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Romanian CFOs must maintain focus on generating and managing cash flows, as credit availability remains tight

Date: 08/27/2013
The economic expectations of CFOs in Romania have slightly decreased in the last six months. Nevertheless, Romania still benefits of strong key indicators - high foreign exchange reserves, falling inflation, a good potential for agricultural harvests which offer room for further exploitation, the emergence of a growing SME sector, an expected increase in EU funds absorption rate, etc. - according to the fourth edition of the Deloitte Central Europe CFO Survey.

Cautiously optimistic about future growth, Romanian companies face the challenges of identifying the appropriate factors for making the right decisions and developing the best strategies.

"CFOs have to sieve through a wealth of available information and forecasts to find the right balance of actions that will help them develop a strategy for their businesses in 2013. They have to decide whether to forecast growth, contraction, investment or diversification, volatile foreign exchange rates or stabilisation, ease of access to finance or the need to cut costs," said Ahmed Hassan, Country Managing Partner, Deloitte Romania.

The ongoing trend apparent from the answers of Romanian CFOs is the high priority given to cost-cutting (direct and indirect costs). Moreover, most Romanian CFOs regard seeking the ways to increase revenues from current and new markets as the main and possibly achievable task.

According to the survey, in Romania, the views on the attractiveness of loans is split, with 25% finding such financing sources “attractive”, and a similar percentage “unattractive”.

"When it comes to bank loan price attractiveness, the CFOs answers indicate equivalent ratios. On the other hand, based on the survey, new equity funding is not considered an attractive option. Given the low amounts of new credit available in the market, Romanian CFOs will need to maintain focus on generating and managing cash flows, as obtaining credit will remain difficult," added Ahmed Hassan.

The figures related to market consolidation and mergers and acquisitions are lower than in previous surveys 35% (48% in December 2012 and 57% in May 2012). The macroeconomic outlook will remain challenging, but M&A may benefit from non-core asset sales and domestic consolidation activity.




Key Findings of the Survey among CFOs in Romania:

• Regarding macro-economic indicators, CFOs are less optimistic than in the previous survey - 70% of respondents expect the Romanian economy to stagnate in the year to come, down from 81%, while 10% of them fear recession (up from 4.8% last December);
• 40% of respondents say they are fairly optimistic about their company’s financial prospects;
• 80% of CFOs continue to take a cautious attitude towards taking greater risk on to their company balance sheets;
• 60% of respondents believe that credit is difficult to obtain;
• 55% expect financing costs to increase.

Overall, the Deloitte Central Europe CFO Survey questioned 668 Chief Financial Officers from many of Romania’s leading companies, alongside their equivalents from Croatia, the Czech Republic, Hungary, Poland and Slovakia.


For more information, see: www.deloitte.com/cecfo.


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Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ro/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 200,000 professionals are committed to becoming the standard of excellence.


© 2013 Deloitte Romania

Romanian CFOs must maintain focus on generating and managing cash flows, as credit availability remains tight


Bucharest, Romania – August 27, 2013 – The economic expectations of CFOs in Romania have slightly decreased in the last six months. Nevertheless, Romania still benefits of strong key indicators - high foreign exchange reserves, falling inflation, a good potential for agricultural harvests which offer room for further exploitation, the emergence of a growing SME sector, an expected increase in EU funds absorption rate, etc. - according to the fourth edition of the Deloitte Central Europe CFO Survey.

Cautiously optimistic about future growth, Romanian companies face the challenges of identifying the appropriate factors for making the right decisions and developing the best strategies.

"CFOs have to sieve through a wealth of available information and forecasts to find the right balance of actions that will help them develop a strategy for their businesses in 2013. They have to decide whether to forecast growth, contraction, investment or diversification, volatile foreign exchange rates or stabilisation, ease of access to finance or the need to cut costs," said Ahmed Hassan, Country Managing Partner, Deloitte Romania.

The ongoing trend apparent from the answers of Romanian CFOs is the high priority given to cost-cutting (direct and indirect costs). Moreover, most Romanian CFOs regard seeking the ways to increase revenues from current and new markets as the main and possibly achievable task.

According to the survey, in Romania, the views on the attractiveness of loans is split, with 25% finding such financing sources “attractive”, and a similar percentage “unattractive”.

"When it comes to bank loan price attractiveness, the CFOs answers indicate equivalent ratios. On the other hand, based on the survey, new equity funding is not considered an attractive option. Given the low amounts of new credit available in the market, Romanian CFOs will need to maintain focus on generating and managing cash flows, as obtaining credit will remain difficult," added Ahmed Hassan.

The figures related to market consolidation and mergers and acquisitions are lower than in previous surveys 35% (48% in December 2012 and 57% in May 2012). The macroeconomic outlook will remain challenging, but M&A may benefit from non-core asset sales and domestic consolidation activity.




Key Findings of the Survey among CFOs in Romania:

• Regarding macro-economic indicators, CFOs are less optimistic than in the previous survey - 70% of respondents expect the Romanian economy to stagnate in the year to come, down from 81%, while 10% of them fear recession (up from 4.8% last December);
• 40% of respondents say they are fairly optimistic about their company’s financial prospects;
• 80% of CFOs continue to take a cautious attitude towards taking greater risk on to their company balance sheets;
• 60% of respondents believe that credit is difficult to obtain;
• 55% expect financing costs to increase.

Overall, the Deloitte Central Europe CFO Survey questioned 668 Chief Financial Officers from many of Romania’s leading companies, alongside their equivalents from Croatia, the Czech Republic, Hungary, Poland and Slovakia.


For more information, see: www.deloitte.com/cecfo.


###

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ro/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 200,000 professionals are committed to becoming the standard of excellence.


© 2013 Deloitte Romania

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