Better finances

Despite moderating revenue growth, a majority of chief financial officers at large U.S. companies are optimistic about their company’s outlook.

According to the fourth quarter 2010 Deloitte CFO Signals survey, 53% of surveyed CFOs at North America’s largest companies are more optimistic than they were in the previous quarter, and CFOs are expecting an average 8% rise in capital spending over last year.

The Deloitte CFO Signals survey was conducted for the fourth quarter of 2010. A total of 80 percent of the CFO respondents are from companies with more than $1 billion in annual revenues; 75 percent are from publicly-traded companies.  The findings were collected from 92 CFOs who responded to the survey during the last two weeks in November 2010.

The survey, which tracks the thinking and actions of chief financial officers representing many of North America’s largest and most influential companies, also found that CFOs believe high unemployment levels are largely the result of structural shifts that are making it harder to find the highly-skilled staff they need.

"While large company CFOs are still concerned about conditions within their home markets, many appear to be seeing and acting on opportunities to strengthen their businesses for the long term — and spending some of the cash they have accumulated over the past few years," Sanford Cockrell III, national managing partner, CFO Program, Deloitte, said in a statement. "The results of the Congressional mid-term elections appear to be contributing to this rising optimism. Polling of more than 150 CFOs at our mid-November 2010 CFO conference, ‘CFO Vision 2010 — Staying Agile,’ showed nearly 60 percent believed election results would have a positive impact on their industries, and only 7 percent expected a negative impact."

OTHER FINDINGS
• More than half of the CFOs surveyed are more optimistic about their company’s prospects this quarter and only 21% are less optimistic (compared with 36% last quarter), year-over-year performance expectations declined this quarter.

• Expected future annual sales gains dropped from 11% on the whole last quarter to 6.5% this quarter, and projected earnings gains fell from 20% to 12%.

• The average year over-year growth projections for companies across all industries are 6.5% for revenues (as compared to 11% the previous quarter) and 12% for earnings (as compared to 20% the previous quarter).

• Domestic hiring expectations are essentially unchanged this quarter with an expected 1.8% year-over-year gain – again modest relative to current unemployment levels.

• On the plus side, no industries are projecting decreases and some are projecting significant increases. CFOs project an average 3.6% increase in offshore personnel and 2.8% in outsourced staffing.

• Nearly half of all surveyed CFOs said that, despite high unemployment, they are finding it harder to find sufficiently skilled staff than they did five years ago — equally citing changed staffing needs and regular staffing profiles that are now harder to find. Only 20% report easier hiring.

• More than 90% of CFOs surveyed say Congress should not wait for a less fragile economy to begin addressing the deficit.

• CFOs expect health care reform to substantially impact their resourcing and costs, with more than 90% expecting benefit cost per employee to rise and half expecting the quality and/or breadth of offered benefits to decline.

• "Our findings around health care reform may suggest many companies are in a tactical or ‘wait and see’ mode. They also face significant challenges in benefits design strategies that are both compliant with the regulations and cost effective," Cockrell noted in the statement.