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CFO Optimism At Five Year High

CFO optimism about their companies' financial prospects has hit a five-year high, according to Deloitte's second-quarter survey of businesses in Ireland.

The Deloitte CFO survey was conducted in June and July, during which a net 62% of those polled expressed optimism about their firms' fortunes – up from 50% in Q1 2014.

Findings also show that a large majority of CFOs (79%) believe that revenues will increase over the next 12 months. Both capital expenditure and discretionary expenditure are also on the rise – 76% and 33% of CFOs respectively expect these to increase over the coming year.

The Q2 survey findings signal for the first time that a majority of the CFO respondents have indicated an apparent increased appetite for risk. Just under two thirds of CFOs (62%) feel it is a good time to take greater risk onto their company's balance sheet, compared with 29% in Q2 2013.

CFOs believe that the availability of credit from all sources is improving. For the first time since the survey commenced, a majority of CFOs believe credit to be easily available across domestic and overseas banks, corporate bonds and equity.

A marked improvement was noted in CFOs' perceptions of availability of credit from overseas banks. A net 33% of respondents now believe credit is easily available from this source, compared to a net 18% who believed it was hard to get in the first quarter of the year.

Commenting on the findings, Shane Mohan, a partner with Deloitte, said that the positive sentiment expressed by CFOs was in line with the majority of respondents who rated the level of external financial and economic uncertainty facing their business as low to normal.

He added: “Capital expenditure is on the rise, despite the majority of CFOs indicating that no major equity injections are expected and bank borrowings will decrease or stay the same over the next 12 months.

"This suggests that organisations will invest cash to support growth, a finding backed up by the fact that CFOs continue to cite a preference for investing as opposed to holding cash this quarter.

“This, coupled with an increased risk appetite, signals a very real shift in the minds of Irish CFOs – they are forging ahead with growth plans.”

Opinion is mixed amongst Irish CFOs in terms of the appropriate adjustment required in Budget 2015. A slight majority (52%) feel that the government should go ahead with the proposed €2bn adjustment.

More details on Deloitte's second-quarter CFO survey are available here. (August 2014)

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