Mercurial CFOs feeling better in Q4 2012, after gloomy Q3

The CFOs of our leading companies are feeling much, much better as we move into 2013. After plumbing record depths of gloom, as we reported, in period from June to September last year, they had a decided uptick in optimism in last quarter of the year, and it’s nearly jolly hockeysticks again.

Deloitte’s chief operating officer, Keith Skinner, says it’s worth taking note of CFOs because they are a good lagging and leading indicators of business conditions.

He says CFOs feel they have cut staff and operations where necessary and their companies are ship-shape. “It seems most ASX300 CFOs have right sized their businesses, cleaned up their balance sheets and are adjusting to the new norm of a stronger Australian dollar.

“A solid 70% of CFOs expect to see positive revenue growth in the coming year and 63% expect an increase in cash-flow over the same period. These two key indicators have been steadily increasing over the past two quarters.”

The last survey revealed only 55% of CFOs felt optimistic, a record low since the survey began several years ago. Uncertainty was bugging them back then … Europe, China, the high dollar, politics. These days, it is mainly just domestics politics that is getting their goat. Although global uncertainty still ranks high on their list of worries, it is not constrining them from action.

CFOs are getting used to the high dollar, the report found, and the two interest rate cuts have helped to lift their spirits. In fact, 23% of CFOs now say that the cost of capital is cheap or very cheap.

Most CFOs (85%) expect their revenue growth to come from existing customers, which is also a clue that they expect the economy to improve. 

However, there is a risk of that companies around the world will become complacent about risk, the CEO of accounting firm, KPMG, Michael Andrew, has told the Australian Financial Review. Andrew is at the 43rd World Economic Forum in Davos.