CFOs optimistic about their profit forecasts
CFOs in the UK and US are feeling positive about their companies’ profit forecasts, according to two new surveys.
Chief financial officers of some of the largest UK companies have seen confidence in their own businesses rise after the election, according to Deloitte’s latest CFO survey.
Uncertainty has fallen to its lowest level in eight years and 23% of CFOs feel more positive about the financial prospects of their businesses compared with last quarter. This is the fourth consecutive quarterly rise in business confidence.
Corporate risk appetite among UK CFOs has seen its largest rise in over four years with over a third of CFOs (36%) stating that now is a good time to take greater risk.
“The new Government’s focus on growth and stability is already increasing corporate confidence,” said Richard Houston, senior partner and chief executive of Deloitte UK.
Houston added: “Business leaders want industrial strategy to be top of the new Government’s economic priorities, and there’s a clear desire to work in partnership to unlock growth and drive productivity. That will be key to delivering a more inclusive and sustainable future for the UK.”
Sixty-four per cent of survey respondents expect UK corporate revenues to increase over the next year – a 22% increase from three months ago.
“Finance leaders have entered the second half of the year in a confident mood. This is not solely a sentiment story, as expectations for revenue growth have also risen sharply,” Ian Stewart, chief economist at Deloitte, said.
“Perceptions of uncertainty have fallen in the wake of the election and against a background of low inflation and a recovering economy. With corporate risk appetite on the rise, business is gearing up for growth,” he added.
CFO feelings in the US
Grant Thornton’s survey for the third quarter of 2024 reflects a similar positivity in US CFOs.
The survey has shown that finance leaders remain confident about their company’s potential, despite a drop in confidence in other aspects of business.
Two hundred and thirty eight CFOs from across the industry spectrum responded to the survey.
Nearly four out of five respondents (79%) expect to see profits to grow over the coming year, even if they are not so confident about meeting increased demand and keeping a lid on costs.
However, the percentage of US CFOs who feel optimistic about the economy fell from 58% to 46%.
Sixty-one per cent of respondents said the US election results could lead to a change in their business strategy.
Paul Melville, Grant Thornton’s CFO advisory services national managing principal, said: “The business fundamentals like efficiency in the finance function and the basics for growing your business aren’t going to change, regardless of who is in the White House or the government.”
Two thirds (66%) of finance leaders said they expect to increase their spending on IT and technology in the next year.
Melville said: “CFOs understand that they need these technological capabilities to be competitive.”
For the fourth quarter in a row, the top category for potential cost cuts was the workforce and how they are paid; this was identified by 42% of respondents.
Sixty per cent of respondents said they are using generative AI for customer relationship management and customer experience, which is a 15% increase from the first quarter.
