27 Nov 2019 07:48

CFO Survey: Defensive priorities among CFOs of large Swedish companies

In the opinion of the CFOs of large Swedish companies, business opportunities are less favourable compared with in the spring survey. Companies’ defensive priorities are becoming increasingly clear since hiring intentions are approaching zero, fewer companies are planning to increase capital expenditure, and cost reduction is once again above growth on corporate agendas. A slowdown in growth is seen as the greatest risk although, in contrast to the rest of Europe, external uncertainty is not considered to be higher than normal.

The CFO Survey is carried out twice a year and aims to reflect changes in attitude among Swedish CFOs and compare these with developments in the rest of Europe. This autumn’s report shows that business optimism for the next six months has fallen for the second consecutive survey and that for the first time since the question was included (2013) the financial outlook is considered to have worsened. This result mirrors development in the rest of Europe where the financial outlook, however, is considered to have worsened further.

“Despite a generally more cautious attitude in this autumn’s survey, nearly all CFOs in the Swedish companies are still hopeful that it will be possible to increase, or at least maintain, business revenues. If this turns out to be the case, it indicates a soft landing for the economy rather than a crisis,” says Henrik Nilsson, partner Deloitte.

Defensive agenda

After a year and a half, cost savings have re-emerged as the companies' top priority at the expense of growth plans that previously was top priority. In the same vein, plans to increase capital investment is abating and the willingness to hire approaches zero. For the engineering companies, the defensive tendencies are most evident with an intention to reduce investments and the workforce in future. This, in line with the broader European survey, also indicates a decline in investment and a smaller workforce in future. For the second survey in a row, the number of business transactions is predicted to be flat, which also indicates that growth plans are gaining less and less focus.

“The most worrying result in the survey is that it suggests a stronger slowdown in manufacturing industry. This can be explained by the sector being more exposed than others to the global economy but what’s worrying is that historically it has shown a tendency to be ahead of other sectors,” says Karl Steiner, economist at SEB.

Slowdown in growth is the greatest risk

Concern for a slowdown in the economy which permeated the spring survey is growing. The economic outlook is not just the greatest risk but also the risk that CFOs consider has increased most in significance. Concern for the economy is also shown in pressure on margins and declining domestic demand being the next most significant risks. We also note that geopolitical risk is the risk that is growing next fastest. A lack of qualified staff is now down at fourth place after being top in several surveys.

Swedish companies’ climate initiatives are higher on the agenda that in other European countries

The survey’s “hot topic” is about the companies’ climate initiatives. The responses show that Swedish companies’ climate initiatives are placed significantly higher on the agenda compared with other European countries. CFOs perceive that pressure on the company to act on climate change is greatest from their companies’ customers, employees and boards. Regarding action taken, a wide majority reply that they have increased the efficiency of energy use and are using more climate-friendly equipment. Fewer companies adopt a more systematic strategy with assessment of the risks of climate change for their business or including them in their management processes.

“Taken overall, the results show that companies have heeded the message about adapting to climate change from their stakeholders, but that action so far has in the first hand been reactive rather than strategic,” says Henrik Nilsson, partner Deloitte.

About CFO Survey

The Deloitte/SEB CFO Survey aims to reflect attitudes amongst Swedish CFOs in different sectors as well as the relation to attitudes in the rest of Europe and thus build an understanding of economic and financial trends. It is published twice a year and is carried out in Sweden and 18 other European countries. The full report can be found at www.cfosurvey.se.

For further information, please contact
Karl Steiner, Economist SEB Research
070-332 3104, karl.steiner@seb.se

Henrik Nilsson, partner, Deloitte
073-397 1102, henrik.nilsson@deloitte.se

Press Contact
Frank Hojem, Head of Corporate Communication SEB
070-763 9947, frank.hojem@seb.se

Christer Ahlgren, press contact, Clients &Industries, Deloitte
0708-14 23 20, christer.ahlgren@deloitte.se

SEB is a leading Nordic financial services group with a strong belief that entrepreneurial minds and innovative companies are key in creating a better world. SEB takes a long-term perspective and supports its customers in good times and bad. In Sweden and the Baltic countries, SEB offers financial advice and a wide range of financial services. In Denmark, Finland, Norway, Germany and UK the bank's operations have a strong focus on corporate and investment banking based on a full-service offering to corporate and institutional clients. The international nature of SEB's business is reflected in its presence in some 20 countries worldwide. On September 30, 2019, the Group's total assets amounted to SEK 3,046 billion while its assets under management totalled SEK 1,943 billion. The Group has around 15,000 employees. Read more about SEB at http://www.sebgroup.com.