This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print this page

CFO SignalsTM: 2012 Q1 Results

Large company CFOs more optimistic about earnings, hiring and investment — but not revenue


DOWNLOAD  
To use our embedded media player, please install the latest version of Adobe Flash Player.

Results: CFO SignalsTM Q1

To view the survey results by a specific category, filter using the drop down menu.


Highlights: CFO SignalsTM Q1

Since our last survey, several macroeconomic factors have been improving – or at least stabilizing. Unemployment numbers have been mixed but directionally positive. Corporate earnings have been leveling off but still largely trending upward. European debt issues linger, but there appears to be rising expectation of (or at least hope for) improvement. And broader market sentiment has improved, with Dow and S&P 500 valuations rising about 15% since our last survey.

CFO optimism seems to have followed suit, rising markedly after two quarters of sharp declines. But what is not clear is whether CFOs are optimistic in absolute terms, or just optimistic relative to where they were over the past two tumultuous quarters. Continued declines in year-over-year revenue may suggest the latter, but rising expectations for earnings, capital investment, and domestic hiring appear to indicate that many companies are ready to start pushing forward again.

Earnings gains outpace revenue gains

Net optimism (the spread between CFOs citing rising and falling optimism) turned negative near the end of last year – to the tune of a stunning -24 percentage points in 3Q11 and another -9 points last quarter. But the “good” news is that multiple quarters of rising pessimism make it easier for optimism to improve, and that is what happened this quarter.

Growth and investment up along with domestic hiring (finally)

In line with their rising earnings expectations, CFOs’ investment and hiring expectations appear to reflect improved optimism. In contrast to the last two quarters, companies’ growth plans appear to be spurring hiring at home. CFOs’ expected domestic hiring gains of 2.1%* are more than double last quarter’s survey-low 1.0%*, and just over half of CFOs project gains. Similar to rising earnings projections, growing investment and hiring expectations raise questions about reasons for confidence as revenue appears to be leveling off.

Significant worries – mostly global – remain

Although CFOs are more optimistic and project better company performance, they are certainly not without substantial worries. And most of those worries revolve around Europe and global economic developments

Companies want (and plan) to invest their cash – but they’re hedging their bets

U.S. corporations approached 2012 with an estimated $2 trillion in cash sitting on their balance sheets, and about 20% of that cash appears to be held abroad (the U.S. is highest at 24% and Canada is lowest at 11%). Overall, it appears that most cash is held as government bonds, although use of regular bank deposits and money market accounts is also high.  Still, there is significant variability by country and industry.

Less ambiguity; more influence

Although there is still considerable uncertainty and worry about national and global challenges, companies appear to be getting back to their core operations. Whereas findings from past quarters indicated a heavy focus on strategy-setting and prioritization, this quarter’s seem to indicate a stronger focus on execution. Moreover, “strategic ambiguity,” which has been a perennial top CFO job stress, finally fell out of the top three.

Receive CFO center updates

Deloitte CFO Insights subscription  Subscribe to CFO Insights 

Deloitte RSS Feed  Deloitte U.S. RSS feed (What is RSS?)

DeloitteUS Twitter  Twitter

As used in this document, 'Deloitte' means Deloitte LLP [and its subsidiaries]. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.Certain services may not be available to attest clients under the rules and regulations of public accounting.

Related links

  • CFO SignalsTM
    What North America’s CFOs are thinking – and doing.
  • CFO Center
    A CFO's varied roles make the job more complex than ever.
  • Subscribe to CFO Insights
    Dedicated to addressing the issues that CFOs and finance executives face today.

Share this page

Email this Send to LinkedIn Send to Facebook Tweet this More sharing options

Stay connected