U.S. Mid-Market CFOs See Opportunities Despite Economic and Political
Uncertainties Says New GE Capital Survey
*Current sentiment on industry and U.S. economy better than year ago, but
lower than Q1
*Sentiment on global economy continues to decline
*Most continue to feel positive about company outlook
*Hiring continues, but more cautiously
NORWALK, Conn. -- September 27, 2012
U.S. chief financial officers (CFOs) of middle-market companies surveyed this
summer remain generally positive about the state of their own industries and
continue to see measured growth over the next three years, according to the
latest GE Capital Mid-Market CFO Survey.
CFOs’ sentiment on the state of the U.S. economy and their respective
industries declined slightly since the first quarter survey but remained above
the levels of a year ago. Their view on the current health of the world
economy continued to deteriorate.
A majority of CFOs expect to grow their revenues in 2012, and nearly
two-thirds of CFOs still plan to hire in the next 12 months, although both
figures fell from six months ago.
The survey, which was conducted during the third quarter of 2012, included
responses from 500 CFOs of companies with average revenues of $124 million
operating across seven distinct industries including: food, beverage and
agribusiness; general manufacturing; healthcare; metals, mining and metals
fabrication; retail; technology and business services; and transportation.
“Middle-market CFOs still see expansion opportunities over the next three
years, but remain cautious as concerns about the business environment and
uncertainties in areas such as tax and healthcare policy persist,” said Dan
Henson, president and CEO of GE Capital, Americas. “From our perspective as a
provider of capital, we see positive year over year growth in both lending and
leasing. Economic sentiment, while still positive, is slightly more guarded
than we saw in the last survey. In the meantime, the credit markets are very
healthy, providing extremely attractive terms for borrowers as credit
facilities come up for renewal and as acquisition or other investment
2012 Growth and Profit Expectations
CFOs’ expectations for their industries shifted from an expansion phase to a
more stable outlook. Moving forward, CFOs continue to project moderate growth
for their companies, even amid a more measured sentiment for the U.S. economy.
*Eighty-five percent expect the U.S. economy to grow or be stable in the
next 12 months, down 11 percentage points since the first quarter, but
higher than a year ago.
*Eighty-eight percent expect their industry to grow or be stable during the
same time period.
*Revenue expectations for 2012 remain positive but have diminished, with 54
percent projecting increases, down 13 percentage points since the last
*Seventy percent expect profits to remain the same or increase this year
compared to last, down 11 percentage points.
*Healthcare and raw materials costs continue to be cited as the top threats
to business performance in the next 12 months.
“This data reinforces what we have heard from our clients. Over the last
several years, middle-market companies have focused on right-sizing to manage
through a lower growth environment and have maintained disciplined approaches
to growth — and they now have cash on hand that they are looking to use
wisely, including purchasing new equipment and making strategic hires,” said
Confidence Indicators: Hiring, Cost Structure and Capital Expenditures
*Forty-six percent of CFOs plan on increasing their cost structure in 2012.
Eighteen percent expect to decrease their cost structure in 2012, up from
15 percentage points since the last survey.
*Sixty-two percent of CFOs plan to hire in the next 12 months, down 12
percentage points from the last survey. Transportation companies are the
most bullish in their hiring plans, with 79 percent expecting to hire.
*Layoffs continue to decline, down to 24 percent from 27 percent a year
*Expectations for greater capital expenditure spending increased slightly
to 28 percent. Retail companies are the most likely to increase their
Other Top Findings
*Top threats to health of the economy – Domestic unemployment numbers and
global fiscal concerns continued to weigh heaviest on CFOs.
*Pricing outlook – For the first time since the third quarter of 2010, less
than half (44 percent) of CFOs expect to raise prices on their company’s
products or services this year, down from 51 percent in the first quarter
*Credit availability/cost – Sixty-five percent of CFOs state that credit
availability from their current lender has stayed the same, an increase of
eight points from a year ago. Seventy-two percent believe the cost of
capital will remain the same in the next 12 months, with only 18 percent
predicting an increase.
*Internal challenges – Reducing employee benefit costs and implementing
service process improvements were cited as the most common internal
challenges faced by middle market CFOs today.
For additional survey data, including detailed industry-level findings,
contact Ned Reynolds at 203-229-5717. For an executive summary including
industry highlights, visit www.gecapital.com/cfosurvey.
GE Capital supports the middle market with more than just financing. In 2011,
in partnership with the Fisher College of Business at The Ohio State
University (OSU), GE Capital founded the National Center for the Middle Market
(NCMM). The Center is the leading source of knowledge, leadership, and
innovative research on the U.S. middle market economy. Through research,
executive education, and student engagement, the NCMM is dedicated to
promoting job creation and growth in the middle market as well as driving the
dialogue on this vital economic segment. The NCMM has produced foundational
research on the size and contributions of the U.S. middle market, and is
funding and overseeing additional projects in this area. For more information,
Among the CFO surveys published in the U.S., the GE Capital Middle-Market CFO
Survey is one of the few that examines businesses across distinct sectors,
providing a more comprehensive picture of the way financial executives view
the world today and their outlook for the months ahead. The CFOs who were
surveyed were selected from an independent report produced by The Dun and
Bradstreet Corporation of middle-market companies with revenue between $50
million and $1 billion, and average revenue of $124 million (with the
exception of the transportation industry respondents where revenues start at
About GE Capital
GE Capital offers consumers and businesses around the globe an array of
financial products and services. For more information, visit www.gecapital.com
or follow company news via Twitter (@GECapital and @GELendLease). GE (NYSE:
GE) works on things that matter. The best people and the best technologies
taking on the toughest challenges. Finding solutions in energy, health and
home, transportation and finance. For more information, visit the company's
website at www.ge.com.
GE Capital, Americas
Ned Reynolds, +1-203-229-5717
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