CFOs Warm on Growth

The following is from the Bank of America 2012 CFO Outlook – Spring Update

Who participated and how results were gathered

From February 16 through March 14, 2012, Granite Research Consulting completed 251
interviews with financial executives from U.S. companies with annual revenues
between $25 million and $2 billion. Participants are referred to as CFOs throughout the report since two-thirds of those surveyed have C-suite titles and most are CFOs.

CFOs Warm on Growth

Senior financial executives have a considerably warmer view on corporate performance
and the U.S. economy than they did just a few months ago—with 93% of CFOs now
forecasting growth in 2012. Whether renewed CFO optimism signals a temporary
spring thaw as we experienced in 2011 or a blossoming upward trend depends on
several factors, from rising oil prices and looming legislative rulings on health care reform to U.S. presidential and congressional races that will continue heating up through the fall elections.

U.S. economy and sectors sprout gains

CFOs give the U.S. economy a score of 53 out of 100, reversing steady declines from
54 last spring to 44 at the onset of 2012. This gain may be due in large part to significantly increased confidence that the U.S. economy will expand in 2012 (63%) versus CFO perspective four months ago (38%). Confidence in the U.S. services sector is up seven points to 63, and U.S. manufacturing now rates 56, six points higher than it was at the beginning of the year. Views on the world economy remain cautious while improving from 43 to 47.

Rising revenue, employment and prices

Sixty-four percent of CFOs expect their revenues to rise, half project greater profits and
51% anticipate more hiring in 2012. Perhaps due to bolstered confidence in the economy and consumer spending, 57% of companies will be raising prices on their products and services.

Employing diverse strategies

More than 9 out of every 10 CFOs surveyed see growth ahead for their companies 22%
expect growth of 10% or more, 34% estimate growth of 5-9% and 37% expect less
than 5% growth. Leading growth strategies include targeting new customer segments (31%), expanding into new geographic markets (12%) offering new products (11%), and mergers and acquisitions (11%). Of the remaining companies, 33% plan to grow by concentrating on their current business model without significant changes and 2% plan on divesting underperforming businesses.

Oil prices and government fuel concern

Decreasing concerns about the economic impact of unemployment, consumer confidence and the housing market have been partially offset by higher anxiety over oil prices
(65%) as well as the effectiveness of government leaders (63%). When it comes to corporate financial concerns, 51% of CFOs cite energy costs and healthcare costs as their leading issues.

Keep it simple

Responding to ways the U.S. government can encourage domestic business growth, 56% of CFOs call for simpler government laws and regulations, 41% seek changes to corporate
tax policy, 32% cite reducing the budget deficit, and 30% suggest offering tax credits or incentives for investing in facilities or relocation.

Harvest CFO Consulting recommends you read the full report which can be accessed as

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