Deloitte CFO Signals™ Survey: CFO Optimism Still Rising, Underlying Fundamentals Suppressing Near-Term Growth Expectations

CFOs indicate desire to invest rather than save cash in 2013, looking at acquisitions

Jun 26, 2013, 07:36 ET from Deloitte

NEW YORK, June 26, 2013 /PRNewswire/ -- According to Deloitte's Q2 CFO Signals™ survey, optimism regarding their companies' prospects is at a level not seen for 15 months among Chief Financial Officers (CFOs). That optimism is translating into a bias toward investment over cash conservation and dividend forecasts that have risen to an almost three-year high. Still, year-over-year sales and earnings growth expectations remain below their long-term averages, suggesting near-term growth will remain elusive.

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The quarterly survey, which tracks the thinking and actions of CFOs representing North American companies with collective annual revenues of more than $680 billion, found that net optimism (the difference between the percentages of CFOs expressing rising and falling optimism) rose from +32 last quarter to +46 this quarter. While optimism has historically climbed in the first quarter each year, this marks the first time that increased optimism has carried into the second quarter since CFO Signals began in 2010. The primary driver seems to be CFOs' perception of the North American economies: more CFOs rate the region's health as good than as bad, and nearly two-thirds are optimistic about the trajectory of the economies. Moreover, 74 percent list the strength of the economies as one of their company's top growth drivers – a rise from 60 percent in the first quarter.

In addition, CFOs say their companies' cash will be deployed mostly toward funding growth. Less than 20 percent of CFOs say a top cash use for 2013 will be as a hedge against business volatility, but nearly 60 percent say they will use it to invest in organic growth opportunities and around 50 percent will invest to acquire other companies.

"There is a definite shift in CFOs' sentiment this quarter, despite some of their growth expectations remaining below the long-term averages," said Sanford Cockrell III, national managing partner, CFO Program, Deloitte LLP. "There's a shift away from defensiveness, but CFOs' tempered near-term expectations suggest they are approaching growth in the same measured and incremental way they have cut costs over the last several years."

That muted outlook is apparent in CFOs' expectations for sales, earnings, and other key metrics, which remain little changed from the first quarter, and below the long-term average. While mean sales growth expectations increased slightly from 5.4* percent to 5.7* percent this quarter, earnings expectations fell from 12.1* percent to 10.3* percent. Driven by improvements in Canada and Mexico, domestic employment growth expectations increased to 2.4* percent from 0.9* percent in the first quarter, but the expectation for the U.S. is just 1.3 percent*. Capital spending growth expectations also fell slightly to 7.5* percent and are significantly down from 11.4* percent 12 months ago.

Financing- and capital-related uses of cash will also be prevalent for the next year, with 62 percent of CFOs citing paying down debt, buying back stock, or paying dividends as top cash uses. In particular, CFOs' expectations for dividend payments are at a level not seen since the third quarter of 2010, having risen from 3.6* percent in the first quarter to 4.5* percent this quarter.

"One of the most striking aspects of this quarter's findings is the high variability of CFOs' year-over-year growth expectations – especially when it comes to sales and domestic hiring," noted Greg Dickinson, director, North American CFO Signals Survey, Deloitte LLP. "This pattern suggests we may be at a transition point – where some companies are beginning to believe conditions are substantially improving, while others are not yet convinced."

Additional findings from the Deloitte CFO Signals survey include: (estimates are adjusted averages to reduce the effect of outliers):

  • CFOs less optimistic on European economies. While nearly two-thirds of CFOs are optimistic about the North American economies, only 14 percent are optimistic about the European economies. The outlook is brighter toward China, with 53 percent optimistic about that country's economic outlook.
  • Concern remains over public policy. Government spending/budget policy is again named by CFOs as the top impediment to growth, with 30 percent of CFOs listing this in their top three impediments. The healthcare and pharmaceutical sectors are particularly concerned about this.
  • International taxes a perceived threat. Two-thirds of CFOs are concerned that foreign governments will step up efforts to tax profits of companies from outside their borders, with manufacturers particularly concerned. The same proportion of CFOs is concerned about the prospect of paying taxes on repatriated cash. The risk of governments more aggressively pursuing taxes on income from IP and intangibles is a concern for just over half of CFOs.
  • Environmental regulation concerns increase markedly. The percentage of CFOs citing environmental regulation as a top impediment to growth rose sharply from 16 percent to 27 percent in the second quarter. CFOs in the energy and resources sector were the main reason for this, with 82 percent of this group citing this concern.
  • Changes to risk management approaches. In light of conditions over the past five years, CFOs confirmed their companies have taken strong steps to improve risk awareness and plan for risk events. Nearly 80 percent of companies have raised the visibility of risk with their boards and executive teams, while more than 70 percent have improved their ability to assess the probability and impact of risks.
  • CFOs believe their peers' stocks are overvalued. Despite the rise in optimism, nearly 60 percent of CFOs think U.S. equities are overvalued, compared to just four percent who say they are undervalued. Their view of their own-company stock, however, is markedly different, with only 11 percent believing it is overvalued.

To download a copy of the survey, please visit:  

*All numbers with an asterisk are averages that have been adjusted to eliminate the effects of stark outliers.

About The Deloitte CFO Signals™ Survey

The Deloitte CFO Signals survey was conducted for the second quarter of 2013 between May 13, 2013 and May 24, 2013. Eighty percent of the 105 CFO respondents were from companies with more than $1 billion in annual revenues, and 70 percent were from publicly-traded companies.

Each quarter, CFO Signals tracks the thinking and actions of CFOs representing many of North America's largest and most influential companies. This report summarizes CFOs' opinions in five areas: business environment, company priorities, company expectations, finance priorities, and CFOs' personal priorities.

For more information about Deloitte's CFO Signals, or to participate in the survey, please contact

About Deloitte's CFO Program

The CFO Program brings together a multidisciplinary team of Deloitte leaders and subject matter specialists to help CFOs stay ahead in the face of growing challenges and demands. The Program harnesses our organization's broad capabilities to deliver forward thinking and fresh insights for every stage of a CFO's career – helping CFOs manage the complexities of their roles, tackle their company's most compelling challenges, and adapt to strategic shifts in the market. For more information about Deloitte's CFO Program, please contact or visit  

As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.


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SOURCE Deloitte