CFO Quarterly Outlook Survey - Financial Executives International

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CFO Quarterly Outlook Survey May 2012 Table of Contents Executive Summary .............................................................................................................. 2 Detailed Survey Results ....................................................................................................... 5 Figure A: Median CFO Optimism about the Economy .......................................................... 5 Figure B: U.S. CFO Optimism about the U.S. Economy ....................................................... 5 Figure C: Median CFO Optimism about Their Companies .................................................... 6 Figure D: FEI/Baruch CFO Outlook Surveys Two-Year Comparison by Quarter (U.S.) ............................................................... 7 Figure E: FEI/Baruch CFO Outlook Surveys Quarterly Comparison by Quarter (Europe) ........................................................... 8 Company Demographics .................................................................................................... 24 About FEI and Baruch ........................................................................................................ 25 The source for financial solutions. 1250 Headquarters Plaza | West Tower, 7 th Floor Morristown, New Jersey 07960 www.ferf.org Research an affiliate of Financial Executives International
CFO Quarterly Outlook Survey May 2012 Executive Summary Chief Financial Officers still see a tough road ahead, but are demonstrating a strong outlook, according to the most recent survey of CFOs conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business. CFOs in Europe and the United States have increased optimism in the global economy and their businesses, with fewer concerns over inflation, oil and hiring than last quarter. U.S. CFOs are showing a brighter outlook in particular and despite little approval for President Obama and Congress’ handling of the economy, half now believe that the country is in the midst of a recovery. Respondents to the quarterly “CFO Outlook Survey,” which polls CFOs of public and private businesses in the U.S., Mexico and Europe (Italy and France) on their economic and business confidence, expressed a higher level of optimism compared with the previous quarter. European CFOs’ optimism in the global economy increased over two points (from 51.80 to 54.00), but it still remains below the survey high one year ago (58.9). Their level of confidence in their own companies also increased slightly to 58.30 (from 57.60 in Q4), although it remains below where it stood a year ago (66.1). U.S. CFOs’ confidence also experienced increases this quarter. Their optimism in the global economy increased more than five points to 51.9 (from 46.10 in Q4), and their optimism in their own companies saw a three point increase to 70.60 (from 67.60 in Q4). The CFO Optimism Index for the U.S. economy had a similar increase to 60.60 (from 57.10 in Q4). This quarter, net earnings, capital spending, revenue and technology spending remained the top areas where CFOs across the board are expecting positive increases over the next 12 months. U.S. CFOs are expecting a 20 percent increase in their net earnings, compared with 13 percent last quarter. Despite their climbing optimism, CFOs on average continue to believe that that the unemployment rates will remain at high levels for the next six to 12 months. Although the U.S. CFOs believe the rate will slightly decline, European CFOs think their countries’ unemployment rates will climb from 8.6 to 9 percent. While 59 percent of U.S. CFOs have seen wage levels rise, the majority of those responding in Europe (63%) report that they have stayed the same. Still, the majority of U.S. CFOs (62%) plan to hire additional employees at their companies in the next six months, compared with only a third of European CFOs (35%). Of those who are hiring, CFOs are most commonly seeking mid-career professionals to fill their staff (70% of U.S. and 42% of European CFOs), followed by experienced and skilled technical workers (49% of U.S. and 40% of European CFOs). CFOs are also seeking entry-level college graduates, which was the third highest choice among relevant respondents (45% of U.S. and 38% of European CFOs). “Over the last several quarters, confidence among U.S. and European CFOs had fluctuated, but CFOs are kicking off 2012 with a relatively encouraging outlook,” said John Elliott, Dean of the Zicklin School of Business at Baruch College. “U.S. CFOs remain particularly optimistic in their companies’ expectations, reflecting projections in net earnings, optimism in the U.S. economy and small dips in unemployment rate. CFO sentiment this quarter demonstrates good signs for U.S. job seekers in the year ahead, and while Europe is improving, it has not yet moved the needle to positive job growth.” CFOs believe that crude oil prices, which were $105.66 when the survey was taken, will not change substantially in the next six months. Forty-two percent of U.S. CFOs and forty-eight percent of EU CFOs believe it will average $110, while another third of those in the U.S. (32%) and a quarter of Europe (26%) think prices will fall to $100. Most CFOs stated that their 2
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