Deloitte CFO survey: Q2 2010Positive outlook but further volatility expected |
Welcome to our fourth quarterly Deloitte survey of Chief Financial Officers (CFOs) conducted in June 2010 among CFOs of listed companies, large private companies and Irish subsidiaries of overseas multi-national companies.
Key findings from this quarter’s survey can be summarised under three headings:
Micro versus macro economic recovery
- CFOs have a more positive outlook on their own company’s financials now then they had in the previous quarter
- CFOs believe that the return to growth within their own company will be faster than the return to growth in the economy as a
- Of the four surveys to date the highest percentage of CFOs so far expect to see their revenues (62%) and profits (65%) increase over the next six months
- The majority of respondents (66%) don’t expect to see significant macro economic recovery until at least 2011
- As in the last quarter, revenue maintenance/ growth remains the key financial challenge
Cost and availability of credit
- CFOs have expressed ongoing concerns in relation to the cost and availability of credit to Irish businesses
- 78% of CFOs indicated that new credit is harder to get from national banks compared to six months ago
- An increased number of respondents (66%) on last quarter rate the cost of credit to Irish companies as high or very high
- On a positive note the supply of credit (if not the cost) is expected to improve into 2011
Shocks and balances
- Recent events in Greece and predictions that similar problems could occur in other eurozone countries have shaken confidence. 54% of Irish CFOs believe the European Central Bank has been ineffective in managing confidence in the eurozone
- Opinions on the US dollar and sterling have changed over the quarter with CFOs expecting both to continue to strengthen against the euro
- A considerable 62% of respondents listed an increased risk to exchange rate sensitivity on their balance sheet over the past 12 months
- CFOs expressed the opinion that exchange rates will remain volatile into the future but the expectation that the US dollar and sterling will further strengthen against the euro will give exporters a further boost.
On the other hand:
- Despite falls during the quarter, CFOs believe the stock market has bottomed out with 63% of respondents predicting an increase in the ISEQ over the next 12 months
- CFO sentiment about commercial real estate valuations being overvalued has abated this quarter and an increased number of respondents now believe property to be at “fair value” (20%) or indeed “somewhat undervalued” (23%). However, CFOs still expect further reductions in valuations - 57% (down from 73% in quarter 1) still believe that property is overvalued
- With NAMA up and running, views are crystallising with previously undecided respondents expressing an opinion on its effectiveness in restoring credibility to the banking sector and credit to business. In general the perception is that the mechanics of NAMA will work but that the effect is yet to be felt
The Deloitte CFO Survey is the only survey that seeks to establish the views of CFOs on financial markets, the economic outlook and business trends.
Read the full report here.
Read the executive summary here.
Read the full Deloitte CFO survey press release here.
Contact us
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Shane Mohan, partner T + 353 1 417 2543 |
