In a recent survey a majority of Chief Financial Officers (CFOs) of major Irish companies see revenues and profits stabilising or recovering, rather than falling further, over the next six months. However, they do not expect the Irish economy to rebound as quickly identifying the end of 2011 as a likely timeline for broader macro-economic improvement.
The survey, which looks to establish the views of CFOs in relation to financial markets, the economic outlook and business trends, found that Irish CFOs are beginning to see signs of an upturn within their own organisations.
Asked how they saw their financial prospects now compared to six months ago, 37% were more optimistic compared to 27% who were less optimistic. Looking forward, 55% see profits rising over the next six months against 25% who believe profits will fall over the period. Almost half, 46%, see turnover rising in the period compared to 30% who see it falling.
However, this positive sentiment is not felt by Irish CFOs with regards to Ireland’s economy. Only one third of respondents expect economic recovery by the end of 2010. The two main reasons for this are firstly the state of the public finances and secondly the need to improve international competitiveness.
89% of CFOs surveyed are dissatisfied with the measures the Government has taken to date to resolve the crisis in the public finances and feel that more affirmative action is required to achieve long-term sustainable efficiency, including structural reform, review of employee numbers and benchmarking.
Similarly, CFOs are concerned with issues impacting on international competitiveness - tax increases, emigration and a ‘brain drain’ are potential threats, and the lack of finance and credit availability experienced by businesses and individuals are not conducive to an environment of risk taking and entrepreneurship.
CFOs are more confident about the measures undertaken by the Government to repair the Irish banking sector. 55% of CFOs believe these measures have been either highly or quite effective; particularly with regards to restoring confidence in the financial sector and preventing further economic downturn. However, despite NAMA and the recapitalisation of the banks, 70% of CFOs are not benefitting from an improvement in the availability of finance/credit.