With COVID-19 continuing to spread, what do North America’s top finance executives have to say about heading into a new year after helping businesses through nine of the toughest months in recent history? According to The Deloitte North American CFO Survey, the CFOs are “concerned about the first half, but optimistic about the second half onward.”
: Deloitte recently released its CFO Signals survey for Q4 2020, a quarterly survey that provides CFOs with information regarding the perspectives and actions of their CFO counterparts across four areas: business environment, company priorities and expectations, finance priorities and CFOs’ personal priorities. Each quarter, the survey seeks responses from CFOs across the U.S., Canada and Mexico, wherein the majority of respondents are from public and private companies with more than $1 billion in annual revenue.
The report notes that after a challenging 2020, only about 40 percent of CFOs expect to achieve 95 percent or more of their originally-budgeted revenue for 2020, with the average expecting 88 percent. In fact, consistent with their near-term COVID-19 worries, two out of three CFOs do not expect pre-crisis operating levels until at least the second half of 2021, and 26 percent do not expect to get there until the first quarter of 2022 or even later, especially in retail/wholesale, manufacturing and services sectors.
Strategies to Remain Mostly Unchanged
According to the report, CFOs do not anticipate their 2021 strategies to be substantially different from what they were before the pandemic hit. Even in the face of strong industry differences, there seems to be a general trend toward M&A-driven growth, a smaller real estate footprint, broader offerings and more diversified supply chains (which are less reliant on China).
From a capital markets standpoint, CFOs mostly expect rates to stay low and for bond yields to remain below two percent. They expect the Chinese currency (renminbi, or yuan) to appreciate against the U.S. dollar (and for its use as a trading currency to rise substantially) and for digital currency use among businesses to grow.
Vaccine, New Administration Bring Hope
In the immediate aftermath of the announcement regarding an effective COVID-19 vaccine and U.S. elections, almost 60 percent CFOs said that they are more optimistic about their company’s prospects than they'd been three months prior.
About three-quarters of CFOs expect the U.S. economy to improve in 2021 after news of an effective vaccine, especially broader vaccine availability later in the year. The outlooks for Canada and Mexico also appear positive; however, a few expect economies to grow faster over the next five years than pre-pandemic.
While expressing their views on policy as a new administration takes over, CFOs overwhelmingly support a new stimulus package, the federal government leading a COVID-19 response, de-escalating US-China trade tensions, infrastructure investments and less protectionist trade. Despite industry differences, financial leaders hope for improved bipartisanship and cooperation in getting essential things done, with more moderation and transparency, the report noted.
Resource: To read the complete survey results, visit Deloitte’s website.