Recent challenges of global CFOs

Recent challenges of global CFOs Sandy Cockrell, Global leader and US national managing partner, CFO Program, Deloitte LLP March 16, 2017

Agenda Background Business environment Business risks and strategies The role of the CFO Question and answer Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 2

Background CFO Global Signals survey The surveys conducted are pulse surveys intended to provide CFOs with quarterly information regarding their CFO peers thinking across a variety of topics. Twenty-eight Deloitte CFO surveys covering more than 60 countries, are conducted on a quarterly, biannual or annual basis CFO Transition Lab TM Our CFO Transition Lab is a one-day experience based on our extensive research on CFO transitions Focuses on use of time, talent and relationships Helps CFOs as they create a tangible 180-day work plan Over 1,200 Labs completed across our global network www.deloitte.com/thecfoprogram Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 3

Question Compared with three months ago, how do you feel about the financial prospects for your company, over the next 12 months? More optimistic, primarily due to external factors (e.g., economy, industry and market trends) More optimistic, primarily due to internal/company-specific factors (e.g., products/services, operations, financing, assets) No notable change Less optimistic, primarily due to internal/company-specific factors (e.g., products/services, operations, financing, assets) Less optimistic, primarily due to external factors (e.g., economy, industry and market trends) Other/Don t know Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 5

CFO sentiment: Net change in optimism (as of Q1 2017) Americas Net % of CFOs who are more optimistic about the financial prospects of their company now than three months ago. 80% 60% 40% 20% 0% -20% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Argentina North America -40% -60% -80% Source: Deloitte Touche Tohmatsu Limited s Global CFO Program, Q4 2016 Global CFO Signals survey Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 6

CFO sentiment: Net change in optimism (as of Q4 2016) Europe Net % of CFOs who are more optimistic about the financial prospects of their company now than three months ago. 80% 60% 40% 20% France Germany Italy Netherlands 0% -20% -40% -60% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Russia Spain Sweden Switzerland Turkey United Kingdom Average -80% Source: Deloitte Touche Tohmatsu Limited s Global CFO Program, Q4 2016 Global CFO Signals survey Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 7

CFO sentiment: Net change in optimism (as of Q4 2016) Asia Pacific Net % of CFOs who are more optimistic about the financial prospects of their company now than three months ago. 80% 60% 40% 20% Australia 0% -20% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 China Japan -40% -60% -80% Source: Deloitte Touche Tohmatsu Limited s Global CFO Program, Q4 2016 Global CFO Signals survey Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 8

Assessment of economies (as of Q1 2017) North American CFOs perceptions of North America s economy How do you regard the North American, European, and Chinese economies? North America 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% Net % good now Net % better in year Economic optimism index Source: Deloitte LLP s CFO Program, Q1 2017 North American CFO Signals survey Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 9

Assessment of economies (as of Q1 2017) North American CFOs perceptions of Europe s economy How do you regard the North American, European, and Chinese economies? Europe 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% Net % good now Net % better in year Economic optimism index Source: Deloitte LLP s CFO Program, Q1 2017 North American CFO Signals survey Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 10

Assessment of economies (as of Q1 2017) North American CFOs perceptions of China s economy How do you regard the North American, European, and Chinese economies? China 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% Net % good now Net % better in year Economic optimism index Source: Deloitte LLP s CFO Program, Q1 2017 North American CFO Signals survey Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 11

CFOs assessments of their company s prospects External challenges and business risks North America (Q1 2017) Other than economic growth challenges, which of the following external factors have presented obstacles to your company s growth over the past 12 months? Policy Tax policy and reform Regulation Rising health care costs Trade policy Capital/currency markets Currency shifts (Dollar, Mexican peso) US equity markets are seen as overvalued Corporate taxes Rising and falling interest rates Europe (Q3 2016) Which of the following factors are likely to pose a significant risk to your business over the next 12 months? Geopolitics/Policy/Trade Effects of Brexit US presidency Economic environment Weaker domestic and foreign demand Financial markets instability Deflation and currency depreciation Resources Skills shortage Immigration Resources Skills shortages Source: Deloitte LLP s CFO Program, Q1 2017 North American CFO Signals survey and European CFO Survey Q3 2016 Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 13

CFOs top strategies (North America as of Q1 2017; Europe as of Q3 2016) What is your company s business focus for the next 12 months? Offensive vs Defensive strategies Revenue growth North America Cost control France / Germany / Italy / Spain Switzerland / Russia / Sweden / Turkey / UK New business vs Current business New offerings or products North America France / Germany / Italy / Russia / Spain / Sweden / UK New geographies Germany / Switzerland / Sweden / Turkey Existing offerings or products Not selected Existing geographies North America Inorganic vs Organic growth Inorganic growth Germany / Italy / Sweden / Turkey / UK Organic growth North America Switzerland / Russia Source: Deloitte LLP s CFO Program, Q1 2017 North American CFO Signals survey and European CFO Survey Q3 2016 Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 14

The four faces of the CFO Catalyze behaviors and change across the organization to execute strategic and financial objectives Provide financial leadership in determining strategic business direction, M&A, financing, capital market and longer term strategies vital to the future performance of the company Protect and preserve the critical assets of the organization and accurately report on financial position and operations to internal and external stakeholders Balance capabilities, talent, costs and service levels to fulfill the finance organization s core responsibilities efficiently Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 16

CFO Transition Lab Themes Information technology Develop a plan to rationalize IT systems to better support financial fact gathering for the business. Talent Execute a talent agenda which elevates the skills of Finance and develops people. Communications and teaming Create a comprehensive communication strategy to effectively convey key messages to various consistencies. Operational efficiency Create an efficient Finance operating model which fosters development and scalability to meet business objectives. Corporate strategy Establish a platform to become a contributor to corporate strategy. Financial Planning & Analysis Develop a function to deliver insights and partner more effectively with the business. Source: Deloitte LLP s CFO Program, CFO Transition Lab, 2010-2016 Copyright 2017 Deloitte Development LLC. All rights reserved. Recent challenges of global CFOs 17

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