Companies Tread Cautiously into 2010

Ernst & Young's "Lessons from change: Findings from the market" study suggests that companies still seem anxious about the economic recovery and are treading cautiously into 2010, reports The Big Four Blog, a global social networking site for alumni and professionals of the world’s biggest accounting firms.

 

Citing the report, Big Four Blog notes that in January 2009, 75% of companies prioritised their own survival and only 19% were trying to take advantage of the recession to pursue new market opportunities. But by end of that year December 2009, 34% were considering pursuing new opportunities; but over half (53%) of companies still agreed that surviving 2010 would still remain a challenge.

 

"The spirit of optimism has increased, but it is essentially fragile in nature. Companies may be less worried about survival over the next 12 months, but the return to a healthy operating environment is still some way off," says Ernst & Young's John Murphy, global managing partner for markets.

 

But there is some good news—33% of companies increased their EBITDA by over 5% in the last 12 months. The study further shows that 7% of all businesses had seen a more than 20% increase in earnings. This trend seems to be more prevalent in mid-sized companies in the Asia-Pacific region, with 45% reporting a 5% EBITDA increase. In Latin America (26%), Western Europe (28%) and Eastern Europe (29%) the proportion was lower.

 

The Ernst & Young report also reports that 40% of pharmaceutical, aerospace and defense and banking companies exceeded the 5% growth threshold.

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