Deloitte CFO Signals™ Survey: Optimism Among CFOs Proves Durable Despite Declining Expectations for Key Metrics

CFOs continue to focus on generating growth in a "fits and starts" economic recovery

Oct 02, 2013, 07:05 ET from Deloitte

NEW YORK, Oct. 2, 2013 /PRNewswire/ -- According to Deloitte's third quarter (Q3) CFO Signals™ survey, optimism among Chief Financial Officers (CFOs) regarding their organizations' prospects remains unusually strong for the third consecutive quarter, buoyed by continuing confidence in the North American economies. However, that optimism is in sharp contrast to underlying earnings, sales, capital spending and hiring forecasts that have fallen significantly, partly due to concerns over policy gridlock in Washington and the state of the Chinese and European economies. 

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The quarterly survey, which tracks the thinking and actions of more than 120 CFOs representing North American organizations with collective annual revenues of approximately $1 trillion, recorded a third consecutive quarter of positive net optimism among CFOs. Overall, 42 percent of CFOs expressed improved optimism about their organizations' prospects versus 24 percent who expressed declining optimism. While net optimism has declined from the second quarter, this represents the first time in the survey's history that the measure has been positive for the first three quarters of a calendar year.

Despite this confidence, the survey points towards weakened company forecasts ahead. Earnings growth expectations matched their survey low, having fallen from a mean of 10.3 percent last quarter to 8.0 percent in Q3. Likewise, sales growth expectations have fallen from 5.7 percent in the second quarter (Q2) to 5.0 percent, marking the lowest forecast in the past 12 months. Those tempered forecasts also affected investment, with capital spending growth expectations falling to 4.9 percent from 7.5 percent in Q2; domestic hiring forecasts also fell to 1.3 percent from 2.4 percent over the same time frame.

"The decline in underlying fundamentals paints a picture of organizations turning their focus back towards planning and a reassessment of their core business strengths," said Sanford Cockrell III, national managing partner, CFO Program, Deloitte LLP. "Organizations are recognizing that, in a 'fits and starts' recovery, even slow growth requires a mix of adaptation and persistence."  

The driving force behind CFOs' optimism and growth plans appears to be the comparative strength of the North American economies. Thirty-eight percent rate their current status as "good," an increase from 30 percent last quarter, and more than half (55 percent) believe these economies will be better one year from now. Still, CFOs are increasingly concerned about China, with only 26 percent regarding China's economy as "good" (down from 35 percent last quarter) and only 27 percent expecting it to improve in the upcoming year (down from 37 percent last quarter).Their perception of Europe is similarly gloomy with 81 percent of CFOs rating the region's economy as "bad" (an improvement from last quarter's 90 percent) and 30 percent believing conditions will be worse a year from now (an improvement from last quarter's 40 percent).

In light of this mixed outlook, CFOs are evenly split on how to pursue growth. Just over half (51 percent) confirmed that their organizations plan to pursue substantial mergers and acquisitions (M&A) with the most common reason being the desire to pursue twin tracks of organic and inorganic growth. The 49 percent not planning deals most commonly cite better organic growth opportunities and a shortage of good values in the M&A marketplace.

"Many organizations are taking a step back to reconsider how their economies and industries are evolving," noted Greg Dickinson, director, North American CFO Signals Survey, Deloitte LLP. "Large recent deals show that M&A can be a tool for growth and also for changing strategic direction."   

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

  • Gridlock in Washington and political risk remain on the agenda. Worries about regulation increased this quarter, especially regarding sector-specific regulation. Concerns over gridlock in Washington returned, while geopolitical risk emerged as an accelerating risk factor.   
  • Technology and Healthcare/Pharmaceuticals sectors are most pessimistic. CFOs from the Technology sector expect just 2.5 percent and 1.8 percent year-over-year growth for sales and earnings, respectively. Expectations are even more pessimistic for the healthcare and pharmaceuticals sector at 1.6 percent and -0.8 percent, respectively.
  • Manufacturing and service industries continue to forecast higher earnings versus sales. CFOs from both the manufacturing and service sectors continued to forecast earnings growth significantly above sales growth, in contrast to the tightening of this gap in other sectors.
  • The opinion of CFOs is mixed when it comes to a future CEO role. While CFOs tend to work closely with their CEOs around strategy decisions, only 40 percent say they would like to be their CEO's successor, and only 40 percent of these believe they will actually be the successor. However, more than 60 percent believe their CEO would endorse them now for a future CEO role outside their organization.

To download a copy of the survey, please visit:  

About The Deloitte CFO Signals™ Survey 
The Deloitte CFO Signals survey was conducted for the third quarter of 2013 between August 9, 2013 and August 23, 2013. Seventy-seven percent of the 124 CFO respondents were from organizations with more than $1 billion in annual revenues, and 73 percent were from publicly-traded organizations.

Each quarter, CFO Signals tracks the thinking and actions of CFOs representing many of North America's largest and most influential organizations. This report summarizes CFOs' opinions in four areas: business environment, company priorities and 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 organization's most compelling challenges, and adapt to strategic shifts in the market. For more information about Deloitte's CFO Program, please contact or visit  

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SOURCE Deloitte