

“Consistently, CFOs have been more favourable about the performance of their own companies, compared to that of the overall economy. This quarter the gap between the expectations on the two seem to be closing, with the majority of CFOs looking to a pick-up in the economy from Q1 2013 onwards.”

This quarter’s survey also compares CFO sentiment with regards to cost and availability of credit, with those of their peers in Europe. In Ireland, CFOs believe that credit is hardest to get and also the most costly when compared to other countries. The net balance of CFOs in Ireland who believe credit is costly is 81%, contrasting with 57% in the Netherlands, and 50% in Switzerland who believe credit is cheap. Similarly Ireland ranks poorly in terms of availability of credit, with a net balance of 50% of CFOs who believe that credit is hard to get, compared to 16% in Switzerland and 9% in Germany stating it is easily available.

The survey also continued to track CFO sentiment on the performance of the Government in the second quarter of the year. 52% believe the Government has had a positive effect on fiscal and economic matters to date, an increase of 5%. Areas of performance that CFOs believe the Government are having a positive impact include restoring fiscal stability (65%), encouraging FDI (77%) and renegotiation of the EU/IMF Package (40%). However those areas which CFOs believe the Government is having a limited impact on include reducing the cost of credit (75%), levels of taxation (69%), increasing credit availability to small business (66%) and employment (58%).

For full details of the Deloitte Q2 2012 CFO Survey, please visit www.deloitte.com/ie/cfo-survey.

About the survey
This is the twelfth in a series of quarterly surveys by Deloitte of Chief Financial Officers of major Irish based companies. The survey was conducted in June 2012. The Deloitte CFO Survey is the only survey that seeks to establish the views of CFOs in relation to relation to the financial markets, economic outlook and business trends on a quarterly basis.

Many of the charts in the Deloitte CFO Survey show the results in the form of a net balance. This is the percentage of respondents reporting, for instance, that bank credit is attractive less the percentage saying bank credit is unattractive.

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a 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/ie/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

The information contained in this press release is correct at the time of going to press.

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