Deloitte Belgian CFO Survey Favourable business conditions ......Q1 2010 “Financial ... Q1 2015...
Transcript of Deloitte Belgian CFO Survey Favourable business conditions ......Q1 2010 “Financial ... Q1 2015...
CFO ServicesFirst quarter edition 2015
Deloitte Belgian CFO SurveyFavourable business conditions give confidence for expansion Benchmarking corporate financial attitudes
2
Key points 3
Looking Back: Business confidence through the financial and economic cycle (2009-2015) 4
Favourable business conditions give confidence for expansion 6
Q1 2015 Summary: Better outlook for growth: higher appetite for expansion 8
Promising first quarter financial performance 11
Shortage of skilled labour starts to worry CFOs 12
Higher growth projects drive expansion 14
Money is cheap and available 17
Difficult to keep up with all the promises 18
Profile Q1 survey participants 21
Content
Deloitte Belgian CFO Survey Fourth quarter 2014 3
Key points from the 2015 Q1 Belgian CFO survey
• CFOs remain optimistic about the financial prospects of their organisations, although growth projections for Belgium and the eurozone are weak.
• First quarter financials are good. Performance to budget has not been better since 2010.
• The perceived levels of financial and economic risk have decreased significantly this quarter. Risk appetite is on the rise. The growth mindset is accentuated by shortage of skilled labour entering the top 5 CFO concerns.
• Corporates see growth opportunities mainly outside the EU. Internationally oriented companies plan to increase capital expenditure more than companies with a local market focus.
• CFOs remain positive about Belgian financial and economic policy setting, but the extreme enthusiasm reported last quarter has tempered significantly.
Keypoints
Macro-economic backdrop to the first quarter CFO surveyGlobal equity markets rose 4.5% in the firt quarter and yields on developed economy sovereign bonds fell. The price of oil stabilised somewhat although at a significant lower level than at its 2014 peak. Lower oil prices provided a boost to consumers across the globe through lower inflation and a rise in disposable incomes. Financial markets reactive positively to the launch of the Euripean Central Bank’s quantitative easing programme, with risk assets rallying in Europe and equities hitting a record high in Germay. European bond yields also fell and Spanish and Italian yields hit record lows. Despite renewed concerns over a euro area break up following the election of anti-austerity party Syriza in Greece, a number of euro area economic indicators show signs of improvement. The ECB upgraded its Euro area growth forecast for 2015 to 1.5% from 1%.
Ian Stuart, Chief Economist Deloitte UK
4
Looking Back: Business confidence through the financial and economic cycle (2009-2015)
Mor
e O
ptim
istic
Less
Opt
imis
tic
Q2 2009 “Preparing for a slow recovery”
Q1 2009“First signs of optimism in
uncertain times”
Q3 2009 “Financial
conservatism is back”
Q4 2009“Diverging fortunes
going into 2010”
Q1 2010“Financial
repair, economical uncertainty”
Q2 2010“Confidence
grows”
Q3 2010“Higher confidence,
good results”
Q4 2010“Planning for
growth”
Q1 2011“Call for caution” Q2 2011
“At a turning point”
Q3 2011“Results under
pressure”
Q4 2011“Outlook 2012:
a very difficult year”
Q1 2012“Anxiety has eased,
but plenty ofrisks remain”
Q4 2012“Outlook 2013:
how CFOs are preparing for 2014”
Q1 2013“Concerns dominate”
Q2 2013“Call for action”
Q3 2012“The New Normal
is here to stay“
Q2 2012“Corporates
are defensive“
Q3 2013“A new mood”
Q4 2013“Growth ambitions”
Q4 2014“Reasonable year, prudent growth”
Q1 2015“Favourable business
conditions give confidence
for expansion”
Q1 2014“More appetite
for risk”
Q3 2014 “Amid more uncertainty,
declining optimism”
Q2 2014“Concern over
government policies clouds current optimism”
Optimism
Looking Back: Business confidence through the financial and economic cycle (2009-2015)
Deloitte Belgian CFO Survey First quarter 2015 5
Looking Back: Business confidence through the financial and economic cycle (2009-2015)
Mor
e O
ptim
istic
Less
Opt
imis
tic
Q2 2009 “Preparing for a slow recovery”
Q1 2009“First signs of optimism in
uncertain times”
Q3 2009 “Financial
conservatism is back”
Q4 2009“Diverging fortunes
going into 2010”
Q1 2010“Financial
repair, economical uncertainty”
Q2 2010“Confidence
grows”
Q3 2010“Higher confidence,
good results”
Q4 2010“Planning for
growth”
Q1 2011“Call for caution” Q2 2011
“At a turning point”
Q3 2011“Results under
pressure”
Q4 2011“Outlook 2012:
a very difficult year”
Q1 2012“Anxiety has eased,
but plenty ofrisks remain”
Q4 2012“Outlook 2013:
how CFOs are preparing for 2014”
Q1 2013“Concerns dominate”
Q2 2013“Call for action”
Q3 2012“The New Normal
is here to stay“
Q2 2012“Corporates
are defensive“
Q3 2013“A new mood”
Q4 2013“Growth ambitions”
Q4 2014“Reasonable year, prudent growth”
Q1 2015“Favourable business
conditions give confidence
for expansion”
Q1 2014“More appetite
for risk”
Q3 2014 “Amid more uncertainty,
declining optimism”
Q2 2014“Concern over
government policies clouds current optimism”
Optimism
Looking Back: Business confidence through the financial and economic cycle (2009-2015)
6
Reduced financial and economic uncertainty, cheap money, upwardly revised economic outlooks for the Eurozone and a new political climate drive CFOs’ positive mood in the first quarter. Overall growth expectations for Belgium and the Eurozone remain modest - and are unlikely to return to pre-crisis levels anytime soon - but CFOs are optimistic about the financial prospects of their own organisations. Capital expenditure slowly moves up the CFOs priority list as expansionary business strategies gain ground. At the same time, a shortage of skilled labour enters the top 5 of CFOs’ concerns.
A positive moodCFOs entered 2015 in an optimistic mood, and corporates’ financial results for the first quarter did not disappoint. The survey’s “performance to budget” ratio has not been better since the end of 2010. The year started well, and optimism about the future prevails. 70% of our survey respondents have budgeted growth for 2015, both in terms of top-line and bottom-line.
Favourable business conditionsThe European Central Bank’s policy of quantitative easing led to record low interest rates, and a weaker euro. And although the European Central Bank’s formal objective is to keep inflation to a little under 2% – not boost the economy – the European economy clearly benefits. Following the publication of disappointing economic indicators in the US, the US Federal Reserve is unlikely to raise interest rates in the short run.
Money has never been cheaper. Funding is available and all major forms of funding are attractive. Bank borrowing has never been more attractive since the launch of the CFO Survey in the beginning of 2009. The cost of bank borrowing has further dropped, while it is available to most. Following the deleveraging process that took place over the past years, balance sheets are healthy and debt ratios have decreased, lowering the risks for banks to grant corporate loans. Many organisations are cash rich and have internal financing means available as well.
Belgium-based CFOs continue to positively evaluate the financial and economic priorities as set by the government, although the extreme enthusiasm we reported when the government came into office has faded. It seems difficult to manage the high expectations that have been created.
Favourable business conditions give confidence for expansion
Deloitte Belgian CFO Survey First quarter 2015 7
The pace of the economic recovery, the ability of their companies to compete in the market and the impact of regulatory changes continue to top the list of CFOs’ key concerns – as it has over the past five years. Almost 40% of survey respondents report sanctions against Russia are having a negative impact on their businesses. Few CFOs seem to worry about the stability of the Eurozone, notwithstanding difficult negotiations with Greece and the fact that a Grexit is no longer politically impossible.
ExpansionOngoing cost control and efficiency improvement remain important, but focus on growth strategies gained some ground in the first quarter. Risk appetite is high. The proportion of corporates that plan to decrease capital expenditure continues the steady decline that we have witnessed in the past six quarters. Merger and acquisition activity is in general expected to increase, but the vast majority of corporates focus on organic growth. 40% of CFOs have expansion through mergers and acquisitions on their list of business priorities.
Corporates see investment potential outside of the euro area, little within. This limits opportunities for companies that are mainly conducting their business within Europe. As a consequence, we observe that more internationally- oriented companies plan to increase capital expenditure compared to local firms (48% vs. 24% expecting CAPEX growth in the next year). Also their revenue expectations are slightly higher.
Structural reforms?Financial and economic policy making in Belgium remains for CFOs an important inhibitor to investment. Recent research with CFOs in 12 European countries indicated CFOs see national structural reforms as the most effective way to facilitate growth. Uncertainty will impact corporate behaviour and might weaken today’s risk appetite and investment intentions. Business-hostile policy poses a threat to recovery. The significant decrease in CFOs’ appreciation of taxation and labour market policies over the last quarter will hopefully not continue.
Thierry Van Schoubroeck, Partner,
8
Q1 2015 Summary: Better outlook for growth: higher appetite for expansion
CFOs entered the year in an optimistic mood:CFOs are positive about the financial prospects for their own companies, although to a lesser extent than a year ago.
Only 18% of CFOs report high or very high levels of uncertainty facing their businesses – similar to one year ago. Geopolitical concerns that added to the overall financial and economic uncertainty in the second half of last year have to some extent eased.
Mor
e op
timis
ticLe
ss o
ptim
istic
Net % of CFOs who are more/less optimistic about financial prospects for their company
'10 Q4
'11 Q1
'11 Q2
'11 Q3
'11 Q4
'12 Q1
'12 Q2
'12 Q3
'12 Q4
'13 Q1
'13 Q2
'13 Q3
'13 Q4
'14 Q1
'14 Q2
'14 Q3
'14 Q4
'15 Q1
'10 Q3
'10 Q2
'10 Q1
'09 Q4
'09 Q3
'09 Q2
'09 Q1
-100%
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
-18%
0%
22%17%
25%
44%40%
53%
26%
8%
-34%
-75%
-42%
-27%
-11%
-29%
-15%
34%30%
39%35%
8%
24%27%
12%
% of CFOs rating the general level of external financial and economic uncertainty high/very high
0%
10%
20%
30%
40%
50%
60%
2015 Q1
2014 Q4
2014 Q3
2014 Q2
2014 Q1
2013 Q4
2013 Q3
2013 Q2
2013 Q1
2012 Q4
2012 Q3
2012 Q2
2012 Q1
2011 Q4
2011 Q3
2011 Q2
21%
47%
51%
42%
53%
41%
37% 33%
27%26%
17%16%
12%
25%
33%
18%
Deloitte Belgian CFO Survey First quarter 2015 9
Optimism about the future, and relatively low levels of uncertainty continue to drive CFOs’ risk appetites. 41% of CFOs say that this is a good time to take additional risk onto their balance sheets.
% of CFOs who think now is a good time to be taking greater risk onto their balance sheets
5%
17%17%
21%23%
28%
31%
35%
41%
35%
30%
21%
22%21%
33%
36%
41%
35%
42%
24%
14%
19%19%
8%
13%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
'15 Q1
'14 Q4
'14 Q3
'14 Q2
'14 Q1
'13 Q4
'13 Q3
'13 Q2
'13 Q1
'12 Q4
'12 Q3
'12 Q2
'12 Q1
'11 Q4
'11 Q3
'11 Q2
'11 Q1
'10 Q4
'10 Q3
'10 Q2
'10 Q1
'09 Q4
'09 Q3
'09 Q2
'09 Q1
CFOs remain prudent about the strategic priorities for the next 12 months, but continued optimism translates into a mild increase in the importance of expansionary strategies.
CFO priorities: defensive vs. expansionary strategies
Arithmetic average of the % of CFOs who rated expansionary and defensive strategies as a strong priority for their businesses in the next 12 months. Expansionary strategies are introducing new products/services or expanding into new markets, expanding by acquisition and increasing capital expenditure. Defensive strategies are increasing productivity/efficiency, reducing costs, reducing leverage, disposing of assets and increasing cash flow.
Expansionary strategies Defensive strategies
20%
30%
40%
50%
2013 Q1
2013 Q2
2013 Q3
2013 Q4
2014 Q1
2014 Q2
2014 Q4
2015 Q1
2014 Q3
Revenues
Operating cash flow
Operating margins
Profit before taxes
Operating costs
Capital expenditure
Levels of cash and cash equivalents on balance sheet
Headcount
Discretionary spending, for instance on travel, training and marketing
Inventory levels
Financing costs
10
The CFOs’ budgets for growth, and revenue and operating margin forecasts that we reported in the previous quarter remain unchanged. Around two-thirds of the CFOs expect revenues, operating margins and profits before taxes to go up in the next 12 months. Companies that operate mainly within the Belgian market have somewhat lower growth ambitions than the internationally oriented organisations.
CFOs remain positive about the way the Belgian Federal Government is setting financial and economic priorities. But the government has not been able to meet the high expectations that were created at the time of the formation: as compared to the last quarter, enthusiasm has cooled down.
CFOs' expectations on the evolution of the following metrics in the next twelve months
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
72% 16% 12%
64% 15% 21%
63% 22% 15%
62%
42%
37%
36%
36%
20%
16%
12%
22%
20%
40%
51%
33%
56%
63%
54%
16%
38%
23%
15%
31%
25%
20%
33%
Increase Same level Decrease
Revenues
Operating cash flow
Operating margins
Profit before taxes
Operating costs
Capital expenditure
Levels of cash and cash equivalents on balance sheet
Headcount
Discretionary spending, for instance on travel, training and marketing
Inventory levels
Financing costs
-33%
-25%
-29%
-20%
-52%-44%
-27%
19%
64%
31%
-34%
-46%
-63%
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013Q2
2013 Q3
2014 Q1
2014 Q3
2014 Q4
2015 Q1
2014 Q2
2013 Q4
Perception by a net % of CFOs of the way the Belgian government is setting the right priorities for financial and economic policy making
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
Deloitte Belgian CFO Survey First quarter 2015 11
Most companies have budgeted growth for 2015, and at the end of the first quarter most survey respondents report that financials are on or above budgets. Performance to budget has not been better since 2010.
About 70% of our survey panel report their companies today meet both turnover and operating margin targets.
Promising first quarter financial performance
Comparison of the surveyed organisations' actual performance versus budget over time
Worse than expectedAs expectedBetter than expected
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
‘13Q4
‘14Q1
‘14Q2
‘14Q3
‘14Q4
‘15Q1
‘13Q3
‘10Q3
‘10Q4
‘11Q2
‘11Q3
‘11Q4
‘12Q1
‘12Q2
‘13Q1
‘13Q2
‘12Q3
‘12Q4
18%
41%
41%
‘10Q2
20%
38%
42%
12%
35%
53%
29%
37%
34%
50%
23%
27%
49%
22%
29%
37%
39%
24%
57%
23%
20%
45%
30%
25%
43%
22%
35%
57%
8%
35%
47%
35%
18%
54%
52%
32%
24% 32%
28%
40%
35%44%
35%
24%
30%31%
30%
40%
29%
32%
42%
27%22%
15%
As expected0%
10%
20%
30%
40%
50%
60%
24%28%
43%45%
33%
27%
Turnover
Operating margins
Comparison of the surveyed organisations' actual turnover & operating margins versus budget
Better than expected Worse than expected
12
The economic outlook and the competitiveness of their organisations remain on top of the list of key concerns – as they have in the past years. Shortage of skilled labour has moved up the list, coinciding with the increased focus an expansion.
European economic sanctions against Russia have a negative impact on the businesses of around 38% of CFOs, similar to the previous quarter.
Shortage of skilled labour starts to worry CFOs
CFOs' perceptions of the greatest concern for their businesses in the next 12 months
Economic outlook/growth
Competitive position in the market
Changes in regulation
Current geopolitical risks (Ukraine, Gaza, ISIS, Western Africa)
Shortage of (skilled) labour
Impact of Belgian financial & economic policy making
Deflation risk
Increasing sovereign risk
Access to capital/funding
Eurozone stability (Greece, UK)
Slow-down in China
Interest rates
Commodity prices
30%
22%12%
10%
8%
8%
4%2% 2%
2%
0%
0%
0%
Impact of current sanctions against Russia on CFO's company/business
1%2%
59%27%
11%
Positive impact
Slightly positive impact
No impact
Slightly negative impact
Negative impact
Deloitte Belgian CFO Survey First quarter 2015 13
CFOs are less upbeat about the growth of the Belgian economy: Only 45 % of CFOs expect Belgian GDP to grow by 0,6% or more.
CFOs' expectations for Belgian economic growth in 2015
16%
5%
40%
0%39%
Greater than 1%
0,6% to 1%
0,2% to 0,5%
-0,1% to 0,1%
-0,5% to -0,2%
-1% to -0,6%
Less than -1%
0%
0%
The Q1 predictions of real GDP growth by NBB and international institutions confirm less than 1% for Belgium and revise growth to 1.3% for the Eurozone in 2015.
Shortage of skilled labour starts to worry CFOs
Real GDP evolution: Belgium vs. the Eurozone
-1,0%
-0,5%
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
Belgium Eurozone
2010 2011 2012 2014* 2015*2013
*Source of data: Economic Indicators for Belgium N° 2015-13, National Bank of Belgium2014 & 2015 data are forecasts, the Belgian forecast is based on NBB estimates fromDecember 2014, Eurozone forecast on OECD data from November 2014
2,3%
1,6%
0,1%0,3%
1%1,3%
0,9%0,8%
-0,4%-0,7%
1,7%
14
While focusing on the priorities such as ongoing cost control and increasing productivity and efficiency, most growth business strategies have gained in significance in the first quarter of 2015.
The proportion of CFOs planning to increase capital expenditure remains well above 30%, while those planning a decrease further decline. Drilling into the details, it are mainly organisations with a broad international coverage that plan capex increases.
Higher growth projects drive expansion
% of CFOs who report that their capital expenditure is likely `to increase/decrease in the next 12 months
Incr
ease
Dec
reas
e
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-8%
14%
-4%
5% 3% 3%
20%
19%
2013 Q1
2013 Q2
2013 Q3
2013 Q4
2014 Q1
2014 Q2
2014 Q3
2014 Q4
2015 Q1
Capital expenditure (net % line)
7%
0% 20% 40% 60% 80% 100%
62%
57%
54%
52%
40%
39%
32%
19%
18%
13%
13%
10%
5%
2% 10% 88%
14% 81%
30%
19% 71%
57%
33%
40%
39% 7%
35% 13%
36%
46%
36%
20%
47%
18%
33%
69%
14%
31%
60%
23%
4%
5%Ongoing cost control
Increasing productivity/efficiency
Introducing new products/services
Expanding organically
Cost cutting
Increasing cashflow
Expanding into new markets
Expanding by acquisition abroad
Increasing focus on sustainability programmes
Expanding by acquisition in Belgium
Reducing leverage
Increasing capital expenditure
Disposing of assets
Raising dividends or share buy backs
Business strategies likely to be a priority for the CFOs’ businesses over the next 12 months (2015 Q1)
Strong priority Somewhat of a priority Not a priority
Deloitte Belgian CFO Survey First quarter 2015 15
Following last year’s gradual decline, and in line with corporates’ growth ambitions and the availability of financing, expectations for merger and acquisition activity has gone up again.
Net % of CFOs who expect M&A activity to increase over the next 12 months
0
20
40
60
80
100
'15 Q1
'14 Q4
'14 Q3
'14 Q2
'14 Q1
'13 Q4
'13 Q3
'13 Q2
'13 Q1
'12 Q4
'12 Q3
'12 Q2
'12 Q1
'11 Q4
'11 Q3
'11 Q2
'11 Q1
'10 Q4
'10 Q3
'10 Q2
'10 Q1
'09 Q4
'09 Q3
'09 Q2
'09 Q1
36%
69%
76%
89%
76%
90%84%
88%
74%70%
5%
55%
66%
59%53%
60%
73%
59%
50%
57%
36%30%
12%
24%
48%
Concerns about financial and economic policy making in Belgium inhibit new investments as do modest growth rates, both in Belgium and in the Eurozone. Secular and long-term growth for products or services continues to be seen as the most stimulating factor for investment decisions.
Net % of CFOs who perceive the following factors to have a positive/negative impact on their investment plans (current impact)
-80% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60%
51%39%
30%34%
-27%
33%30%
28%28%
19%22%
-12%
30%
-5%-22%
-18%
-23%-26%
30%33%
39%51%
34%
2014 Q4
Inhibiting Stimulating
2015 Q1
Secular or long-term growth for your products or services
Actual or expected growth in emerging markets
Availability of internal finance
Actual or expected growth in US, Japan, Asia-Pacific
Cost and availability of external finance
Actual or expected growth in the euro area
Actual or expected growth in Belgium
Financial and economic policy making in Belgium
16
Companies with lower share of turnover derived from abroad ('local companies') are significantly discouraged from investment by financial and economic policy making in Belgium, while the long-term growth for their products and services and availability of internal finance are the key stimuli for new investment. International organisations look for growth outside Belgium and the euro area.
Only small local companies see the actual or expected economic growth in Belgium as a positive factor contributing to new investment decisions.
-40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
35%34%
58%
8%
65%29%
29%58%
6%
53%38%
22%
32%35%
-6%
0%
0%
-12%
-8%
-19%
-31%
-19%-24%
3%
70 - 100% of turnover derived from abroad
31 - 69% of turnover derived from abroad
0 - 30% of turnover derived from abroad
Stimulating/Inhibiting factors to investment plans (current impact) - local vs. international companies
Secular or long-term growth for your products or services
Actual or expected growth in US, Japan, Asia-Pacific
Actual or expected growth in emerging markets
Cost and availability of external finance
Availability of internal finance
Actual or expected growth in Belgium
Actual or expected growth in the euro area
Financial and economic policy making in Belgium
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%
36%43%44%
26%39%
50%36%
16%
8%36%
39%
36%
22%25%
-3%
-12%
53%38%
-21%
58%-28%
-50%
-8%-11%
-33%
-22%
Large companies (turnover > €1bn)
Medium companies (turnover €100mn - €999mn)
Small companies (turnover < €100mn)
12%
12%
Stimulating/Inhibiting factors to investment plans (current impact) - small vs. large companies
Secular or long-term growth for your products or services
Actual or expected growth in US, Japan, Asia-Pacific
Availability of internal finance
Actual or expected growth in emerging markets
Cost and availability of external finance
Actual or expected growth in Belgium
Actual or expected growth in the euro area
Financial and economic policy making in Belgium
Deloitte Belgian CFO Survey First quarter 2015 17
Bank borrowing is available to most, and is cheap.
Money is cheap and financing is available. All main sources of funding are attractive.The attractiveness of bank borrowing has further increased and remains at the highest levels in the history of the CFO survey.
The dominant view amongst CFOs is that interest rates will remain low. The European Central Bank has only recently started its programme of quantitative easing, while the US Federal Reserve is not expected to raise interest rates in the short term following disappointing news from the US economy.
Money is cheap and available
Cre
dit
is c
ostly
Cre
dit
is c
heap
Cre
dit
is a
vaila
ble
Cre
dit
is u
nava
ilabl
e
Net % of CFOs reporting credit is costly and net % reporting credit is available
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
'15 Q1
'14 Q4
'14 Q3
'14 Q2
'14 Q1
'13 Q4
'13 Q3
'13 Q2
'13 Q1
'12 Q4
'12 Q3
'12 Q2
'12 Q1
'11 Q4
'11 Q3
'11 Q2
'11 Q1
'10 Q4
'10 Q3
'10 Q2
'10 Q1
'09 Q4
'09 Q3
'09 Q2
'09 Q1
Cost of credit Availability of credit
CFOs' expectations about the evolution of long-term interest rates in the next 6 months
Increase significantly
Increase somewhat
No change
Decrease somewhat
Decrease somewhat
20%
51%
28%
1%
0%
Net % of CFOs reporting the following sources of funding as attractive/unattractive
Att
ract
ive
Una
ttra
ctiv
e
Bank borrowings EquityCorporate debt
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
'15 Q1
'14 Q4
'14 Q3
'14 Q2
'14 Q1
'13 Q4
'13 Q3
'13 Q2
'13 Q1
'12 Q4
'12 Q3
'12 Q2
'12 Q1
'11 Q4
'11 Q3
'11 Q2
'11 Q1
'10 Q4
'10 Q3
'10 Q2
'10 Q1
'09 Q4
'09 Q3
'09 Q2
'09 Q1
18
Although CFOs are still positive overall about the financial and economic priorities that the government has set, much of the initial enthusiasm has faded. As compared to last quarter, CFOs have become significantly less appreciative of the policy areas they rated as top priorities: labour market policy and taxation policy. It is up to the government to either manage expectations or take action.
CFOs in 12 European countries shared their opinion on the most effective way in which the current EU/euro area growth crisis could be resolved. They suggest that more national structural reforms should be put in place to increase competitiveness. CFOs remain very much in favor of the euro, and the benefits of supranational authorities. Less alignment is reached on other topics.
The text references the European CFO
survey, a shared initiative between European
countries who have aligned some of their
survey questions. CFOs from the following
12 countries expressed their opinion on the
special EU question: Austria, Belgium, Finland,
Germany, Ireland, Italy, Netherlands, Norway,
Russia, Spain, Switzerland, UK.
Difficult to keep up with all the promises
-60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60%
42%38%
5%
-9%-7%
-10%
-10%
-28%-26%
39%
38%-1%
7%
-38%
-27%
-6%-25%
-1%
-27%
-31%
36%
-31%
Net % of CFOs evaluating appropriateness of the current policy settings in the following areas for the long-term success of business in Belgium
Monetary policy, including interest rates, inflation and the availability of credit (Eurozone policy)
Labour market
Education & training
Immigration policy
Public expenditure
Financial regulation
Urban & town planning
Infrastructure
Energy policy
Taxation policy
General levels of regulation affecting business
Inappropriate Appropriate
2015 Q1
2014 Q4
0% 20% 40% 60% 80% 100%
47%
33%
29%
24%
23%
22%
11%
7%
6%
1%1%
1%11% 88%
97%
53% 41%
40%
49%
46% 25%
58%
59%
68%
53%
25%
36%
68%
17%
10%
19%
17%
14%More national structural reforms to increase competitiveness (e.g.
labour market and tax reforms, liberalisation of service market)
Boost EU single market initiatives (e.g. energy union, single digital market)
Deepen European integration towards a fiscal and political union (e.g. issuance of Eurobonds, direct fiscal transfers, EU tax)
Balance government budgets and reduce public debt
Enter into global trade agreements with other regions (e.g. TTIP)
Increase public / pan-European investment spending (e.g. in infrastructure, innovation)
More aggressive monetary easing by the European Central Bank (e.g. buying sovereign and corporate bonds)
Reduce number of eurozone members
Reduce or stop austerity programmes and boost fiscal spending
Dissolve the euro
Redistribute political powers and responsibilities to national governments
Verry effective Effective Not effective
CFOs’ perceptions on the effectiveness of the following policies on resolving the current EU/euro area growth crisis
Deloitte Belgian CFO Survey First quarter 2015 19
Extent to which Brussels government policy will have a positive impact on businesses in Belgium, also in the long-term (2015 Q1)
Very positive
Positive
Neither positive nor negative
Negative
Very negative
72%
11%
2%
15%
0%
Extent to which Brussels government policy will have a positive impacton businesses in Belgium, also in the long-term (2014 Q4)
Very positive
Positive
Neither positive nor negative
Negative
Very negative
72%
15%
1%
10%
1%
On the Regional level, CFOs remain most positive about the extent to which Flemish government policy will have a positive impact on businesses in Belgium, also in the long term. Compared to last quarter, we observe that while opinion about the Brussels and Walloon governments is fairly stable, the view of the Federal and Flemish governments became less positive.
Extent to which Federal government policy will have a positive impact on businesses in Belgium, also in the long-term (2015 Q1)
Very positive
Positive
Neither positive nor negative
Negative
Very negative38%
46%
14%
1%1%
Extent to which Federal government policy will have a positive impact on businesses in Belgium, also in the long-term (2014 Q4)
Very positive
Positive
Neither positive nor negative
Negative
Very negative
66%
25%
4%3% 1%
20
Extent to which Flemish government policy will have a positive impact on businesses in Belgium, also in the long-term (2015 Q1)
Very positive
Positive
Neither positive nor negative
Negative
Very negative
44%41%
1%
9% 5%
Extent to which Flemish government policy will have a positive impact on businesses in Belgium, also in the long-term (2014 Q4)
Very positive
Positive
Neither positive nor negative
Negative
Very negative
54%39%
1%1%
4%
Extent to which Walloon government policy will have a positive impact on businesses in Belgium , also in the long-term (2015 Q1)
Very positive
Positive
Neither positive nor negative
Negative
Very negative
52%
23%
9%
0%
15%
Extent to which Walloon government policy will have a positive impact on businesses in Belgium, also in the long-term (2014 Q4)
Very positive
Positive
Neither positive nor negative
Negative
Very negative
55%
22%
11%
0%
12%
Deloitte Belgian CFO Survey First quarter 2015 21
Profile Q1 survey participants
A total of 85 CFOs active in a variety of industries completed our 2015 first-quarter survey. 23% of the participating companies have a turnover of over €1 billion, 45% of between €100 million and €1 billion, and 32% of less than €100 million.46% of the participating companies derive up to 30% of their revenues from outside Belgium, 21% between 31% and 69%, and 33% derive more than 69% of their revenues from outside Belgium.
Industry sector
26%
16%
10%9%
9%
8%
8%
5%
4%
3%3% 1%
Manufacturing
Banking/finance/insurance
Retail/wholesale
Construction/mining
Services/consulting
Transport
Technology
Healthcare/pharmaceuticals
Energy/utilities
Real estate
Leisure/entertainment
Communication/media
Turnover
< €100 mn
€100 - €999 mn
> €1 bn32%
46%
23%
% of revenues derived from outside Belgium
0% - 30%
31% - 69%
70% - 100%
46%
21%
33%
22
The Deloitte Belgian CFO Survey is produced by Thierry Van Schoubroeck, Peter Hajnîk, Romana Jelinkova and Maarten Vyncke.
A note on methodologyin response to the current financial economic situation. If you participated in the survey and would like to receive information about non-reported questions, do not hesitate to contact us.
Some of the charts in the Deloitte CFO Survey show the result in the form of a net % balance. This is the percentage of respondents reporting, for instance, that bank credit is attractive minus the percentage saying bank credit is unattractive. This is a standard way of presenting survey data.
The 2015 first quarter survey took place between March 9th and March 23rd, 2015. A total of 85 CFOs completed our survey. The participating CFOs are active in variety of industries. 23% of the participating companies have a turnover of over €1 billion, 46% of between €100 million and €1 billion and 32% of less than €100 million.
We would like to thank all participating CFOs for their efforts in completing our survey. We hope the report makes an interesting read, clearly highlighting the challenges facing CFOs, and providing an important benchmark to understand how your organisation rates among peers.
Delivering the voice of the CFO community
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's more than 195,000 professionals are committed to becoming the standard of excellence.
© May 2015, Deloitte ConsultingDesigned and produced by the Creative Studio at Deloitte, Belgium.
Joël Brehmen Finance Lead, [email protected]+ 32 2 800 22 32
ContactThierry Van SchoubroeckPartner, CFO [email protected]+ 32 2 749 56 04