Majority of CFOs see profit recovery in next six months

The first quarterly CFO Survey by Deloitte, which seeks 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, 37pc were more optimistic compared to 27pc who were less optimistic.

Looking forward, 55pc see profits rising over the next six months against 25pc who believe profits will fall over the period. Almost half, or 46pc, also see turnover rising in the period compared to 30pc who see it falling.

Company optimism not reflected in wider economy
However, Irish CFOs do not share the same optimism about the Irish economy as they do about their businesses, the survey showed, with most not expecting the economy to rebound as quickly and pinpointing the end of 2011 as a likely timeline for broader macro-economic improvement.

Only one third of respondents expect economic recovery by the end of 2010.

Stumbling blocks to recovery
The two major stumbling blocks to Irish economic recovery for the surveyed CFOs is the state of public finances and the need to improve international competitiveness.

Some 89pc of CFOs are dissatisfied with the measures the Government has taken to date to resolve the crisis surveyed in the public finances and feel that more affirmative action is required to achieve efficiencies, including structural reform and a review of employee numbers and benchmarking.

CFOs are also concerned with issues impacting on international competitiveness. Tax increases, emigration and a ‘brain drain’ are potential threats, with the lack of finance and credit availability experienced by businesses and individuals perceived as not being conducive to an environment of risk-taking and entrepreneurship.

CFOs gain control, look to Government
“Most companies have addressed factors within their control - reducing employee numbers and related costs, consolidating businesses, cutting discretionary spend and postponing capital expenditure. The focus for the many Irish CFOs has now shifted to growing revenues and profits which is a very positive development,” said Shane Mohan, Partner in Deloitte.

“CFOs feel they have control over the internal issues that needed to be addressed and have positioned their organisations for growth. In order for this growth to be realised, they believe that further action must be taken to address the domestic economic environment.

“Our sense is that Irish CFOs await a definitive economic plan, particularly the 2010 Budget strategy, with a keen sense of anticipation. Only then will their organisations be fully able to capitalise on this growth potential,” he added.

CFOs approve of bank reforms
However, CFOs are more confident about the measures undertaken by the Government to repair the Irish banking sector.

Some 55pc of the CFOs surveyed 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.