Deloitte’s recent first-quarter 2014 survey of more than 100 CFOs across North America revealed that energy sector CFOs forecast growth prospects for their companies that were the least optimistic in three years. They did predict growth, however, and are pursuing opportunities, the company said March 31.
The CFO Signals survey found that this quarter’s net percentage points related to energy companies’ growth--+27—related to the number of CFOs who were optimistic—47%--dropped from last year’s net percentage points--+32—and that this result is “the lowest for any quarter since the survey began in 2010,” the company said.
Other “key metrics” were at “their lowest levels” in the survey. The year-over-year (yoy) expectation for sales growth sat at 4.6%, below last year’s 5.4%. Capital spending growth expectations fell yoy, to 6.5% from 7.8%. Domestic hiring expectations rose yoy, the survey revealed. But the growth prediction for that, of 1%, remained below the historical average of 1.6%, the company added.
The energy sector forecast the lowest earnings growth and the second-lowest sales growth in the survey, the company said. Additionally, more energy sector CFOs named the cost and availability of capital as a “barrier” to growth than CFOs in other sectors, the company said.
Regarding capital spending, CFOs said that 51% of it is “slated for growth and innovation,” the company said. The company added that 58% of CFOs will focus on targeted opportunities and that the U.S. and China are “central” to their growth plans.
Regarding the North American economy, CFOs were more optimistic. A higher number than last year—72% vs. 60%--thought the continent’s economy would be “good, not getting worse or as likely to be better,” according to the survey results.
Many energy sector CFOs were concerned with government and environmental policies and regulations, the company said.
The survey additionally revealed that almost 30% of CFOs think dividends and share buybacks will increase this year.
Also, CFOs are concerned with consumer demand and regulation, the survey revealed.
New York-based Deloitte provides financial consulting to companies worldwide.
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