CFOs edge towards cautious confidence

Deloitte’s head of audit Peter Gulliver says the results suggest New Zealand CFOs are feeling optimistic, with 37 percent reporting they were either somewhat more optimistic or significantly more optimistic about their company’s financial prospects compared to three months earlier. “However, while CFOs appear more confident in their optimism, the survey also indicates that there is still heightened sense of uncertainty which is arguably becoming entrenched across large section of the economy,” he says.

Just over half of CFOs surveyed report their company’s financial prospects unchanged and almost three quarters of CFOs say they expect revenue to increase over the next 12 months.

A significant 64 percent of CFOs said general levels of economic uncertainty were above normal. While they are divided on the expected length of current levels of uncertainty, it is clear that majority see it stretching on well beyond one year. 

Almost third of CFOs believe uncertainty will last between one to two years, third believe it will last two to three years, and 18 percent see it lasting longer than three years. Challenges in Europe were of most concern to CFOs, followed by patchy New Zealand economy and potential slowdown in China.

“Despite CFOs feeling more confident in their businesses’ financial prospects, the uncertainty driven by these external economic conditions has CFOs cautious when it comes to increasing investment in their companies,” adds Gulliver.

Sixty-seven percent of CFOs were hesitant to take greater risk onto their balance sheets and net 23 percent of CFOs expected to reduce discretionary spending, including training and marketing, over the next 12 months. 

Seventy-five percent preferred to focus on organic expansion, and only third of CFOs said they expected mergers and acquisitions activity to feature in their strategy. 

For the full New Zealand CFO survey: www.deloitte.com/nz/CFOsurvey

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