CFOs in CE, cautiously optimistic but still averse to risk, Deloitte study shows

The Chief Financial Officers (CFOs) of leading companies across Central Europe’s six largest economies are generally optimistic about their financial prospects, shows a survey pulled by Deloitte. They remain cautious, however, with an overwhelming majority regarding now as not a good time to take any additional risk on to their company balance sheets. 

The first Deloitte Central Europe CFO survey questioned 138 CFOs from Croatia, Czech Republic, Hungary, Poland, Romania and Slovakia. 

Pieter Wessel, Tax Partner, Deloitte Romania, emphasized the cautiousness that CFOS are currently showing: “The economic crisis may be over, according to certain economic indicators, but is still alive in Romanian CFOs’ strategies. Results show growing optimism in economic and financial prospects, as well as in the recovering dynamism of the local market. In line with the regional sentiment, it is obvious, however, that the ground-shaking crisis that hit the world almost three years ago is still fresh in executives’ minds.”  

Around half the sample expect to focus their primary attention on revenue growth from existing markets during 2011, with just 17 percent focusing on new markets. At the same time, 62 percent see their own domestic markets as the primary source of increased company revenues, ahead of the CE region as a whole (16 percent) and the UK and the Eurozone (14 percent). “This suggests an environment in which companies are concentrating on what they do best,” states Gavin Flook, Deloitte’s regional managing partner, audit. 

Another major theme amongst CFOs is the desire to decrease costs, with 95 percent of those surveyed regarding cost reductions as either a major (54 percent) or medium (41 percent) priority over the next 12 months.   

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Romanian CFOs offer their perspective

Even with 80 percent of Romanian CFOs expecting an improvement in their ability to service debt over the next 12 months and none anticipating a decline, 60 percent of respondents nonetheless believe they are in a time of above normal, high or very high external economic or financial uncertainty. 

Pieter Wessel added: “Romanian CFOs maintain a clear focus on cost-cutting and debt control. Risk aversion still remains high (70 percent of respondents) and new market alliances are expected, with 70 percent of Romanian CFOs expecting a new wave of M&A deals in Romania, over the following 12 months.”

When asked about their financial prospects compared to three months ago, an important share of 40 percent said that they were very optimistic or somewhat optimistic (20 percent each) in Romania. Most companies will focus on their current markets, with 71 percent of respondents aiming for growing revenues. However, the local market remains the main contributor to increasing the company’s revenues. A quarter of interviewed CFOs expect debt to increase significantly over the next three years. Most Romanian CFOs are confident in their companies’ abilities to service debt over the next three years

Corina Dumitrescu