Canadian CFOs Remain Positive on State of National Economy and Industry, Says
New GE Capital Survey
-- View of world economy remains less optimistic
-- Most CFOs expect increasing or stable profits this year
-- Large majority to continue hiring over next 12 months
-- Top immediate concerns: European fiscal conditions and U.S.
MISSISSAUGA, ON and MONTREAL, Nov. 8, 2012 /CNW Telbec/ - The sentiment of
Canadian chief financial officers (CFOs) of middle-market companies on the
state of their own industry and the strength of the national economy remained
steady and positive in the third quarter, according to the latest GE Capital
Mid-Market CFO Survey. CFOs' view of the world economy was unchanged and
remains less optimistic than about the national economy.
More than one-third (38%) of CFOs think the national economy will grow over
the next 12 months. Nearly half (48%) think it will stay the same, although
that's down three percentage points since the last survey in this series,
which was conducted in the first quarter of 2012.
The survey, which was conducted during the third quarter of 2012, included
responses from 203 CFOs of companies with average revenues of $163.3 million
operating across five distinct industries including: Energy; food, beverage
and agribusiness; metals, mining and metals fabrication; retail; and
CFOs' top two immediate concerns are the potential impact of European fiscal
conditions and the American economy, although worries about the latter
declined by five percentage points since the first quarter. Concerns about
unemployment, oil prices and credit market liquidity also increased. In a
similar GE Capital survey conducted in the U.S. during the same time period,
unemployment is the top concern, followed by the U.S. budget deficit and
European fiscal conditions.
Over the next 12 months, Canadian CFOs expect labour costs to have the
greatest impact on business performance, followed by costs for energy
(including oil and gas) and materials, supplies and equipment. Concerns about
the European economic slowdown increased the most, while concerns about the
strength of the Canadian dollar decreased the most.
"Our survey shows that, despite a range of domestic and international
concerns, Canadian CFOs still expect company growth over the next 12 months,
which is very good news" said Katherine Lee, president and CEO of GE Capital's
commercial lending and leasing business in Canada. "We stand ready to help
them expand their businesses, whether that means growing into new geographies,
taking advantage of merger and acquisition opportunities or acquiring new
2012 Growth and Profit Expectations
Despite a slight softening, nearly half of Canadian CFOs expect their
businesses to grow moderately over the next one to three years. Moreover, most
CFOs expect increasing or stable profits in 2012.
-- Thirty-eight percent of CFOs expect to be in a cyclical or
limited growth phase over the same time period, an increase of
five percentage points.
-- Nearly three-quarters (72%) expect profits to increase or
remain the same this year compared to last year. Of those who
say profits will rise, the expected increase holds steady at
-- Nearly two-thirds (61%) expect revenues to increase, down from
67%. Expectations for a revenue decrease jumped 12 points. Of
the 61% who say revenues will rise, the expected increase grew
five points to 13%.
-- Almost three-quarters (73%) said their new order pipeline is
the same or better compared to this time last year; that
represents a 17 point decrease among respondents who said their
pipeline had increased.
Confidence Indicators: Hiring, Cost Structure and Capital Expenditures
-- Nearly three-quarters (74%) of CFOs said their companies have
been hiring this year, up from 63% in Q1'12. Seventy-three
percent plan to hire over the next 12 months, down three
points. The retail, energy and transportation industries are
the most bullish in their hiring plans.
-- Companies conducting layoffs declined over the past 12 months,
down six points to 33%. Of companies that conducted layoffs,
the size of the workforce reduction was up four points to 14%.
-- CFOs in four of the five industries surveyed expect their cost
structures to increase in 2012. Of those who say cost
structures will rise, the expected increase rose to 7% from 5%.
-- Most CFOs plan to keep capital expenditures about the same this
year compared to 2011, but more than one-third (37%) plan to
increase them. Transportation CFOs lead all industries in
expectations for greater cap-ex (45%, up 5 points). Fewer U.S.
CFOs expect cap-ex to be greater (28%), and a larger share
(47%) think it will stay about the same.
-- Fifty-nine (59%) percent said their financing needs will remain
the same through the next 12 months (down six points).
Thirty-four (34%) percent said their financing needs will
increase (up four points); those in the energy industry are
most likely to expect increased financing needs. In the U.S.,
72% think their needs will stay the same, and 20% expect them
Other Top Findings
-- End-market demand — Canadian CFOs are increasingly
concerned about end-market demand (46%, up from 38%) and
capital / liquidity constraints (29%, up from 19%). In the
U.S., end-market demand is also the top business concern (46%).
The second-greatest concern is competition from larger
companies (37%). Capital / liquidity constraints were mentioned
by 17% of U.S. CFOs.
-- Credit availability — The majority of CFOs said their
current lender has maintained credit availability (61%) and
will continue to do so if additional financing is necessary
-- Pricing outlook — Over half (51%) plan to raise prices in
2012, although more plan to decrease prices than in Q1'12; that
compares to 44% in the U.S., where CFOs are more likely to keep
pricing stable (45%).
-- Internal challenges — Implementing service process
improvements (55%) and talent/leadership development (51%) were
cited as CFOs' biggest internal challenges in 2012. In the
U.S., the number one challenge is employee benefit cost
For an executive summary, including industry highlights, visit
http://www.gecapital.ca/home for English or http://www.gecapital.ca/home-fr
Among the CFO surveys published in the Canada, 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 among GE Capital's current and prospective
customers. The list comprises middle-market companies with revenue between
CAD$50 million and $1 billion (with the exception of transportation industry
respondents, where revenues start at $15 million).
About GE Capital
With more than 20 offices throughout Canada, GE Capital (gecapital.ca) offers
a wide variety of financial products and services to address commercial
financing and fleet management needs in all phases of a business' lifecycle.
From equipment finance to working capital and growth financing to large
asset-based and restructuring loans, we apply our wealth of industry expertise
and develop custom solutions for your company. Some of the industry sectors we
specialize in include transportation, construction, healthcare, agriculture,
forestry, manufacturing, oil and gas, wholesale and retail, and restaurant and
GE Capital offers consumers and businesses around the globe an array of
financial products and services. For more information, visit gecapital.com or
follow company news via Twitter @GECapital).
Brigitte Dagnault GE Capital, Canada Montreal, QC 514-397-5323
Lisa Tibbitts GE Capital, Americas Norwalk, CT 203-956-4582
SOURCE: GE CAPITAL CANADA
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-0- Nov/08/2012 21:22 GMT
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