The optimism towards the general economic outlook among chief financial officers (CFOs) in the region has reached its highest point in 18 months, said a study.
The Deloitte 2011 semi-annual Middle East CFO survey titled ‘resilient optimism in the face of uncertainty’ provides a forward looking vision on the road ahead for markets in the region.
The survey presents results that were collated from numerous respondents within listed and non-listed companies in a variety of industries, namely: manufacturing, consumer business and transportation, energy and resources, real estate, hospitality and leisure, telecom, media and technology, and financial services.
“Despite the cautionary news flow, including the Japanese earthquake and waves of social upheaval and conflict unfolding around the region, CFOs continue to express growing optimism ever-since our first CFO survey was launched 18 months ago,” said James Babb, CFO programme leader at Deloitte in the Middle East, a leading financial advisory services provider. Key points in the Deloitte 2011 semi-annual Middle East CFO survey include:
• 67 per cent of CFOs are decidedly optimistic regarding the financial prospects of their company compared to the prior six months.
• 82 per cent of them believe their company’s operating cash flow will increase over the coming 12 months.
• 63 per cent of CFOs expect an increase in Mergers and Acquisitions (M&A) activity over the next 12 months. 34 per cent indicated that they are planning for an M&A transaction during the period, 24 per cent are looking for a joint venture, while 16 per cent are seeking divestiture.
• Bank borrowings continue to be the preferred instrument of finance for CFOs with a net 68 per cent holding a favorable view.
• 52 per cent of CFOs indicated the combination of increased social unrest and potential for military conflict as the high impact risk they are worried about the most.
• CFOs face a tsunami of global debt maturities over the coming three to five years and need to determine their financial strategy now to ensure future success.
• CFOs are strategically focused on improving cash flow, organic growth, and reducing cost.
• According to the CFOs surveyed, the market indicates that inflation is on the horizon.
“Over the past 18 months CFOs have continued to provide accurate forecasts of the financial and economic prospects in the region and we hope they have provided us with equally prescient insight into what to expect going forward,” Babb concluded.