“With uncertainty lingering above global prospects, Romanian companies face the same challenges of maximizing profits amid intensifying competition in their core markets. They are not immune to economic realities and need to focus on cost reduction, operational efficiency and re-allocation of capital, so as to consolidate their core competencies and – if the case – exit the inefficient non-core ones,” reads the second edition of the Deloitte Central Europe CFO Survey.
The survey polled 265 senior finance managers from top companies operating in Romania, Croatia, the Czech Republic, Hungary, Poland and Slovakia.
“The Romanian economic and business outlook is uncertain at the moment, even though there are some positive signs to be seen, such as lower inflation, a relatively stable currency and settled consumer confidence levels. This uncertainty and sensitivity to risk mean, however, that few CFOs are currently contemplating taking additional risk onto the balance sheet, and instead are focused on improving their cash flow through reducing costs and increasing revenues,” said Pieter Wessel, partner of Deloitte Romania.
He added that they preference for the markets on which they are already operating indicates that companies are keen to continue doing what they know best, while improving operations and increasing productivity.
“We believe that innovative businesses have an opportunity to reach price-sensitive consumers by developing new, lower-cost goods and services,” said Wessel.
According to the survey, 70% of respondents agree that business restructuring is a priority over the next twelve months. Most of them believe that the M&A activity will remain largely unchanged or register tepid increases over the next year.
Some Romanian companies will seek purchases abroad, shows the survey.
Many Romanian CFOs foresee an improved performance for their own companies, despite financial and economic uncertainty. About 90% of them believe now is not a good time to take on new risks, reads the survey.
“Growing revenues from existing and new markets is a priority for the year ahead, alongside the reduction of direct and indirect costs. These will lead to an improved cash flow, which is the primary aim of most CFOs,” according to the report.
Most CFOs see restructuring as a means of reducing business complexity and costs. Equity sales are seen as more attractive than bank-borrowing, considering that the cost of credit is expected to rise during this year.