The report, which surveyed CFOs from 19 countries and/or regions across the globe, found increased optimism among CFOs toward their business prospects in several areas. In the UK, for example, business optimism has risen for the fourth consecutive quarter and is well above average. Buoyed by the strength of their home economies, nearly 60 percent of North American CFOs express rising optimism. Moreover, that optimism is also translating into expansionary tactics and investment in some countries.
“Organic and inorganic growth are solidly at the top of CFOs’ agendas in many countries. Even in areas, such as Central Europe, where economic uncertainty persists, and Australia, where the threat of a slowdown in China looms large, CFOs are forging ahead with M&A and other growth activities,” says Sanford Cockrell III, Global CFO Program Leader, DTTL. “While they may not like what is in their particular economic forecasts, CFOs seem united in their determination to ride the tide of uncertainty.”
The CFOs had mixed attitudes towards economic recovery by region. However, three themes emerged when factoring in their outlooks: risk, growth, and the influence of China.
Mixed attitudes towards risk - Risk appetite has grown in many of the countries
- A record 45 percent of UK CFOs say that now is a good time to take risk onto their balance sheets.
- In the Netherlands, 31 percent of CFOs report an increased risk appetite—the highest level in the last two years.
- Switzerland, where risk appetite has been increasing for several quarters, expected capital investments to rise.
- Within Central Europe, the attitude toward risk runs the gamut with 0 percent of CFOs in Slovenia saying now is a good time to take on risk to 35 percent of CFOs in Estonia who take that view:
- In Australia, 24 percent of CFOs believe that now is a good time to take greater risk onto their balance sheets.
- For North America’s CFOs, growth is a top use of cash for three-quarters (75 percent) of all companies.
- The story is similar for UK-facing companies (those that derive more than 70 percent of their revenues from the UK), which are now more expansionary than any time in the past two years.
- Despite economic uncertainty across Central Europe, the majority of the countries in the region are hunting for growth both in their domestic markets and in other markets such as Russia and Turkey. Half of these CFOs expect to see a slight increase in M&A this year, some of which will be due to the sale of distressed assets, Western investors divesting, and private equity playing a larger role.
- More than half (56 percent) of Ireland’s CFOs categorize their corporate strategy as expansionary, but 63 percent cite market uncertainty as the most negative influence on their companies’ investment plans in the next 12 months.
- Eighteen percent of North America’s CFOs say that the state of the Chinese economy is a top factor aiding growth – a figure that jumps to 45 percent in the Technology sector.
- Australian CFOs say the slowdown in China has made a major negative dent in confidence (85 percent). They are less concerned about U.S. and European economic issues. This makes China the biggest concern for Australian CFOs, reflecting the challenges and concerns that are continuing to emerge after the mining investment boom.
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