Finance chiefs expect slow business recovery from coronavirus pandemic
Finance bosses do not expect business to bounce back quickly after the coronavirus pandemic, with many forecasting that demand will not recover until the second half of next year.
Research by Deloitte found that 49 per cent of chief financial officers do not believe that demand for their business will return to pre-pandemic levels until after the second quarter in 2021.
In total, 78 per cent of the finance chiefs surveyed expected UK corporates’ revenue to decrease in the next 12 months, the second-highest reading on record. In the first quarter, a record 97 per cent anticipated that revenue would drop.
The research showed that 80 per cent of finance chiefs felt there is a high or very high level of uncertainty facing their business, slightly lower than the 89 per cent recorded in the first quarter.
Meanwhile, 82 per cent said they were unlikely to take risk onto their balance sheets and 86 per cent said dividend issuance and share buybacks by UK businesses will decrease over the next year.
Almost two thirds of CFOs said they expect capital expenditure to decrease over the next three years due to the coronavirus crisis or Brexit, while a quarter attributed the reduction to both factors.
Finance chiefs ranked the effects of the pandemic as the greatest risk facing their business, followed by geopolitics, Brexit and economic weakness in the US.
Deloitte chief executive Ian Stewart said: “Major corporates are expecting a long haul back to pre-Covid levels of revenue.
“Almost half of them believe their own revenues will not recover for at least a year. Covid-19 overshadows all other sources of risk for UK CFOs, and by a wide margin.”
The survey also found that 61 per cent said reducing costs and 52 per cent said increasing cash flow were strong priorities over the next 12 months.
Separate research by accountancy firm BDO also reflected business leaders’ shifting priorities due to the coronavirus pandemic. Respondents to the survey said the reducing overheads and business costs were the most important aims, compared to six months ago when the top concern was attracting and retaining high quality talent.
In total, 92 per cent said that reducing overheads would be important for their future survival and success.
“Unsurprisingly, some businesses have reined in their growth ambitions in order to focus on business resilience,” BDO managing director Paul Eagland said.
“The pandemic has also forced many to rethink and adapt their operating models.
“As we emerge more fully from lockdown, business leaders will need to continue to act with agility and creativity to ensure their businesses are in the best shape to take advantage of the recovery.”