Euro Debt Crisis Drives Search for Eurozone Acquisitions and Accelerates Investments in Emerging Markets, Accenture Survey

  Euro Debt Crisis Drives Search for Eurozone Acquisitions and Accelerates
  Investments in Emerging Markets, Accenture Survey Finds

Companies signal long-term confidence in the eurozone economy by balancing cut
             backs with investments to gain competitive advantage

Business Wire

LONDON -- November 26, 2012

Half of eurozone-based companies are actively seeking acquisitions within the
eurozone in response to the currency and debt crisis, according to new
research by Accenture (NYSE: ACN). The survey of 450 business leaders in
countries in and outside the eurozone also reveals that although 44 percent
have accelerated their investments in emerging markets as a result of the
uncertainty, companies in the currency area continue to invest in their
eurozone operations.

The research, published in a report: Exploring the Eurozone: take cover or
take advantage, covered France, Germany and Spain, as well as China, the UK
and the United States. Ninety-six percent of responding companies have
revenues of at least $1bn and more than half report revenues of at least $5bn.

A majority (55 percent) of worldwide respondents say they are delaying
investment in the eurozone and exactly half say their long term investment
plans are now more focused on emerging markets due to the debt crisis.
Nevertheless, confidence in the currency area remains as a quarter of French
and Spanish respondents (25 percent and 27 percent respectively) and 64
percent of German companies say that the crisis has made them accelerate their
investment at home or elsewhere in the eurozone.

Fifty percent of surveyed eurozone companies say they will begin to seek
acquisitions in the currency area immediately or have already started doing so
(58 percent of German, 57 percent of Spanish and 36 percent of French
respondents). This compares to 38 percent of companies outside the Eurozone.

Likewise, eurozone companies are more likely to seek joint ventures (JVs) in
the currency area in response to the crisis. Forty-five percent are actively
seeking JVs compared to 34 percent of companies outside the eurozone. German
companies are most eager (56 percent) followed by Spanish companies (48
percent).

“It is inevitable that slow growth and uncertainty in Europe will make
investment to emerging markets look attractive,” said Mark Spelman, managing
director, Strategy, Accenture. “But the eurozone remains a good long term bet
and a significant number of high performing companies see opportunities for
organic and inorganic growth. This is less a case of outside investors
snapping up distressed assets, and more about companies sharpening their
competitive edge and gaining market share on the back of their confidence in
the European economy.”

Outside the eurozone, Chinese companies appear keener than those in the US or
the United Kingdom to take advantage of the crisis and increase their
investments in the currency area, according to the survey. 25 percent of
Chinese respondents say they plan to accelerate their investments in the
eurozone due to the crisis, compared to three percent of US and 11 percent of
UK companies. Seventy-one percent of Chinese respondents are seeking
acquisitions in the eurozone or will shortly begin to do so, compared to 20
percent of US and 30 percent of UK companies.

Cutting back while investing in operational excellence

Although companies are making aggressive cut backs, there is also evidence
that some are using the situation to improve their operational efficiency.

  *72 percent of executives in the global sample intend to implement
    discretionary cost cuts in the eurozone immediately, or have already
    started doing so. This rises to 83 percent of Spanish companies and 90
    percent of Chinese companies.
  *48 percent of the global sample plan to implement staff cuts in the
    eurozone immediately or have already started doing so, rising to 53
    percent of companies based in the currency area. Forty-three percent of
    executives are considering relocating some operations as a result of the
    crisis. This includes ten percent who may move some operations out of the
    eurozone all together. German and Chinese companies are most likely to
    relocate some operations.

Only a third (32 percent) of respondents believe the eurozone crisis presents
no opportunities to gain competitive advantage. When asked which areas of
their business the currency crisis is encouraging them to improve, 33 percent
of the surveyed executives said they would to invest more in outsourcing, 30
percent in flexible supply chains, 28 percent in risk management capabilities
and 25 percent in shared services.

“Our analysis of previous downturns is also relevant today: high performers in
the upturns are those who have invested in the downturns,” said Spelman. “The
eurozone crisis has resulted in a severe response from companies and our data
suggests that they will continue to reduce costs over the longer term. But
companies must balance measures to minimize costs today with efforts to
improve their longer term operational excellence and competitive advantage.”

Confidence in the financial partners

The study suggests that some companies may have some challenges in financing
intended operational investments or their more ambitious plans for growth and
acquisitions. Fifty-nine percent of companies think that the capital position
of Europe’s banks is exposed or dangerously exposed to the crisis. And even
though 63 percent of eurozone respondents are confident that their primary
bank is sufficiently or well capitalized, 45 percent say their primary bank’s
ability to lend has been ‘hampered,’ or ‘hampered significantly.’

These figures may explain why almost half (48 percent) of eurozone respondents
say they plan to establish new banking relationships in the eurozone. That
average figure coincides with the proportion in Spain, and while only 31
percent of French companies participating share this view, the figure rises to
58 percent of German companies.

“Given the desire of many companies to seek growth and acquisition
opportunities within the eurozone, banks will need to demonstrate their
stability and capital strength in order to maintain client confidence,”
Spelman continued. “High performing companies will intensify their demands
from the banking sector as they look to take advantage of opportunities
created by uncertainty in the eurozone.”

View the full report at www.accenture.com/eurozone

View the infographic at www.accenture.com/eurozoneinfographic

About Accenture

Accenture is a global management consulting, technology services and
outsourcing company, with 257,000 people serving clients in more than 120
countries. Combining unparalleled experience, comprehensive capabilities
across all industries and business functions, and extensive research on the
world’s most successful companies, Accenture collaborates with clients to help
them become high-performance businesses and governments. The company generated
net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its
home page is www.accenture.com.

Contact:

Accenture
Chris Allieri, + 917-452-5161
chris.allieri@accenture.com
or
Matthew McGuinness, + 44 77400 38921
matthew.mcguinness@accenture.com
 
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