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Deloitte CFO Vision Poll: Improved Business Outlook in 2010 Despite Concerns about the Shape of the Recovery

Senior finance officers see strategic acquisitions key to growth in uncertain environment

NEW YORK, October 14, 2009 — More than half (57 percent) of chief financial officers expect improved business conditions in 2010 although they are concerned about the shape of economic recovery, according to a poll conducted at Deloitte’s “CFO Vision 2009: Standing Tall in Challenging Times” conference in September.

Senior finance executives also believe they must continue to look for growth opportunities during these times through strategic acquisitions, although they are uncertain about the type of economy they will complete those deals in during the next few years.

“Perhaps the most significant uncertainty is the continuing fall-out from last year’s financial crisis; however, you need to keep in mind that your goal for investors and analysts is to see your company’s future the way you do and to keep their confidence and trust for the road ahead,” Barry Salzberg, chief executive officer, Deloitte LLP, told conference attendees. “Getting through this period will also require managing receivables even more carefully, and monitoring suppliers that may not have the resources to survive. Having a ready-list of alternatives — for credit and components — is a wise precaution.”

More than 120 leading CFOs attended Deloitte’s annual CFO conference, which addressed key issues facing senior finance executives including healthcare reform, the future of global capital, major public policy issues and changing tax guidelines. The Deloitte CFO poll also revealed the following:

  • 43 percent said ending the recession should be the top public policy issue for the administration, followed by tax reform (19 percent), financial system reform (18 percent) and healthcare reform (16 percent).
  • 33 percent were most concerned about the shape of the economic recovery such as the possibility of double-dip “W” shape recovery or an “L” shape stagflation recovery. In addition, 26 percent were most concerned about planning and budgeting in uncertain market conditions and 20 percent were most concerned with the return of inflation.
  • 61 percent believed companies will generally not invest in IFRS conversion readiness activities without a clear signal as to timing in the form of a certain date of IFRS adoption.

During the panel, “The Future of Global Capital,” CFOs were asked to share their vision of various market indicators during the next few years. Respondents see a non-inflationary recovery although the unemployment rate may remain above 8 percent. They also believed the U.S. dollar will weaken moderately to the Euro during the next two years, while the 10-year Treasury bill rate will be at 5 percent two years from now.

“There are opportunities for cash buyouts and growth during the next six to 12 months and CFOs need to be prepared to take action and look for places to buy,” Matthew Slaughter, associate dean of the MBA program at the Tuck School of Business at Dartmouth and a former member of the Council of Economic Advisers, told attendees during the panel. “Strategic acquisitions will remain important for growth for companies even during these times.”

CFOs participating on the panel, “The Economic Outlook: What Should CFOs Consider Next,” noted that senior finance executives need to focus on cost control, working capital and liquidity to support their businesses when their top line revenue growth is slow. The panelists also advised their peers to be prepared for growth opportunities if the stimulus packages are successful, which could lead to banks increasing lending rates and a rise in consumer spending. This, in turn, could result in greater demand for products and services. However, some CFOs were concerned about the possible permanent destruction of industrial and consumer demand.

“In today’s economy, you do have to plan for the worst, hope for the best and still be prepared to quickly take advantage of opportunities that will allow you to grow, such as through strategic acquisitions,” said Mark A. Buthman, senior vice president and CFO of Kimberly-Clark and a member of the panel. “The past few years were all about excess — now we have to get fit. We have to stay on top of basics like expenses, liquidity and debt ratings to be in shape so that we can be agile enough to take advantage of opportunities to grow our business.”

About Deloitte
As used in this document, “Deloitte” means Deloitte LLP and Deloitte Services LP, separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

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