CFO survey reveals remarkable extent of Asia Pacific optimism
10 July 2013
News, Asia, Southeast Asia
By Asia Asset Management
The majority of Asia Pacific-based chief financial officers (CFOs) expect growth in revenues and profits at their corporations in 2013. A full 71% are forecasting year-on-year revenue growth in 2013, while 62% are anticipating that their 2013 net profits will exceed those of 2012, according to the Bank of America Merrill Lynch 2013 CFO Outlook Asia report published on July 9, which surveyed 600 CFOs and senior finance executives in the region. In its second edition, the 2013 CFO Outlook Asia provides broad insight into the perceptions and strategies of key financial decision makers across the region, revealing insights into the outlook for their companies’ prospects, their own roles and their expectations for financing and M&A activity.
Other key conclusions of the survey are as follows: Southeast Asia presents significant earnings opportunities, with 81% and 72% of CFOs forecasting growth in revenues and profits, respectively, in Southeast Asia in 2013 compared with 2012; credit access remains strong and affordable, with CFOs in the region intending to maintain or increase borrowing (73%), with financing to be used for capital expenditure (23%) and to raise working capital (17%); credit availability remained robust in the last year according to respondents (90%), with 47% expecting the cost of capital to remain consistent this year; CFOs favour organic growth over M&A, with the majority of CFOs (63%) not considering any M&A activity in 2013, and half of those who intend to, doing so to achieve growth targets (and mostly looking at opportunities in their home markets or in developing Southeast Asia); the CFO skill set continues to evolve, with corporate strategic planning an important (61%) or growing (29%) part of the job of CFOs in the Asia Pacific.
Eighty-four percent of respondents believe it is getting tougher to recruit treasury staff with the appropriate skills in the region. Furthermore, CFOs polled will increasingly focus on improving operational efficiencies at their corporations and commit resources to enhancing working capital management to drive profits. On the flipside, respondents identified higher commodity prices as the greatest risk to earnings in 2013.
Despite economic uncertainty and global market headwinds, there remains a sense of unbridled optimism towards business prospects in the Asia Pacific, according to the region’s leading CFOs, said Steven Victorin, head of Asia Pacific corporate banking and global corporate banking subsidiaries at Bank of America Merrill Lynch. This year’s report again sheds relevant light on the perceptions and strategies of the evolving CFO function across the region. The results clearly reinforce this view.
The conclusions are based on over 600 interviews conducted with financial executives in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand. Over 50% of respondents came from corporations with annualised revenues of US$500 million or above, representing a broad range of multinational, regional and local companies.
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