Deloitte “CFO Signals” Report 3Q 2011 – Notable Aspects

Recently Deloitte released their “CFO Signals” report (pdf) for the 3rd Quarter 2011.

As seen in page 2 of the report, "Ninety-one CFOs responded during the two weeks ended August 26.  Three-fourths are from public companies, and three-fourths are from companies with more than $1B in annual revenue."

Here are some excerpts that I found notable:

from page 7:

Concerns over further economic turmoil topped CFOs’ worries back in 3Q10—and they are back in force. This quarter, economic concerns rebounded strongly and are again the dominant concern for many CFOs. In fact, economic risk is the top issue within all industries except Healthcare/Pharma and for nearly half of CFOs overall.

from page 9:

Recession fears have resurged in the wake of this quarter’s string of notable global economic events. About one-third of all CFOs now say their companies see recession as the most likely scenario over the next few years—34% for the U.S., 18% for Canada, and 40% for Mexico. Recession or not, more than half of all CFOs say their financial projections have declined (or will decline) as a result of the turmoil.

from page 11, concerning “Industry” :

Nearly 30% of CFOs named market growth a top challenge last quarter, but that number fell to 18% this quarter. Meanwhile, the proportion of CFOs citing pressures from market contraction rose from 25% to nearly one-third.

Rising uncertainty around market demand is leading to increased competition and pricing pressures. Pricing trends are again a top concern for 40% of companies (53% last quarter) and for five of the eight industries, strongest within Technology, Financial Services, and T/M/E. Although input prices are still the dominant industry challenge for Manufacturing, their effect on pricing seems to have declined with just 14% of CFOs overall naming it a top challenge (down from 25% last quarter). Rising competition for stagnating markets appears to be the bigger contributor with more than a quarter of CFOs citing new competitive tactics as a top challenge (these tactics are the top concern in Retail/Wholesale and second in T/M/E).

from page 13, concerning "Company" :

CFOs currently project average year-over-year sales gains of about 6.8%* (slightly below last quarter’s 7%), and 83% of CFOs overall project gains (about the same as last quarter).

from page 13, concerning "Company" :

Earnings growth expectations declined markedly to 9.3%* (versus 14% last quarter), but 82% of CFOs still expect gains.

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The Special Note summarizes my overall thoughts about our economic situation


SPX at 1200.25 as this post is written