CFOs buoyed by upturn

Posted on 6 Jan 2010 by The Manufacturer

Finance officers are beginning the New Year with a spring in their step as the start of an economic upturn translates into confidence, according to a survey by Deloitte.

Optimism among CFOs is in fact the highest since the accountancy firm began this particular quarterly survey over two years ago.

Though, rather predictably, 48% of CFOs cite the economy as their biggest concern in 2010, 78% think the UK banking system is strong enough to sustain the recovery. What’s more, concerns about shortages of liquidity and credit have reduced substantially. Credit is still deemed costly but many CFOs are alleviating the concern by looking to equity and bond issuance for finance rather than borrowing from banks.

Margaret Ewing is a Deloitte partner and vice chairman. “Two stories seem to be playing out,” she said. “On the one hand, the degree of financial risk facing the corporate sector has fallen as the financial system has stabilised. The strategies adopted by CFOs to deal with the recession have also paid dividends, particularly those focussed on controlling costs, boosting cash flow and staying close to investors.

“On the other hand the outlook for the economy remains uncertain and fears of a “double dip” are widespread. Credit conditions have improved, but they remain difficult.”

Ian Stewart, Deloitte chief economist, added: “Economic uncertainty persists, so the top priorities for CFOs in 2010 remain focused on reducing costs and increasing cash flow. This is a strong indication that CFOs anticipate a weak recovery. However, balance sheet and liquidity risks have reduced in the last year meaning corporates should be in a much stronger position to withstand any possible “double dip”.

“And, despite the uncertainties, CFOs are also deploying a series of strategies designed to expand market share and increase revenues as growth returns. The third priority for CFOs is introducing new products or services, followed by expanding into new markets and by acquisition.”

Click here for a link to a PDF of the full survey results.

There are 39 FTSE 100 companies represented within the 128 respondents to the survey.