Uncertain optimism

A new survey from Deloitte suggest many top chief financial officers are optimistic about their company’s finances, but concerned about the growth of government regulation.

Deloitte’s first quarterly CFO Signals survey tracks the thinking and actions of 136 CFOs who responded to the survey during the last two weeks in May 2010.

Nearly two-thirds of those surveyed say they are more optimistic about their companies’ prospects than they were in the previous quarter and less than one CFO out of five is more pessimistic. CFOs of all eight surveyed industries (which excludes government and public sector entities), project year over year gains in both sales and earnings growth on average, though they expect only modest growth in employment. Reflecting the renewed focus on government regulation, 55% of CFOs cited social policy, spending and investment as one of their top three economic concerns, eclipsing concerns like unemployment, cost of capital, capital availability and currency exchange rates.

"CFO optimism shines against a backdrop of ambiguity and uncertainty — especially around business strategies and the selection of new investments. There is a general wariness of the increased role of governments in post-recession economies, with CFOs in most industries already taking steps to influence, plan for, or adapt to government action," Sanford Cockrell III, national managing partner of Deloitte’s U.S. CFO Program, said in a statement.

OTHER SURVEY FINDINGS
• All surveyed industries project revenue and earnings growth (the average projection for all companies across all industries is 9% and 17% year over year, respectively) while keeping both costs and employment in check.

• Despite their positive business outlook, CFOs expect only modest increases in employment — domestic hiring is expected to increase just 3%, suggesting that the productivity of current, often-reduced staffing can support growth in at least the near term.

• Reflecting both increased optimism and stabilization in access to financing, companies are loosening their purse strings with CFOs overall projecting dividends to rise 6.5% and capital spending to increase 12%.

• 75% of the CFO respondents are from companies with more than $1 billion in annual revenues, and 75% are from publicly-traded companies.