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The Deloitte CFO SurveyNo return to business as usual
2009 Q2 Results14 July 2009
 
Contents
The Deloitte CFO Survey: Conclusions
1
Recovery in sight?
3
No return to boom
4
Deleveraging ahead
5
Optimism on M&A
6
Equity is back
7
Data archive
8
This is the eighth quarterly survey of Chief Financial Officers and GroupFinanceDirectors of major UK companies. The 2009 second quarter survey tookplace between 12 and 26 June. 117 CFOs participated including CFOs of 29FTSE 100 and 39 FTSE 250 companies. The remaining respondents were CFOsof other FTSE companies, large private companies and UK subsidiaries of majorcompanies listed overseas. The combined market value of the 83 UK listedcompanies surveyed is £396 billion,or approximately 30% of the UK quotedequity market. The Deloitte CFO Survey is the only survey of major corporateusers of capital that gauges attitudes to valuations, risk and financing.For copies of earlier CFO Surveys seewww.deloitte.co.uk/cfosurvey
 
The Deloitte CFO Survey
No return to business as usual
1
Key points from the 2009 Q2 Survey
•Optimism about the financial prospects ofthe UK corporate sector has risen to thehighest level in two years.•Most CFOs expect the UK economy to recoverin 2010.•Credit conditions have improved for thesecond consecutive quarter but they remaintough and CFOs expect this to persist wellinto the recovery.•CFOs are increasingly looking to equity andbond markets for finance.•The environment for business is expected toremain very difficult well into the recovery.•GDP growth is expected to be sluggish andunemployment is expected to rise for at leasta year into the recovery.•CFOs believe the upturn will be marked bytight credit conditions and high levels of riskaversion.•Corporates are likely to react to theseconditions by reducing debt levels and cuttingcosts.•Sentiment about issuing debt or equityimproved sharply in June, taking it to thehighest level since the Survey started in 2007.•Equity is now seen as a far more attractiveform of finance for corporates than bankborrowing, a reversal of the situation in 2007and 2008.•CFOs are positive about the outlook formergers and acquisition activity. Sentimentabout M&A and private equity activity hasreached the highest level in two years.
The first quarter 2009 CFO Survey, released in April,reported “glimmers of hope” in the economy and wasone of the earliest indicators to suggest that theeconomy had, perhaps, troughed. Our latest survey,carried out in June, shows that CFO optimismcontinued to strengthen in the second quarter. We alsofound a clear, though not universal, conviction amongCFOs that the UK economy will recover during nextyear. But, while for most the end of the recession is insight, CFOs see further problems ahead. This quarter’sspecial questions reveal that UK CFOs expect therecovery to be marked by sluggish growth, a strongfocus on cost control and tight lending conditions –hardly a return to “business as usual”.
Recovery: good news, bad news
In June CFO sentiment about prospects for their owncompanies saw the biggest ever increase, taking it tothe highest level since the CFO Survey started two yearsago. Most CFOs now expect a recovery to unfold in2010, although a substantial minority, 23%, do notexpect a return to growth until 2011 or later.Expectations for M&A, perhaps the most cyclical elementin corporate expectations, have risen very sharply.83% of CFOs expect M&A to rise over the next year.While sentiment has strengthened, perhaps reflectingan improvement in credit conditions, CFOs do notexpect a quick upturn in demand for their ownproducts and services. Most, some 59%, see no revivalin demand for at least a year. Moreover, one of ourspecial questions this quarter shows that anoverwhelming majority of CFOs expect the environmentfor business to remain very difficult through the firstyear of any recovery.Most CFOs think the upturn will be sluggish and creditconditions will remain tight. Such expectations helpexplain why most CFOs expect corporates to reducedebt levels and to maintain a strong focus on costcontrol as the economy recovers.With CFOs assuming that growth will be weak and costreduction a priority it is, perhaps, unsurprising that 85%of CFOs think unemployment will rise through at leastthe first year of therecovery.
The Deloitte CFO Survey: ConclusionsNo return to business as usual
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