European CFOs beset by financial and economic uncertainty

CONTROLLING costs is the biggest priority for chief financial officers at Europe’s largest businesses who struggling against high levels financial and economic of uncertainty, Deloitte has found.

According a survey 1,300 CFOs across 14 different countries, 23% of finance chiefs said that now is a bad time to take risk onto their company balance sheets.

Over half pointed to the high levels of uncertainty facing their business as the reason for the low risk appetite among Europe’s CFOs. Of the 14 countries participating in this survey, 12 reported higher levels of financial and economic uncertainty.

Cost control was identified as either the first or second biggest priority for CFOs in 11 out of 12 countries responding to this question. This was followed by organic expansion and introducing new products and services. Increasing capital expenditure is only mentioned as a top-five priority by CFOs in six countries.

Despite this, 51% of CFOs said they expect revenues for their business to improve in the next 12 months, while 21% said they expect operating margins to improve.

“CFOs are still demonstrating caution in their business strategies, prioritising cost cutting and control, a trend we have observed for many years and which now looks to be continuing in 2015,” said David Sproul, senior partner and chief executive of Deloitte UK.

“Expansion via organic growth and new products and services looks most likely, with lower appetite for increased capital expenditure and growth through acquisition.”

Deloitte’s latest poll of CFO sentiment in the UK found that expectations for capital expenditure, while still positive, have dipped as fears over post-election policy changes have weighed on corporate expansion plans.