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June 26, 2013

North American CFO’s increasingly optimistic: Deloitte

North American companies are increasingly turning towards investments over cash conservatism thanks to a 15 month high in optimism levels among chief financial officers (CFOs), according to Deloitte’s Q2 CFO Signals survey.

CFO optimism rose from +32 in Q1 to +46 in Q2.

As a result of the increase, only 20% of CFOs said their top cash priority for 2013 would be to hedge against business volatility, compared to 60% who intended to invest in organic growth opportunities and 50% who intended to invest in acquisitions.

The positive outlook came despite sales growth expectations only growing from 5.4% to 5.7%, and earnings expectations falling from 12.1% to 10.3%.

Capital spending growth fell to 7.5%, compared to 11.4% in Q2 2012, and 62% of CFO’s put paying down debt, buying back stock or paying dividends as top cash uses.

There was a spike in concerns about environmental regulation, which went from 16% in Q1 to 27% in Q2 and two thirds of CFO’s expressed concerns over international taxes.

Two thirds of CFO’s were optimistic about North American economies and 53% were optimistic about China’s economic outlook, however only 14% described themselves as optimistic about the situation in Europe.

Despite the relative optimism about North American economies, nearly 60% of CFOs felt that US equities were overvalued, however only 11% believing their own company’s stock was overvalued.

Deloitte’s CFO Signals survey featured 105 North American CFOs, collectively representing companies with over $680bn in revenues.

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Deloitte

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