As financial and economic uncertainties are high, 80% of CFOs in Romania continue to be cautious when it comes to taking greater risk on to their company balance sheets, according to the fourth edition of the Deloitte Central Europe CFO Survey.
Most of the polled CFOs said their main priority in the next 12 months is to increase revenues from current and new markets, as well as cut both direct and indirect costs.
Moreover, 65% of them said they must focus on generating and managing cash flows, while 35% of the CFOs said they would focus on new investments.
According to the survey, views on the attractiveness of loans are split. Some 25% of respondents find such financing sources “attractive”, and a similar percentage “unattractive”. Moreover, 60% of CFOs believe it is quite difficult to obtain loans from banks.
The share of executive managers that believe financing costs will fall in the next year doubled to 20% from 9.5% in December 2012. However, 55% of them expect financing costs will rise.
“When it comes to bank loan price attractiveness, the CFOs answers indicate equivalent ratios. On the other hand, based on the survey, new equity funding is not considered an attractive option. Given the low amounts of new credit available in the market, Romanian CFOs will need to maintain focus on generating and managing cash flows, as obtaining credit will remain difficult,” said Ahmed Hassan, Country Managing Partner, Deloitte Romania.
According to the survey, the economic expectations of CFOs in Romania have slightly decreased over the past six months. Some 70% of respondents expect the Romanian economy will stagnate in the next year, and 10% of them fear recession (up from 4.8% last December);
About 20% of CFOs believe the Romanian economy will grow by at least 1.5%.
The survey also reveals that 40% of respondents are fairly optimistic about their company’s financial prospects, up from 28.6% in December.
“The economic expectations of CFOs in Romania have slightly decreased in the last six months. Nevertheless, Romania still benefits of strong key indicators – high foreign exchange reserves, falling inflation, a good potential for agricultural harvests which offer room for further exploitation, the emergence of a growing SME sector, an expected increase in EU funds absorption rate, etc.,” the survey reads.
Cautiously optimistic about future growth, Romanian companies must take the right decisions and develop the best strategies.
“CFOs have to sieve through a wealth of available information and forecasts to find the right balance of actions that will help them develop a strategy for their businesses in 2013. They have to decide whether to forecast growth, contraction, investment or diversification, volatile foreign exchange rates or stabilization, ease of access to finance or the need to cut costs,” Hassan said.
The survey polled 668 top chief executive officers and financial experts at key companies in Romania, Croatia, Hungary, Poland and Slovakia.