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20 April 2016

Confidence Returns to Big Business as Corporate Purse Strings Relax

Confidence Returns to Big Business as Corporate Purse Strings Relax

Summary

Buoyed by a sense of optimism in the economy and their own recent performance, finance and corporate executives from some of Australia’s largest companies have signaled their intentions to spend big this year as well as expand and up-skill their workforce to spur their companies to lofty heights.  

The findings are from the ninth annual American Express/CFO Research Global Business and Spending Monitor, an annual global survey exploring attitudes and sentiment of senior finance executives from companies with revenues exceeding US$500 million.

According to the research, 64 per cent of CFOs expect to see economic expansion in Australia over the next 12 months and the vast majority, 81 per cent, say that this has given them the confidence to increase investment – 19 percent at aggressive levels.  More than a third of CFOs (36%) say their company’s level of spending and investment will increase by more than 15 per cent this year. 

A different picture from last year

According to American Express Director, Robert Gunning, this year’s results are markedly different from last year’s survey.

“Last year, Australian big business had applied the brakes to their spending; with Australia the second most reluctant market in the Asia Pacific region to aggressively invest, behind Hong Kong.  This year, it’s a different story.  CFOs from big business are realising that to remain competitive with other companies, enter new markets and better meet their customers’ needs, they need to relax their corporate purse strings and they’re doing just that.”

Most of this increased investment is being directed at sales and marketing activities, followed by improving production process efficiency and adding capacity for production or service delivery. 

Robert Gunning said that the increased investment could also be attributed to company’s projections of sales growth, with domestic and Trans Tasman sales anticipated to deliver the strongest results. 

“While CFOs are looking for customers on their own doorsteps first and foremost, they’re also increasingly looking abroad for fresh opportunities for expansion.  In fact, around three quarters of CFOs (78%) say exports will be more important for their company’s growth this year compared to 2015 – with most looking to China, a sign that nervousness around China’s economy is not a deterrent.”

In a positive sign for the Government, CFOs signaled praise for the free trade agreements negotiated with markets such as China, Japan and Korea over the past 18 months, saying that these agreements, more than any other factor, are likely to accelerate their company’s growth this year. 

Positive hiring intentions

With their sights firmly set on steering their organisation to new heights, it’s perhaps not surprising that the survey revealed spending on labour and headcount would be at greater levels this year for approximately 30 per cent of respondents.  Only 19 per cent said they’d decrease their investment in this area, with the remainder reporting flat spending.

According to Robert Gunning around 20 per cent of companies are expecting their workforce to grow by more than 15 per cent this year and most are focused on attracting talent in managerial positions, skilled workers and IT staff.  

“Big business is willing to pull out all stops to attract the best talent”, said Gunning.  “A third of CFOs said they’d be willing to offer flexible work schedules and an improved working environment to recruit the right candidate. When job seekers are considering one role over another, often it can come down to those companies that have a more progressive approach to their HR policies. CFOs know that having plans to grow their business will only be realised if they have the best team behind them.”

Key Takeaways

  • 12 per cent of CFOs expect they’ll increase investment by more than 30 per cent this year
  • 47 per cent of CFOs said they’re likely to make greater use of temporary or contract workers to meet staffing needs this year
  • 34 per cent said they’d likely move more positions from overseas to domestic locations
  • 60 per cent said that optimising cash flow is more important for their company this year
  • 33 per cent said their revenues were higher this year compared to a year ago. 

 

 

For more information or to organise an interview contact Jane Drew from American Express Public Affairs on 02 9152 2346 or jane.e.drew@aexp.com

About the methodology - For the ninth annual American Express/CFO Global Business and Spending Monitor 565 senior finance executives were surveyed at companies with annual revenues of $500 million or more across a wide range of industries in the U.S., Europe, Canada, Latin America, Asia and Australia.  33 of these respondents are based in Australia.  The research program, which included an online survey and interviews with senior finance executives, was conducted in October and November 2015.

CFO Research is the sponsored research group of CFO Publishing LLC, which produces CFO magazine, CFO.com and CFO Conferences. CFO Publishing, a portfolio company of Seguin Partners, is the leading business-to-business media brand focused on the information needs of senior finance executives. CFO Publishing has long-standing relationships with more than 500,000 executives.

 

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