COVID-19 CFO Slideshow - Boston Consulting Group · COVID-19 CFO Slideshow Author: Alexander Roos,...
Transcript of COVID-19 CFO Slideshow - Boston Consulting Group · COVID-19 CFO Slideshow Author: Alexander Roos,...
COVID-19 CFO Pulse Check
Conducted April 8–30, 2020
68% 85% 81%
91%Nearly all CFOs step on the brakes 91%
89%
83% 78% 75%
Overview of CFOs’ Perspectives on the COVID- Crisis
Source: BCG’s COVID- CFO Pulse Survey.
of CFOs see demand shock as the biggest challenge
expect sales to decrease
expect profits to decline by >%
U shape
L shape
have significant cash constraints
Many CFOs see severe financial impacts Recovery
of CFOs see opportunities arising
of CFOs have implemented a COVID-task force as a short-term reaction
in CFOs plan for cost reductions in their function
Working capital optimization
Company-wide cost reduction
Capex reduction
Process optimization New ways of working Digitization
87% 51%
25%44%
15%
COVID-19
CFOs’ Perspectives on theCOVID- Situation
CFOs’ Short-Term Response
CFOs’ Midterm Response
1
2
3
Biggest immediate impacts of the COVID- crisisRespondents (%)
Expected impact on total salesRespondents (%)
68
40
37
32
Reduction in demand
Supply chain issues
Operationalissues
Client credit defaults orcredit quality deterioration
Increase by >%
Increase by %–%
Decrease by %–%
Decrease by %–%
Decrease by >%
33
62%
89
22
29
A Serious Reduction in Demand Is the Biggest Immediate Impact
Source: BCG’s COVID- CFO Pulse Survey.Note: Respondents were able to choose multiple answers.
PERSPECTIVES ON THE COVID- SITUATION
PERSPECTIVES ON THE COVID- SITUATION
Expected impact on total salesRespondents (%)
Increase by >%
Increase by %–%
Decrease by %–%
Decrease by %–%
Decrease by >%
33
62%
17%89
22
29
Current cash situationRespondents (%)
Significant constraints
Small constraints
No constraints
33
59%
41%
45
41
14
15%
64%
Expected impact on total profitsRespondents (%)
Increase by >%
Increase by %–%
Decrease by %–%
Decrease by %–%
Decrease by >%
20
312
21
44
Many Companies Have Been Hit Hard, Creating a Sizable Gap Between the Haves and the Have Nots
Source: BCG’s COVID- CFO Pulse Survey.
COVID-19Decrease
Increase
Increase
Average expectedsales impact
Average expected profit impact
Decrease
PERSPECTIVES ON THE COVID- SITUATIONRetail, Automotive, and Transportation Companies Have Been
Hit the Hardest
Source: BCG’s COVID- CFO Pulse Survey.Note: Industries with three or fewer respondents were excluded.
Automotive
RetailTransportation
Professional servicesCapital goods
Consumer durables
BanksMaterials
Insurance
Health care
Food, beverage, and tobacco
Telecommunications
Food and staples retailing
Technology hardware SoftwarePharmaceuticals
Diversified financialsEnergy
Media and entertainment
PERSPECTIVES ON THE COVID- SITUATION
Expectations for new opportunitiesRespondents (%)
Significant
Mostly top-line growth
Mostly cost reduction
Some
No
ObservationsExpectations for new opportunitiesRespondents (%)
Despite the Adversity, % of CFOs See Opportunities
16
68
16
51
49
Expectations show only a small variation among industries, regions, and company size:
CFOs in health care, financial services, and insurance are the most optimistic
CFOs of Asian companies are the most pessimistic
CFOs of midsize companies see opportunities mostly to reduce costs
•
•
•
Source: BCG’s COVID- CFO Pulse Survey.
PERSPECTIVES ON THE COVID- SITUATION
Expected shape of the global economic recoveryRespondents (%)
V shapeA return to the preshock economiclevel and growth rate
W shapeMultiple, repeated V shapes
U shapeA longer dip before returning to the preshock economic level and growth rate
L shapeThe economic level and growth remain at sustained lower rates
Observations
Most CFOs Expect a Long Downturn, Showing Great Pessimism
Source: BCG’s COVID- CFO Pulse Survey.
8
16
51
25
The expectations of European and US CFOs align with the overall findings of a U-shaped recovery as the base case
Asian CFOs are more skeptical
CFOs’ Perspectives on theCOVID- Situation
CFOs’ Short-Term Response
CFOs’ Midterm Response
1
2
3
Immediate actions already taken or consideredRespondents (%)
Immediate liquidity protection taken or consideredRespondents (%)
Adaptation of short-term planning and forecasting
Provision of liquidity support to supply chain partners
Setup of COVID- task force
Liquidity protection
Client credit management
Adaptation of reporting
Stopped or delayed investments
Setting up a dedicated cash office
Suspending dividends orbuybacks
Taking advantage of emerging government aid
Drawing on lines of creditor revolving loans
Stopped or delayed payments
Preparing to raise new debt or equity
CFOs Have Responded to the Crisis with the Right Short-Term Moves
Source: BCG’s COVID- CFO Pulse Survey.
SHORT-TERM RESPONSE
88
81
78
58
58
22
66
43
37
37
25
22
24
77%
SHORT-TERM RESPONSE
Immediate actions in investor communicationsRespondents (%)
Increased communication about corporate actions and initiatives
of CFOs have increased investor communication or revised guidance
Increased transparency on crisisimpact and risks
Provided revised guidance
No change
Delayed or reduced investor communication for now
CFOs Recognize the Value of Communicating More with Investors During the Crisis
Source: BCG’s COVID- CFO Pulse Survey.
3
34
27
16
20
CFOs’ Perspectives on theCOVID- Situation
CFOs’ Short-Term Response
CFOs’ Midterm Response
1
2
3
Expected type of actions to prepare for the midtermRespondents (%)
Working capital optimization
Some Significant
M&A
Company-wide cost reduction
Capex reduction
Tightened performance management
Rework of risk management
Cost reduction in the finance function
Systematic transformationof the finance function
M&A levers
Proceeding with ongoing transaction
Divesting to generate cash
Search for acquisition opportunities
CFOs Have Responded to the Crisis with the Right Short-Term Moves
Source: BCG’s COVID- CFO Pulse Survey.Note: Because of rounding, not all percentages add up to . Excludes “None” and “Don't know” answers.
MIDTERM RESPONSE
40
40
48 40
45 42
55
58
42 16
834
13
25
52
51
37
21
42
Expected type of cost-reduction levers to be employed in the finance functionRespondents (%)
Process optimization
Some Significant
Examples
Outsourcing
New ways of working
Digitization
IT infrastructure optimization
Organizational optimization
Simplification
Service level reduction
To Take Costs Out of the Finance Function, CFOs Are Focusing on Process Optimization, New Ways of Working, and Digital
Source: BCG’s COVID- CFO Pulse Survey.Note: Because of rounding, not all percentages add up to . Excludes “None” and “Don't know” answers. AI=artificial intelligence; ERP=enterprise resource planning; RPA=robotic process automation.
MIDTERM RESPONSE
42 16
50
51
43 32
52 20
48
42
824
27
148
22
33
27
Process redesign, standardization
Lean, agile, daily routines
Next-level automation, RPA, AI, self-service
ERP standardization, data storage, cloud
Functional rightsizing, delayering, reorganization
Reduce number of profit and cost centers, simplify data dimensions
Bundling, relocation, low-cost providers
Reducing level of reporting or planning