Focus for financial officers shifts from cuts to profits

THE focus of chief financial officers at major Irish companies has shifted from cost cutting to profits, according to research from Deloitte.

And seven in 10 chief financial officers (CFO) believe sales and profits will stabilise or improve over the next six months.

However, the first quarterly CFO survey by Deloitte finds that Irish CFOs do not expect the Irish economy to rebound as quickly, identifying the end of 2011 as a likely timeline for broader macro-economic improvement.

“While there is still caution in the air, there are signs appearing that the tide is turning; 32% and 43% have experienced an increase in turnover and profit respectively over the last six months.

“They expect this upward trend to continue and two-thirds anticipate full recovery by the end of 2010. Focus has shifted from cost cutting programmes to maintaining and/or increasing turnover and profit stabilisation,” Deloitte partner Shane Mohan said.

He said most companies have addressed factors within their control – reducing employee numbers and related costs, consolidating businesses, cutting discretionary spend and postponing capital expenditure.

Asked how they saw their financial prospects now compared to six months ago, 73% are starting to adopt a positive outlook.

The figures shows that 37% were more optimistic compared to 27% who were less optimistic. Looking forward, 55% see profits rising over the next six months against 25% who believe profits will fall over the period. Almost half, 46%, see turnover rising in the period compared to 30% who see it falling.

Only one in three respondents expect economic recovery by the end of 2010. The two main reasons for this are firstly the state of the public finances and secondly the need to improve competitiveness.