CFOs focusing more on revenue growth vs. cost cutting

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Nearly two-thirds of CFOs are highlighting revenue growth as more of a priority over cost-cutting at their companies, according to a new survey.

Deloitte’s quarterly CFO Signals survey found that 63 percent of CFOs indicated a bias toward revenue growth, one of the highest levels in the survey’s history, while only 18 percent were biased toward cost reduction. The survey also found 62 percent of CFOs said they are biased toward investing cash over returning it to shareholders (16 percent). CFOs’ assessments of the North American economy stayed positive, with 65 percent indicating the current conditions are good.

Revenue growth expectations among the 132 CFOs polled by Deloitte increased from 4.3 percent in the first quarter of 2017 quarter to 5.6 percent in the second quarter, while earnings growth expectations rose to 8.7 percent in Q2 from 7.3 percent in Q1.

“Last quarter’s CFO Signals survey registered the sharpest uptick in sentiment in its seven-year history, and the global economy has continued to show strength since,” said Sandy Cockrell III, national managing partner of Deloitte’s U.S. CFO Program, in a statement. “As a result, CFOs continue to be strongly optimistic. However, our survey also picked up a growing concern from CFOs about political and policy uncertainty, as well as talent shortages, all figuring among their most worrisome risks.”

Revenue growth expectations increased from 4.3 percent in Q1 to 5.6 percent in Q2, above the prior two-year survey average. Earnings growth expectations rose to 8.7 percent from 7.3 percent in the first quarter, a two-year high. Capital investment growth expectations declined to 9 percent in Q2 from 10.5 percent in Q1, but remain at the second-highest level in five years. Domestic hiring expectations stayed steady quarter-over-quarter at 2.1 percent. Net optimism declined from the prior quarter’s survey high at plus 50 to plus 44 percentage points—the second-highest level in four years—with nearly 55 percent of CFOs indicating rising optimism, and 11 percent exhibiting a declining level of optimism.

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Economy Economic indicators Deloitte