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Deloitte CFO Signals™ Survey: Optimism among Large Company CFOs Tumbles Again; Corporate Performance Expected to Slow

NEW YORK, June 28, 2012 – Optimism on the global economy remains fleeting at best for CFOs from North America’s largest companies. According to the Deloitte CFO Signals survey, CFO optimism last quarter took a solidly positive turn after two dismal quarters to end 2011. However, amid a continued stream of bad global economic news in the second quarter of 2012, CFOs became more pessimistic and began to look decidedly inward at what they can control within their organizations.

The quarterly survey, which tracks the thinking and actions of chief financial officers representing North American companies averaging more than $5B in annual revenue, shows only 39 percent of CFOs are more optimistic this quarter about their companies’ prospects (compared to 63 percent last quarter), and 29 percent report rising pessimism (up from 15 percent last quarter). The sentiment is even bleaker in the U.S., where equal proportions of CFOs are more optimistic and more pessimistic. Moreover, their rising worries about Europe and domestic policy appear to be driving companies to hunker down and focus more on industry- and company-level issues.

“Continued high unemployment is driving rising concerns about consumer demand at home, and that seems to be shifting some of CFOs’ focus away from the things that are still uncertain – especially the European debt crisis, the upcoming elections in Europe and the U.S., and the fiscal cliff in the U.S.,” said Sanford Cockrell III, national managing partner, CFO Program, Deloitte LLP. “With such uncertainty, it is little wonder that many of them are retrenching and focusing less on new markets, and more on working capital, inventories, and further efficiency gains.”

In fact, unemployment topped CFOs’ economy-level concerns for the first time this quarter, with 59 percent of U.S. CFOs ranking it in their top three (well above last quarter’s previous high of 43 percent). Overall CFO expectations for year-over-year earnings growth (10.5* percent this quarter versus 12.8* percent last quarter), capital investment (11.4 percent versus 12 percent) and even sales (6.6* percent versus a survey-low 5.9* percent last quarter) remain positive. In addition, their projection for domestic hiring remains steady at an uninspiring 2.1 percent.

“With large corporations performing very well over the past few years, there is rising concern about how much longer they can keep it up in a slow-growth world,” said Greg Dickinson, who leads the Deloitte CFO Signals survey. “Up until now, CFOs have been confident in their companies’ ability to get even more focused and more efficient. But a large percentage of them are seeing diminishing returns and do not believe the gains will continue beyond a year from now.”

Past confidence has been expressed through CFOs’ expectations for strong earnings growth even in the face of slowing sales. In fact, this was the ninth consecutive quarter in which their expectations for year-over-year earnings growth have exceeded their expectations for year-over-year revenue growth. Up until now, 80 percent of CFOs say they have achieved earnings growth by reducing direct and indirect costs through process efficiency gains; more than half say they have reduced their focus on lower-margin businesses and/or lower-margin customers; and a remarkable two-thirds have raised prices. However, of the 52 percent of CFOs who expect earnings to continue outpacing sales this quarter, just 41 percent expect it to hold for more than another year.

Additional findings from the Deloitte CFO Signals survey include: (estimates are adjusted averages to reduce the effect of outliers):

  • When asked about their most worrisome risk, nearly half of all CFOs say economic conditions, with some three-quarters of those specifically citing European conditions. About 20 percent cite governmental and regulation-related issues.
  • U.S. CFOs have differing ideas on how to cut the national debt: about 60 percent advocate substantial spending cuts, but 30 percent prefer to freeze spending or hold off on major cuts (while formalizing a long-term plan). One-third of U.S. CFOs prefer to leave taxes unchanged while substantially cutting spending, but nearly 30 percent prefer raising taxes and substantially cutting spending simultaneously.
  • In response to the coming year-end “fiscal cliff” of pending tax increases and spending cuts, CFOs do not seem particularly worried. About two-thirds say they are not reacting at all, and the remaining third are split when it comes to accelerating and decelerating their investments, hiring, and transactions.
  • CFOs say their companies’ top three challenges include revenue growth from existing markets (steady at 60 percent), talent (up seven points to 41 percent) and prioritizing investments (steady at 32 percent).
  • Companies’ focus on revenue continues with 52 percent of companies’ strategic focus on revenue growth/preservation (34 percent on revenues in existing markets and 18 percent on new markets). The focus on indirect costs and direct costs held relatively steady at 12 percent and 15 percent, respectively. The focus on fixed asset efficiency held steady at about 10 percent; the focus on working capital climbed to 9 percent.
  • With their own money, CFOs appear cautious when it comes to equities and bonds. While CFOs do hold these instruments, they indicate a roughly equal preference for cash. About 40 percent indicate a preference for stocks over bonds, with 26 percent preferring bonds and the rest indifferent. About 60 percent of the stock focus is on domestic stocks.

To download a copy of the survey, please visit:

*All numbers with an asterisk are averages that have been adjusted to eliminate the effects of stark outliers.

About The Deloitte CFO SignalsTM survey

The Deloitte CFO Signals survey was conducted for the second quarter of 2012. More than 77 percent of the 93 CFO respondents were from companies with more than $1 billion in annual revenues, and three fourths were from publicly traded companies.  

Each quarterly CFO Signals report analyzes CFOs’ opinions in five areas:  CFO career, finance organization, company, industry, and economy. For more information about Deloitte’s CFO Signals, or to participate in the survey, please contact

About Deloitte’s CFO Program

Deloitte’s U.S. CFO Program supports the organization’s vision “to be recognized as the pre-eminent advisor to the CFO.” It harnesses the breadth of Deloitte’s capabilities to deliver forward-thinking perspectives and fresh insights to help CFOs manage the complexities of their role, drive more value in their organization, and adapt to the changing strategic shifts in the market. For more information about Deloitte’s CFO Program, please contact or visit

As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see 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.

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