The Deloitte Belgium CFO Survey First quarter 2017 Edition. This survey is a clickable pdf

Transcription

1 The Deloitte Belgium CFO Survey First quarter 2017 Edition This survey is a clickable pdf

2 Favourable business environment drives expansion Deloitte CFO Survey 2017 Dashboard Click on the dashboard frames to see a detailed overview General environment Business priorities Optimism Expansionary focus CFOs entered the year in a positive mood. CFO survey participants were already optimistic about the outlook for 2017 three months ago, and at the end of the first quarter, this has not changed. Financial and economic uncertainty has decreased and corporates focus on expansion. Growth plans and corresponding headcount requirements are ambitious and as a result, CFOs are concerned about the availability of sufficient skilled labour. Economic uncertainty Risk appetite Turnover growth Belgian economic growth Bank borrowing availability Bank borrowing costliness Financing options Top 3 CFOs concerns: 1. Competitive position 2. Shortage of (skilled) labour 3. Economic outlook/ growth Attractiveness bank borrowings Attractiveness corporate debt Capital expenditure growth Headcount growth Discretionary spending growth Policies Appropriateness of financial and economic policies Top 3 CFOs priorities: 1. Organic growth 2. Increasing productivity/ efficiency 3. On-going cost control Click to read more... Interest rate evolution Attractiveness equity Financial leverage Attractiveness internal financing This quarter s hot topics

3 Corporates remain overall optimistic about the financial prospects of their organisations. However larger companies and companies with important international activities are more optimistic as are the smaller organisations that have a more prominent focus on local markets. The outlook looks promising, and current performance is good: at the end of the first quarter, the vast majority of companies financial performance is on budget. Few are out- or underperforming as compared to the budget. Notwithstanding Brexit discussions, upcoming elections in several European countries and the new administration in the US, uncertainty decreased and is today at the lowest level we have witnessed since the launch of the Deloitte CFO survey in Funding remains attractive and bank borrowing is widely available and cheap. CFOs expect interest rates to go up in the next 12 months, but the increase will likely remain modest. Balance sheets are underleveraged and many corporates have internal financing options available. Appetite for risk Following the optimistic mood and reduced financial and economic uncertainty, risk appetite is up again and close to the highest levels in recent years. Almost half of survey participants report it is a good time to add additional risk to the balance sheet. Increased risk appetite is also reflected in business priorities: overall expansionary strategies are more important than defensive strategies, although cost cutting and efficiency improvement remain top priorities. Focus on growth As a consequence, planned capital expenditure continues its upward trend. Today, 6 of CFOs report capital expenditure will increase in the next 12 months, up from 5 last quarter and 45% one year ago. And other investment indicators point towards further growth and expansion as well: 65% plan to increase headcount, up from 43% last year and discretionary spending (including marketing, training, travel, etc.) is likely to further increase as well. CFOs are upbeat about growth potential, with 75% budgeting top line growth and 73% bottom line growth this year. Concerns With these positives, CFOs remain above all concerned about the competitiveness of their organisations. In this respect, they remain disappointed in the appropriateness of financial and economic policy and the impact it has on their competitiveness. More in particular the taxation policies are not seen as positive contributors to the success of business in Belgium. Following the growth ambitions and projected headcount growth, CFOs share also concerns on the availability of skilled labour to satisfy recruitment needs. Future of the EU This quarter, we polled whether CFOs expected that following Brexit other EU member states would leave or vote to leave the Union. The vast majority of respondents only assign a low probability to this scenario. Beginning of March, European Commission President Juncker presented five scenarios for how the Union could evolve by Going forward, CFOs are in favour of a multi-speed Europe, with increased integration for some member states and looser alliance between others. Thierry Van Schoubroeck Partner The macroeconomic backdrop to the Deloitte CFO Survey 2017 Continuing political uncertainty including the Dutch general election, the run up to formal Brexit negotiations and some high-profile complications for the Trump administration failed to derail the global recovery in the first quarter. A number of leading global growth indicators strengthened, with German business confidence reaching a near three-year high, optimism among UK manufacturers rising to its highest level since 1995 and US consumer confidence hitting its highest level since July For the first time since 2010, activity is picking up in both developed and emerging markets this year. Oil prices softened slightly in the first quarter but remained well above their levels at the start of Stronger growth and rising commodity prices drove up inflation across the West. With euro area growth and inflation accelerating, the European Central Bank signalled victory in its fight against deflation. The Federal Reserve raised interest rates to 1. and stuck with previous projections for two further rate increases this year. UK and US equity markets remained at or near record highs, although rising rate expectations led to a sell-off in government bonds. Ian Stewart, Deloitte UK Chief Economist

4 Looking back: Favourable business environment drives expansion More Optimistic Less Optimistic 2009 Financial conservatism is back Optimism 2010 Financial repair, economical uncertainty 2009 Diverging fortunes going into Confidence grows 2010 Planning for growth 2010 Higher confidence, good results 2011 Call for caution 2011 Results under pressure 2011 At a turning point 2012 Anxiety has eased, but plenty of risks remain 2012 Outlook 2013: how CFOs are preparing for The New Normal is here to stay 2013 Concerns dominate 2013 A new mood 2013 Call for action 2013 Growth ambitions 2014 More appetite for risk 2014 Concern over government policies clouds current optimism 2014 Amid more uncertainty, declining optimism 2014 Reasonable year, prudent growth 2015 Favourable business conditions give confidence for expansion 2015 Solid mid-year financials 2015 Good performance amid the haze 2015 Cautious investment towards growth 2016 Optimism fades, but growth ambitions hold 2016 Post Brexit Vote Outlook 2016 Optimism is close to recent years highs 2016 Persist focus on investment 2017 Favourable business environment drives expansion 2011 Outlook 2012: a very difficult year 2012 Corporates are defensive

5 A favourable business environment Optimism General environment Net % of CFOs who are more/less optimistic about the financial prospects for their company Economic uncertainty Risk appetite Turnover growth Belgian economic growth More optimistic % 53% 26% 39% 34% 35% 3 27% 24% 23% 23% 37% 38% Concerns 1 8% 12% 12% 8% 9% 8% 11% Actuals performance vs. budget Less optimistic % -11% -15% -27% -29% -13% -5-42% '10 '10 '10 '11 '11 '11 '11 '12 '12 '12 '12 '13 '13 '13 '13 '14 '14 '14 '14 '15 '15 '15 '15 '16 '16 '16 '16 '17

6 A favourable business environment Optimism General environment % CFOs rating the general level of external financial and economic uncertainty facing their business as high Economic uncertainty 10 Risk appetite Turnover growth Belgian economic growth Concerns % 85% 88% 85% 82% 85% 79% 77% 66% 63% 77% 69% 63% 6 56% 54% 56% 5 5 Actuals performance vs. budget 49% 49% 44% 3 33% 2 Rompravo, oca; Cas crem morte, Catalab usperox siciam ad sil virit peria sent grae 1 convere ius adhuit, prio, nosultus, qui potius, ner huius hore publiu cute dum mero mandam fectorectam comniri condam in tus consupiciam diumus, etiam tistem nos '11 '11 '12 '12 '12 '12 '13 '13 '13 '13 '14 '14 '14 '14 '15 '15 '15 '15 '16 '16 '16 '16 '17 iurnihi liceres convo, Cupio maximpo publicit, nocus, omnit videm es intis periam noris, convo, noveres se concerudem adduciae

7 A favourable business environment Optimism General environment % of CFOs who think now is a good time to be taking greater risk onto their balance sheets Economic uncertainty Risk appetite 5 41% 42% 41% 44% 41% Turnover growth 35% 35% 35% 36% 39% 38% 39% Belgian economic growth Concerns Actuals performance vs. budget % 21% 17% 31% 28% 23% 19% 13% 19% 3 14% 24% 22% 21% 21% 33% 23% 31% 1 8% RCas crem morte, Catalab usperox siciam ad sil virit peria sent grae co tistem nos iurnihi liceres convo, Cupio maximpo publicit, nocus, omnit videm es intis periam noris, convo, noveres se concerudem adduciae

8 A favourable business environment General environment How do you expect your turnover/top-line to evolve in the next 12 months? Optimism Economic uncertainty Risk appetite Turnover growth 2% 8% 13% 21% 32% 23% Belgian economic growth 2% Concerns Actuals performance vs. budget Decrease with more than 5% Decrease between 2% and 5% Increase between and 2% Increase between 2% and 5% Decrease between and 2% Increase with more than 5% Same level Rompravo, oca; Cas crem morte, Catalab usperox siciam ad sil virit peria sent grae convere ius adhuit, prio, nosultus, qui potius, ner huius hore publiu cute dum mero mandam fectorectam comniri condam in tus consupiciam diumus, etiam tistem nos iurnihi liceres convo, Cupio maximpo publicit, nocus, omnit videm es intis periam noris, convo, noveres se concerudem adduciae

9 A favourable business environment General environment What do you expect the economic growth in Belgium to be in 2017? Optimism Economic uncertainty Risk appetite 8% 6% 1 Turnover growth Belgian economic growth 21% Concerns Actuals performance vs. budget Rompravo, oca; Cas crem morte, Catalab usperox siciam ad sil virit peria sent grae 56% convere ius adhuit, prio, nosultus, qui potius, ner huius hore publiu cute dum mero mandam fectorectam comniri condam in tus consupiciam diumus, etiam tistem nos iurnihi liceres convo, Cupio maximpo publicit, nocus, omnit videm es intis periam noris, Greater than 2% 1,6% to 2% 1% to 1,5% convo, noveres se concerudem adduciae 0,5% to 0,9% to 0,4%

10 A favourable business environment General environment Concerns Optimism Competitive position in the market 51% 9% Economic uncertainty Shortage of (skilled) labour Economic outlook/growth 45% 25% 57% 15% 19% Risk appetite Impact of Belgian financial & economic policy making 11% 62% 26% Turnover growth European Union Stability Changes in regulation 2% 17% 65% 49% 33% 34% Belgian economic growth Eurozone stability 13% 53% 34% Concerns Current geopolitical risks Euro exchange rate 25% 19% 34% 32% 42% 49% Actuals performance vs. budget Increasing sovereign risk 4% 32% 64% Monetary tightening 2% 34% 64% China's slow-down 4% 28% 68% Inflation risk 9% 23% 68% Rompravo, oca; Cas crem morte, Catalab usperox siciam ad sil virit peria sent grae convere ius adhuit, prio, nosultus, qui po- Access to capital/funding Deflation risk 6% 19% 11% 89% 75% tius, ner huius hore publiu cute dum mero mandam fectorectam comniri condam in tus consupiciam diumus, etiam tistem nos iurnihi liceres convo, Cupio maximpo publi- Strong concern Somewhat of a concern Not a concern cit, nocus, omnit videm es intis periam noris, convo, noveres se concerudem adduciae

11 A favourable business environment General environment Comparison of the surveyed organisations' actuals performance versus budget Optimism Economic uncertainty Risk appetite Turnover growth % 45% 43% -8% 57% 47% 54% 52% 32% -5% 8% 32% 35% -5% 44% -13% 7% 6% % 37% 38% 41% -4% -5% -5% -9% -9% 44% 21% -4% 1-1 Belgian economic growth % 33% 33% -17% -2 Concerns Actuals performance vs. budget Rompravo, oca; Cas crem morte, Catalab usperox siciam ad sil virit peria sent grae convere ius adhuit, prio, nosultus, qui potius, ner huius hore publiu cute dum mero mandam fectorectam comniri condam in tus consupiciam diumus, etiam tistem nos iurnihi liceres convo, Cupio maximpo publicit, nocus, omnit videm es intis periam noris, convo, noveres se concerudem adduciae 2-38% 23% % 12 22% 35% 35% 12 8% 13 18% 13 22% 13 Better than expected Net % -49% -29% 35% -32% 24% -37% 32% 15% 13 42% 27% % As expected 24% 3 31% 29% 15 37% 15 31% 3 26% 32% 15 37% 15 33% 16 37% 16 Worse than expected 3 32% 16 29% 62% 27% 17%

12 Expansion is high on the agenda Business priorities Business priorities Priorities Organic Growth 66% 28% 6% Capex, headcount and descretionary spending Capex expectations Increasing productivity/efficiency On-going cost control Introducing new products/services 59% 51% 51% 37% 42% 28% 4% 8% 21% Metrics Cost Reduction 42% 38% 21% Increasing cash flow 42% 38% 21% Expanding into new markets 31% 35% 35% Expanding by acquisition abroad 26% 28% 45% Increasing capital expenditure (CAPEX) 19% 42% Increasing focus on sustainability programmes 17% 38% 45% Reducing leverage 12% 29% 6 Expanding by acquisition in Belgium 12% 27% 62% Increasing operating expenditure (OPEX) 4% 29% 67% Disposing of assets 4% 13% Raising dividends or share buy backs 13% 83% 87% Strong priority Somewhat of a priority Not a priority

13 Expansion is high on the agenda Priorities Business priorities Net % of CFOs who expect Belgian corporates' capital expenditure, headcount, and discretionary spending to increase over the next 12 months Capex, headcount and descretionary spending Capex expectations % 57% 51% Metrics % 3% -2% -12% -1-14% % 5% -5% -9% % 11% % 13% -11% % 32% 3 28% 6% 2% % 32% -7% % % 12% 2% Capital Expenditure Headcount Discretionary Spending

14 Expansion is high on the agenda Business priorities Capital Expenditures expectations Priorities Capex, headcount and descretionary spending Capex expectations Metrics 36% 25% 11% 25% 2% 2% Decrease with more than 1 Increase between 1% and 5% Decrease between 1% and 5% Increase between 6% and 1 Same level Increase with more than 1

15 Expansion is high on the agenda Business priorities Priorities CFOs' expectations on the evolution of the following metrics in the next twelve months Capex, headcount and descretionary spending Revenues 79% 12% 1 Capex expectations Profit before taxes 73% 16% 12% Metrics Operating cash flow Headcount 69% 65% 2 22% 12% 14% Operating margins 63% 31% 6% Operating costs 57% 24% 2 Levels of cash and cash equivalents on balance sheet Discretionary spending, for instance on travel, training and marketing Inventory levels 47% 35% 24% 35% 49% 59% 18% 16% 18% Financing costs 18% 57% 25% Increase The same Decrease

16 Funding is available Financing options Financial leverage Net % of CFOs who think Belgian corporate balance sheets are overleveraged/underleveraged Attractivenes of funding sources 34% Usage of resources Availability and cost of credit Interest rates Euro overleveraged % 13% 9% underleveraged % 2% -11% -11% -3% % -9% - -4% -7% - -22% -15% -9% -17% -5% -13% -1-5% -14% -19% -13% -14% -14% -17% -25%

17 Funding is available Financing options Financial leverage Attractivenes of funding sources Usage of resources Availability and cost of credit Net % of CFO rating the following sources of funding as attractive/unattractive 10 8 Interest rates Euro Attractive 6 2 Unattractive Internal Financing Equity Corporate debt Bank Borrowings

18 Funding is available Financing options Financial leverage Attractivenes of funding sources % of CFOs who want to increase the usage of resources 10 Usage of resources Availability and cost of credit 8 Interest rates Euro % 3 45% 82% Raising equity Raising corporate debt Raising bank borrowings Using internal financing

19 Funding is available Financing options Financial leverage Attractivenes of funding sources Net % of CFOs reporting the availability and cost of credit 6 Usage of resources Availability and cost of credit Interest rates 2 Euro Available Costly

20 Funding is available Financing options Financial leverage Net % of CFOs expecting interest rates to increase in the next 12 months Attractivenes of funding sources 10 Usage of resources Availability and cost of credit 8 78% 81% 85% 88% Interest rates 69% Euro % 55% 54% 48% 38% 32% 46% 29% 54% 45% 47% 36% 14% % 61% 26% 43%

21 Funding is available Financing options Financial leverage % of CFOs preferring a weak/strong Euro Attractivenes of funding sources Usage of resources Availability and cost of credit Interest rates Euro 43% 58% Stronger Euro Weaker Euro

22 Policies Appropriateness of financial and economic policies Detailed appropriateness Perception on financial and economic policy-making recovers but remains weak Perception of a net % of CFOs of the way in which the Belgian government is setting the right priorities for financial and economic policy making Importance of government policies 8 64% 59% 6 31% 33% 2 19% 31% 25% 25% 25% 14% % -2-29% -52% -63% -34% -27% -44% -46% -3%

23 Policies Appropriateness of financial and economic policies Perception on financial and economic policy-making recovers but remains weak Appropriateness of policies Detailed appropriateness Importance of government policies Monetary policy, including interest rates, inflation and the availability of credit (Eurozone policy) Education & training 7% 12% 21% 2 Labour market -24% 4% Financial regulation -19% 2% Immigration policy -4% 12% Infrastructure -53% -23% Urban & town planning -41% -23% Taxation policy -44% -25% General levels of regulation affecting business -49% -27% Public expenditure Energy policy -54% -39% - -31%

24 Policies Appropriateness of financial and economic policies Perception on financial and economic policy-making recovers but remains weak Net % of CFOs rating the governemt policies as important Detailed appropriateness Importance of government policies Taxation policy 87% Education & training 85% Labour market 79% Infrastructure Monetary policy, including interest rates, inflation and the availability of credit (Eurozone policy) General levels of regulation affecting business 67% 63% 62% Energy policy 58% Public expenditure 54% Financial regulation 52% Immigration policy 38% Urban & town planning 38%

25 This quarter s hot topics CFOs do not expect other countries to follow the UK and are supportive to further EU integration Which option would be most desirable for the future European Union Likelihood that more members of the European Union would leave, or vote to leave, the bock in the next 5 years 1 4% 9% 2% 21% 17% 65% 72% Multi-speed Europe (increased integration for some member states and looser alliance between others) Increased economic and political integration No significant change (continuation of the status quo ) Don t know / prefer not to say Disintegration of the Union

26 Profile survey participants % of revenues generated outside of Belgium Business category of respondents Companies' approximate turnover Authors 27% 8% 4% 2% 4% 18% 14% Thierry Van Schoubroeck Partner, Finance Transformation tvanschoubroeck@deloitte.com 1 18% 37% Emilie Wiliquet Senior Consultant ewiliquet@deloitte.com 33% % - 69% % Manufacturing Consumer Business (incl. transport & logistics, leisure&travel) Financial Services Life Sciences Transportation Turnover > 1bn 100mn < Turnover < 999mn 49% Turnover < 100mn Wim Jansens Senior Consultant wjansens@deloitte.com Julien Gossé Business Analyst jgosse@deloitte.com Construction Energy, Utilities, Mining Other Technology, Media, Telecommunication Real Estate Contacts A note on methodology Not all survey questions are reported in each quarterly survey. In response to the current financial economic situation survey questions will be selected. In case you participated to 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 2017 first quarter survey took place between March 13th, 2017 and March 30th, A total of 53 CFOs completed our survey. 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. Rules on the dashboard indicators The following methodology was applied for the symbols and indicators used in the CFO survey dashboard: An upward arrow is displayed in case an indicator has increased with 5 or more percentage points since the previous survey. A downward arrow is used in case an indicator has decreased with 5 or more percentage points since the previous survey. The equals signs is used in case the indicator remained stable between these upper and lower thresholds. A green symbol is used in case the indicator, from a business perspective, displays a favourable trend or situation; a red colour is used in case the indicator displays an unfavourable trend or situation; a grey colour is in case of ambiguous or neutral outcomes. Thierry Van Schoubroeck Partner, Finance Transformation tvanschoubroeck@deloitte.com Tom Van Cauwenberge Finance Lead, Partner tvancauwenberge@deloitte.com For current and past copies of the survey, please visit:

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