The Deloitte/SEB CFO Survey Full Steam Ahead ... The biggest concern in Finland is the shortage of...

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  • The Deloitte/SEB CFO Survey Full Steam Ahead Spring 2018

  • The Deloitte/SEB CFO Survey | 2

    The Deloitte/SEB CFO Survey

    We are excited to present the Spring 2018 results of the new Deloitte/SEB CFO Survey. The report uniquely combines perspectives from CFOs within large and midsized companies in Finland with viewpoints from SEB’s Nordic Outlook, SEB research team’s flagship report on key forecasts, and global economic trends.

    The survey was conducted simultaneously in other European countries and thus we were able to make valuable comparisons between Finnish and other European CFOs. The European CFO Survey is part of a global cohort of surveys benchmarking the attitudes and future intentions of Chief Financial Officers, gathering views from over 1,600 CFOs based in 20 European countries.

    Tuomo Salmi CFO Program Lead Deloitte

    Ville Lähde Financial Strategy SEB

    The Deloitte/SEB CFO Survey Spring 2018

    Spring 2018

    Views were gathered from 1,652 CFOs in 20 European countries

  • The Deloitte/SEB CFO Survey | 3

    SummaryThe Deloitte/SEB CFO SurveySpring 2018

    Summary

    Key findings

    The spring 2018 shows a continuous trend of positive sentiment towards business prospects in Finland. Unlike most Central European counterparts, Nordic CFOs estimate that the positive business cycle will not soon be over. However, there are signals that we are reaching home stretch of the cycle. In central Europe, CFOs are increasingly concerned about the growth’s stability and believe that the uncertainty facing their business will increase during the next 12 months.

    This spring survey focused on risks. According to Finnish CFOs, the risk outlook is rather balanced. Amongst the most significant probable risks in Finland are the rise of protectionism and populism and major cyber-attacks, but these risks would have lower impact on companies than a private debt crisis or a new financial crisis. The two latter risks have low probability of materialising.

    Of Finnish CFOs, 64% say that now is the time to take more risk on the balance sheet. This ranks amongst the highest in Europe. Despite the appetite, it is unlikely that there will be a major shift in risk-taking whilst Finnish CFOs believe in organic growth strategies and prioritize capital expenditure lower than most of their European colleagues.

    Albeit indications point toward the end of this economic cycle, business performance will remain strong throughout the Eurozone. Companies will continue to reap the benefits of the economic growth over the next 12 months as operating margins continue to improve. More than 80% of the companies in Finland, the Netherlands, Ireland, and Germany will improve their revenues, which adds to the positive short-term economic outlook.

    41% of Finnish CFOs say that

    they will hire more employees over the

    next 12 months

    84% of Finnish CFOs expect their revenues to increase over the

    next 12 months... ...However,

    Finland remains badly behind

    the investment aspirations with

    respect to the Euro areaOrganic growth

    is seen as the most preferable strategy in all the Nordic countries for

    the next 12 months

    Finland’s optimism continues to be at

    top level in Europe after France and the

    Netherlands

  • The Deloitte/SEB CFO Survey | 4

    SummaryThe Deloitte/SEB CFO SurveySpring 2018

    Summary

    Finland is among the top players

    56%71% 57% are the most optimistic countriesIrelandFrance Finland

    83% Netherlands

    82%84% 84% expect the revenues to increaseIrelandFinland Germany

    100% Netherlands

    45%60% 50% are ready to take more risk on the balance sheetFranceSpain Belgium

    64% Finland

  • The Deloitte/SEB CFO Survey | 5

    Hot Topic Chart 1. Over the next 12 to 24 months how do you rate these risks to the global economy?

    Finnish CFOs see rising protectionism, a major cyber-attack and rise in populism as the most probable risks.

    The Deloitte/SEB CFO Survey Spring 2018

    Hot Topic

    78% Rise in protectionism

    63% Rise of polarisation/

    populism

    64% A major cyber-attack on companies and/or

    governments

    Chart 2. Should one of the following scenarios materialise, how would you rate the magnitude of its impact on the financial prospects of your company?

    A major cyber-attack would have strong or very strong impact on 35% of the companies. The risks with the strongest expected impact have relatively low probability of materialising (private debt crisis and financial crisis).

    46% A plunge in asset prices leading to a

    financial crisis

    45% Private debt crisis in

    a major economy

    43% A new

    Eurozone crisis

    43% Untimely tightening of monetary policy

  • The Deloitte/SEB CFO Survey | 6

    Business Confidence Chart 3. Compared to six months ago, how do you feel about your company’s financial prospects?

    In Finland, optimism has come down a bit from last fall (net optimism 56% vs. 73%). That is understandable considering the global economic uncertainty. However, Finland’s optimism continues to be at top level in Europe after France (67 %) and the Netherlands (83%).

    Net optimism (difference between optimistic and less optimistic)

    Financial prospects

    The Deloitte/SEB CFO Survey Spring 2018

    Business Confidence

    Finland +56%

    Netherlands +83%

    Iceland -5%

    Ireland +50%

    Denmark +32%

    Russia +27%

    Sweden +22%

    Germany +11%

    Poland +12%

    Belgium +20%

    Turkey +5%

    UK -4%

    Switzerland +24%

    Italy +25%

    Norway +36%

    Greece +36%

    Austria +42%

    Spain +45%

    Portugal +45%

    France +67%

  • The Deloitte/SEB CFO Survey | 7

    Prospects & Concerns Chart 4. What are the greatest concerns for your company in 2018?

    The biggest concern in Finland is the shortage of skilled professionals, which may limit the growth potential of companies. The outlook of the Finnish economy has continued to improve, but growth is still the second-biggest concern.

    (In brackets results from The Deloitte/SEB CFO Survey Fall 2017)

    Greatest concerns

    The Deloitte/SEB CFO Survey Spring 2018

    Prospects & Concerns 22% (29%)

    17% (20%)

    Shortage of skilled professionals

    15% (14%)Increasing regulations

    13% (13%)Geopolitical risks

    13% (11%)Reduction in demand (foreign/domestic)

    Economic outlook/growth

  • The Deloitte/SEB CFO Survey | 8

    Prospects & Concerns Chart 5. Assume a current cash surplus position. How would you prefer to use the money in the next 6 months?

    More than a fifth of companies are considering investing in Finland or abroad. The focus of strategic investment in Finland is a bit greater than that of overseas (24% vs. 22%).

    (In brackets results from The Deloitte/SEB CFO Survey Fall 2017)

    Most preferred way to use money

    The Deloitte/SEB CFO Survey Spring 2018

    Prospects & Concerns 24% (29%)Strategic investment in Finland

    22% (19%)

    Pay down debt

    20% (13%)Dividend to shareholders

    17% (13%)

    Strategic investment abroad

    6% (6%)Financial investment in Finland

    4% (6%)Financial investment abroad

  • The Deloitte/SEB CFO Survey | 9

    Prospects & Concerns Chart 6. In your view, how are revenues for your company likely to change over the next 12 months?

    The performance of European companies is at the top and the investment plans are on the rise. 84% of Finnish CFOs expect their revenues to increase over the next 12 months (euro area 77%) However, Finland remains badly behind the investment aspirations with respect to the Euro area (Net balance +4% vs. +47%).

    Net balance (difference between increase and decrease)

    Change in revenues

    The Deloitte/SEB CFO Survey Spring 2018

    Prospects & Concerns

    Finland +79%

    Netherlands +100%

    UK +32%

    Belgium +54%

    Greece +68%

    Austria +55%

    Denmark +49%

    Iceland +53%

    Italy +52%

    Turkey +61%

    Russia +60%

    Poland +63%

    Switzerland +64%

    Norway +66%

    Portugal +65%

    Sweden +75%

    Spain +74%

    France +77%

    Ireland +78%

    Germany +79%

  • The Deloitte/SEB CFO Survey | 10

    Prospects & Concerns Chart 7. In your view, how are operating margins for your company likely to change over the next 12 months?

    As with revenue expectations, the outlook for margins growth is broadly positive. CFOs in the Netherlands, Finland and Spain are the most optimistic. Brexit is hitting UK companies hard and revenue expectations in the UK (-30%) are the most negative.

    Net balance (difference between increase and decrease)

    Change in operating margins

    The Deloitte/SEB CFO Survey Spring 2018

    Prospects & Concerns

    Finland +70%

    Netherlands +83%

    UK -30%

    Norway +27%

    Switzerland +21%

    Germany +24%

    France +27%

    Belgium +18%

    Ireland +18%

    Austria +16%

    Iceland +30%

    Portugal +29%

    Denmark +34%

    Poland +11%

    Italy +40%

    Sweden +39%

    Rus