The Deloitte/SEB CFO Survey Solid signals · 2020. 5. 19. · The Deloitte/SEB CFO Survey | 3...

The Deloitte/SEB CFO SurveySolid signalsSpring 2017

The Deloitte/SEB CFO Survey | 2

The Deloitte/SEB CFO SurveyThe Deloitte/SEB CFO SurveySpring 2017

We are excited to present the Spring 2017 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 1,600 CFOs based in 19 European countries.

Tuomo Salmi CFO Program Leader Deloitte

Mari Lappalainen Finance Leader Deloitte

Ville Lähde Financial Strategy SEB

Spring 2017

Views were gathered from 1,600 CFOs in 19 European countries


SummaryThe Deloitte/SEB CFO SurveySpring 2017

Summary After the economically and politically treacherous winter period, the first quarter survey indicates Finnish CFOs are adamant in their beliefs that their prospects have turned significantly for the better. The weak signals from our third quarter 2016 survey are growing louder, marking the record setting pace in optimism. Optimism is higher than ever in our survey’s history (dating back to the third quarter of 2010). Finland is only shadowed by Sweden and Austria where optimism is soaring.

This spring the survey digs deeper into the instability caused by Brexit. CFOs in Finland see the uncertainty is fading and the political environment is stabilizing after Brexit. They give low odds on new Member State exits. Not even the looming trade wars are affecting their investment plans—95% have not made any changes.

Rising optimism accelerated by a recovering economy is already increasing the risk appetite of Finnish CFOs. Concern over demand has dropped and 59% say that it is a good time to take more risk on their balance sheets. Risk appetite in Finland is one of the highest in Europe, and it is remarkably higher than that of Sweden, where only 26% are arguing the same.

Staggering 95% of Finnish CFOs say that risks of protectionism and looming trade wars don’t influence companies’ investment plans.

In the past few years, companies have controlled their costs prudently, and now, when the economy is taking a shift for better, the strategy will pay dividends. Key financial metrics indicators are in the positive. Not only are revenues expected to increase, but also operating margins and capital expenditures are on the growth track.

Although the amount of companies considering to make strategic and financial investments in Finland in rising, the macro-economic turn will unlikely have a significant impact on hiring. Finnish companies were amongst the unlikeliest to hire more employees compared to their European counterparts, scoring the lowest net margin out of all countries.


SummaryThe Deloitte/SEB CFO SurveySpring 2017

Summary

Optimism is at an all-time high, net optimism at 48%. Falling short of only Austria 52%, and Sweden 60%

Key findings

59% agree it is a good time to take more risk on the balance sheet

Strategic investments in Finland are up, 14% considering those choices

Key metrics to improve in the next 12 months, 68% will increase revenues and 56% see their operating margins improving

CFOs are hesitant to hire in Finland in the coming 6 months, with only 19% hiring more, down from 31% last fall


12%

Finland EU Eurozone Non-Eurozone

Hot Topic

Chart 1. Which of the following options would be desirable to ensure the future success of the European Union and/or its Member States?

Finnish CFOs see less need for increased economic and political integration than their European peers (23% vs. 40%). Non-Eurozone CFOs believe more strongly that EU integration should decrease than CFOs in Eurozone countries. In Finland, 16% of CFOs are satisfied with the current EU compared to only 5% in other EU countries.

The Deloitte/SEB CFO SurveySpring 2017

Hot Topic

23%

16%

4%

46%

Increased economic and political integration

Multi-speed Europe (increased integration for some Member States and looser alliance between others)

Disintegration of the union

No significant change (continuation of the ‘status quo’)

5%

40%

5%1%

49%

4%

40%

4%1%

50%

13%

30%

6%

12%

38%

Don’t know / prefer not to say

EU integration


Hot Topic

37%RU

30%UK

32%IE

33%NO

29%

20%NL

29%FR

28%PT

34%

AT

31%

PL

45%

IT

34%

CH

18%

BE

Chart 2. What likelihood would you assign to more Members States of the European Union leaving, or voting to leave, the bloc in the next five years?

EU CFOs assign a 32% likelihood that more Member States will leave the EU, but Finnish CFOs are slightly more positive (29%). In the Benelux countries there are the most respondents who assign a 0% probability of more Member States leaving. Italian CFOs give the highest likelihood of more countries leaving.

Average probability


Hot Topic

FI

29%

GR

42%DK

More exits?


Business Confidence

+47%RU

+14%UK

+29%IE

+40%NO

+48%

+60%SE

+43%NL

-10%

TR

+19%DE

+21%FR

+39%PT

+52%

AT

+18%

PL

+12%

IT

+18%

CH

+38%

BE

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

Optimism in Finland is higher than ever during the history of this research, since the 2010s. Finland is ranked among the most optimistic countries in Europe (a net balance of 48%). Optimism is the highest in Sweden (net optimism is 60%) and the average net optimism in Europe is 24%. Optimism is the lowest in Turkey and Greece.

Net optimism (difference between optimistic and less optimistic)

Financial prospects


Business Confidence

FI

-6%

GR

+42%

ES

+28%DK


Prospects & Concerns

Chart 4. What are the greatest concerns for your company in 2017?

The outlook and competitiveness of the Finnish economy have continued to improve, but those are still biggest concerns together with demand. Compered to six months ago, the cost of raw material/commodities has become a bigger concern.

(In brackets results from The Deloitte/SEB CFO Survey Fall 2016)

Greatest concerns



Cost of labour

Other

Foreign competition 29% (33%)

Cost of raw material / commodities

Outlook of Finnish economy and competitiveness 47% (51%)

Demand 53% (78%)

32% (29%)

25% (20%)

20% (20%)



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

The emphasis of the Nordic market and improved economic outlook affect companies’ interest in making strategic investments in Finland.


Most preferred way to use money



Financial investment abroad

Dividend to shareholders

Financial investment in Finland 14% (5%)

Pay down debt

Strategic investment in Finland 21% (11%)

Strategic investment abroad 23% (32%)

18% (30%)

5% (18%)

4% (2%)



+70%RU

+49%UK

+75%IE

+54%NO

+56%

+80%SE

+48%NL

+26%

TR

+64%DE

+63%FR

+57%PT

+75%

AT

+69%

PL

+44%

IT

+54%

CH

+69%

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

In Finland, cost control is prudent and CFOs see positive growth in net sales. 56% of Finnish CFOs expect their revenues to increase over the next 12 months. At the European level, profitability and capital utilization are at the lowest in the UK. Sweden is currently riding strongly, net sales and profitability are among the highest.

Net balance (difference between increase and decrease)

Change in revenues



FI

+40%

GR

+68%

ES

+40%DK



+51%RU

-26%UK

+13%IE

+41%NO

+46%

+62%SE

+40%NL

+3%

TR

+22%DE

+35%FR

+21%PT

+3%

AT

+33%

PL

+45%

IT

-9%

CH

+57%

BEChart 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 Sweden, Belgium, and Russia are most optimistic, with well over half anticipating an increase in margins. Also Finnish CFOs are broadly expecting still rising operating margins (46%). Only revenue expectations in Switzerland (-9%) and the UK (-26%) are negative.


Change in operating margins



FI

+18%

GR

+39%

ES

+31%DK



+4%RU

-22%UK

+42%IE

+25%NO

+28%

+14%SE

+52%NL

-1%

TR

+36%DE

+42%FR

+39%PT

+55%

AT

+34%

PL

+31%

IT

+16%

CH

+57%

BE

Chart 8. In your view, how are capital expenditures for your company likely to change over the next 12 months?

An improved European economy is seen in capital expenditure expectations where an overall net balance has risen from +8% to +27% and only the UK reporting negative net balance (-22%). Finnish capex expectations have recovered from a low level to above the EU average (+28%).


Change in capital expenditures



FI

+20%

GR

+33%

ES

+23%DK



Chart 9. To what extent is each of the following business strategies likely to be a priority for your business over the next 12 months?

CFOs in Finland see organic growth as the most preferred strategy in the next 12 months (77%). From more defensive strategies, cost control and reductions are still important for Finnish CFOs.


Priorities in business strategies



Expanding into new markets

Expanding by acquisition

Introducing new products/services 39% (40%)

Cost reduction

Cost control 66% (53%)

Organic growth 77% (69%)

40% (33%)

25% (33%)

24% (38%)



Chart 10. During the next 12 months, in what region do you expect your company to have the best opportunities for growth?

The Nordic market is still the most important region. The importance of Asia Pacific has fallen to a moderately low level, but Russia’s importance for Finland has risen slightly.

Best opportunities for growth



+11%

America

+16%

Other EMEA

countries

+58%

Nordics

+4%

Russia

+9%

Asia Pacific

+2%

Other



+10%RU

-28%UK

+63%IE

+7%NO

0%

+18%SE

0%NL

+1%

TR

+19%DE

+23%FR

+17%PT

+17%

AT

+40%

PL

+2%

IT

+17%

CH

+51%

BE

Chart 11. In your view, how is the number of employees for your company likely to change over the next 12 months?

Finnish CFOs don’t see a significant change in the number of employees of Finnish companies in the next six months (net optimism 0%). Compered to six months ago European CFOs are more positive (net optimism 12% vs. 4%).

Eurozone CFOs are still more optimistic about the employment outlook in their businesses than other European CFOs. 38% of Eurozone CFOs expect to hire more employees over the next 12 months.

(combined results from questions regarding employees abroad and employees in Finland)


Expected change in number of employees



FI

+16%

GR

+30%

ES

+13%DK


Finance

+6%RU

+88%UK

+10%IE

+59%NO

+55%

+70%SE

+70%NL

-14%

TR

+64%DE

+52%FR

+63%PT

+62%

AT

+45%

PL

-5%

IT

+71%

CH

+72%

BE

Chart 12. How do you currently rate bank borrowing as a source of external funding for companies?

Bank borrowing is the most preferred source of funding for CFOs in Europe, with a net balance of 50% in the EU. Swedish companies strongly prefer bank borrowing (net balance +70%), while Finnish companies are close to the EU average (+55%).

Net balance (difference between attractive and unattractive)

Attractiveness of bank borrowing


Finance

FI

+29%

GR

+71%

ES

+23%DK


Finance

-11%RU

+72%UK

+8%IE

+33%NO

+34%

+35%SE

+25%NL

-33%

TR

+42%DE

+53%FR

+46%PT

+4%

AT

-3%

PL

-61%

IT

+27%

CH

+50%

BE

Chart 13. How do you currently rate corporate debt as a source of external funding for companies?

Corporate debt is the second favorite external funding source for European companies (net balance +32%).


Attractiveness of corporate debt


Finance

FI

+28%

GR

+56%

ES

-12%DK


Finance

-37%RU

+17%UK

+21%IE

+51%NO

-18%

-8%SE

+5%NL

+13%

TR

+41%DE

+8%FR

+28%PT

-4%

AT

-28%

PL

-74%

IT

+8%

CH

+16%

BE

Chart 14. How do you currently rate equity as a source of external funding for companies?

Equity is the least attractive source of funding for CFOs in Europe. Finnish companies see equity as the least preferred funding source (net balance -18%) and well below the EU average (net balance +6%).


Attractiveness of equity


Finance

FI

+22%

GR

+14%

ES

-13%DK


Finance

+50%RU

0%UK

+65%IE

0%NO

+13%

+45%SE

0%NL

+25%

TR

+61%DE

+32%FR

+68%PT

+50%

AT

+28%

PL

-3%

IT

+58%

CH

+22%

BE

Chart 15. How do you currently rate internal financing as a source of funding for companies?

Internal financing is again the second most attractive source of funding for CFOs in Europe with 51% viewing internal financing as attractive, compared to 13% who consider it is unattractive. In Finland, internal financing is seen as attractive by 36% of respondents, which is 10% less compared to the previous survey.


Attractiveness of internal financing


Finance

FI

+51%

GR

+33%

ES

+61%DK


Finance

Chart 16. How is the lending attitude of financial institutions toward your company perceived?

External financing is available and Scandinavian banks have strong balance sheets which support lending activities. The lending attitudes have been very positive already for a while and it seems that this situation will only continue. 79% of Finnish CFOs see that the lending attitude as either very favorable or favorable.


Lending attitude of financial institutions


Finance

79%(82%)

14%(9%) 7%

(9%)


Finance

-6%RU

-48%UK

-50%IE

-52%NO

+18%

-48%SE

-20%NL

-79%

TR

-49%DE

-29%FR

-60%PT

-41%

AT

-43%

PL

-30%

IT

-24%

CH

-13%

BE

Chart 17. Is this a good time to be taking greater risk on your balance sheet?

Across Europe risk appetite is low (net balance -35%). In Sweden, Norway, and Denmark net balance is lower than on average in Europe, close to -50%. Risk appetite has risen sharply from -11% to +18% in Finland, and is the highest in Europe.

Net balance (difference between yes and no)

Taking risks on your balance sheet


Finance

FI

-65%

GR

+8%

ES

-46%DK


Macroeconomic Context

Chart 18. Growth will accelerate further

Finnish GDP growth is supported by positive sentiment indicators which are signalling a broad-based acceleration in economic activity

Source: Statistics Finland, European Commission



-1,5

-1,0

0,0

1,0

2,0

201720162015201480

100

110

90

Statistics Finland GDP indicator, lhs

GDP, year-on-year percentage change, lhs

European Commission indicator, rhs

GDP growth



Chart 19. Industrial production has steadily increased

After four years of falling industrial production, output has finally rosen.

Source: Eurostat



2017201620152014201320122011

8

12

4

0

-4

-6

Finland

Eurozone

Sweden

Industrial production

Year-on-year percentage change



Chart 20. Industry and capital spending drive growth

Capital spending rebounded in 2016 after several weak years. Rising capacity utilisation and higher order booking at companies will also contribute to a broad increase in business investments ahead.

Source: Eurostat



Finland

Eurozone

Sweden2016201520142013201220112010

12

8

4

0

-4

-8

Industrial capital spending

Year-on-year percentage change



Chart 21. Budget deficit remains in Finland

Despite better economic conditions in Finland, budget deficit is estimated to remain during 2017 and 2018 which will increase slightly gross government debt as a percentage of GDP.

Source: Eurostat



20162012200820042000

Finland

Eurozone

Sweden

8

4

0

-4

-7

Budget deficit

Percent of GDP



Chart 22. The labour market is improving but the decline in unmployment has been slower than estimated

Despite improved economical activity the jobless rate has remained at 8.7% for the eight straight months in March 2017.

Source: Eurostat



20172016201520142013201220112010

15

6

12

9

Finland

Eurozone

Sweden

Unemployment rate

Percent


About the SurveyThe Deloitte/SEB CFO SurveySpring 2017

About the Survey

This is the first-quarter edition survey of Chief Financial Officers and Groups Finance Directors in Finland. The survey is carried out as a web-based questionnaire. 57 CFOs participated, including a good mix of privately held and publicly listed medium, large, and multinational companies across a broad range of industries. 77% of respondents are from companies that have an annual turnover of more than 100 million euros.

Just like last fall, CFO Survey was conducted simultaneously in other European countries. The European CFO Survey gathered opinions of over 1,600 CFOs in 19 European countries.

Writers & Contributors

The survey was produced by Tuomo Salmi, Partner, CFO Program Leader, Deloitte; Mari Lappalainen, Director, Finance Leader, Deloitte; and Ville Lähde, Financial Strategy, SEB.

The survey was written by Juha Lintula, Deloitte; Piia Inkinen, Deloitte, Mari Nikitin, Deloitte and Ville Lähde, SEB. Visual design was made by Kristina Jalonen, Deloitte.

Please visit www.deloitte.fi or www.seb.fi for the latest and past copies of the survey and other publications.

Contacts

Tuomo [email protected]

Mari [email protected]

Ville Lä[email protected]

http://www.deloitte.fi

http://www.seb.fi

About DeloitteIn Finland, Deloitte & Touche Oy is the member firm of Deloitte Touche Tohmatsu Limited, and services are provided by Deloitte & Touche Oy and its subsidiaries. In Finland Deloitte is among the nation’s leading professional services firms, providing audit, tax, legal, consulting, and financial advisory services through 450 people in 3 cities. Known as an employer of choice for innovative human resources programs, Deloitte is dedicated to helping its clients and its people excel. For more information, please visit our website at www.deloitte.fi.

About SEBSEB is a leading Nordic financial services group. As a relationship bank, SEB in Sweden and the Baltic countries offers financial advice anda wide range of financial services. In Denmark, Finland, Norway and Germany, the bank’s operations have a strong focus on corporateand investment banking based on a full-service offering to corporate and institutional clients. The international nature of SEB’s businessis reflected in its presence in some 20 countries worldwide. The Group has about 16,000 employees. For more information, please visitwww.sebgroup.com.

© 2017 Deloitte & Touche Oy. Group of Companies

The Deloitte/SEB CFO Survey Solid signals · 2020. 5. 19. · The Deloitte/SEB CFO Survey | 3...

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