Citing an improving business environment, chief financial officers (CFOs) at large companies in North America are more optimistic toward the outlook for their companies — even as their expectations on revenue and earnings growth moderate — according to key findings of the Deloitte CFO Signals quarterly survey for the fourth quarter of 2010. Overall, 53 percent of surveyed CFOs at North America's largest companies are more optimistic than they were in the previous quarter, and CFOs are expecting an average 8 percent rise in capital spending over last year.
The survey, which tracks the thinking and actions of chief financial officers representing many of North America’s largest and most influential companies, also found that CFOs believe high unemployment levels are largely the result of structural shifts that are making it harder to find the highly-skilled staff they need.
“While large company CFOs are still concerned about conditions within their home markets, many appear to be seeing and acting on opportunities to strengthen their businesses for the long term — and spending some of the cash they have accumulated over the past few years,” says Sanford Cockrell III, national managing partner, CFO Program, Deloitte LLP.
Cockrell explains that although more than half of the CFOs surveyed are more optimistic about their company’s prospects this quarter and only 21 percent are less optimistic (compared with 36 percent last quarter), year-over-year performance expectations declined this quarter. Expected future annual sales gains dropped from 11 percent on the whole last quarter to 6.5 percent this quarter, and projected earnings gains fell from 20 percent to 12 percent. “While large company CFOs appear buoyed by strong results in 2010, they also see competition heating up and seem to believe the fastest revenue and earnings improvements are behind them,” he added.
Survey results also reveal very high variability in CFO perceptions and expectations – both across and within sectors. “While the reasons for the diversity are certainly many, our findings from this and previous surveys point to two dynamics in particular,” explains Greg Dickinson, who leads the Deloitte CFO Signals survey. “First, uncertainty around the state of the economy, unemployment and government policy drives uneven interpretations of what the future holds; second, major differences in industry dynamics, market/geographic reach and available resources are having an enormous impact on companies’ respective risks and opportunities – and, consequently, their relative focus on growth versus holding tight.”
More than 60 percent of North America's CFOs believe structural shifts are at least somewhat responsible for high unemployment. Supporting this view, nearly half of all surveyed CFOs said that, despite high unemployment, they are finding it harder to find sufficiently skilled staff than they did five years ago — equally citing changed staffing needs and regular staffing profiles that are now harder to find. Only 20 percent report easier hiring.
MORE ARTICLES ON BUSINESS OUTLOOK