Predictions by chief financial officers about their own companies’ revenue and profit growth are consistent with statements from the Federal Reserve Board: The recession is over, but future growth will be small and halting. There is little talk about a double-dip recession -- at least, so far.
Nearly 45 percent of the CFOs we asked say they have a positive or very positive outlook for their companies this coming year. But more than 85 percent of those who expect their revenues to grow think the increase will be 10 percent or less.
On profits, 55.6 percent expect gains this year compared with 2001, and 50 percent say the increases will be greater than 10 percent. A lucky -- or very optimistic -- 3.6 percent forecast earnings gains of 76 percent or higher in 2002.
But of the 24.4 percent who foresee declines, a full 40 percent say profits may be off by 11 percent or more.
The vast majority of respondents are hopeful about next year. More than 75 percent of CFOs surveyed expect revenues and earnings in 2003 to be higher than those of 2002.
CFOs are less optimistic about the U.S. economy than about their own corporations. Only one third of our sample view prospects for the economy as positive in 2002. A larger number, 37.8 percent, see the year as being average, while 28.8 percent see 2002 as a washout.
Respondents seem to be sanguine about inflation. Three quarters expect no more than a 2 percent jump in inflation over the next year, with 11.4 percent saying there will be only a 1 percent price increase.
GDP growth will also climb at a snail’s pace, they say. Almost 64 percent of the CFOs predict it will be right in line with expectations for inflation, at 2 percent or less.
What is the outlook for your company’s business during the coming year?
Very positive 6.7%
Positive 37.8
Average 22.2
Below average 22.2
Negative 11.1
What are your expectations for revenue growth in 2002 compared with 2001?
Increase 46.7%
About the same 24.4
Decrease 28.9
If you expect an increase in revenue growth, how much?
Less than 5 percent 51.9%
6 to 10 percent 33.3
11 to 25 percent 14.8
26 percent or more 0.0
If you expect a decrease in revenue growth, how much?
Less than 5 percent 42.9%
6 to 10 percent 28.6
11 to 25 percent 28.6
26 percent or more 0.0
What is your outlook for revenue growth in 2003 compared with 2002?
Stronger 75.6%
About the same 20.0
Weaker 4.4
What are your expectations for profit growth in 2002 compared with 2001?
Increase 55.6%
About the same 20.0
Decrease 24.4
If you expect an increase in profit growth, how much?
Less than 5 percent 14.3%
6 to 10 percent 35.7
11 to 25 percent 32.1
26 to 50 percent 10.7
51 to 75 percent 3.6
76 percent or more 3.6
If you expect a decrease in profit growth, how much?
Less than 5 percent 20.0%
6 to 10 percent 40.0
11 to 25 percent 20.0
26 to 50 percent 20.0
51 to 75 percent 0.0
76 percent or more 0.0
What is your outlook for profit growth in 2003 compared with 2002?
Stronger 75.6%
About the same 20.0
Weaker 4.4
How do you view the prospects for the U.S. economy in 2002?
Very positive 0.0%
Positive 33.3
Average 37.8
Below average 24.4
Poor 4.4
What are your expectations for inflation over the next year?
Less than 0 percent (deflation) 0.0%
More than 0 percent but less than 1 percent 2.3
1 percent 11.4
2 percent 61.4
3 percent 25.0
4 percent 0.0
5 percent or more 0.0
What are your expectations for U.S. GDP growth during the coming year?
Less than 1 percent 0.0%
1 percent 15.9
2 percent 47.7
3 percent 31.8
4 percent 2.3
5 percent or more 2.3
Has your company increased wages and salaries in the past six months?
Yes 80.0%
No 20.0
If so, by how much?
Less than 1 percent 0.0%
1 percent 0.0
2 percent 8.3
3 percent 52.8
4 percent 36.1
5 percent or more 2.8
If you have not increased wages and salaries, do you plan to in the next six months?
Yes 58.3%
No 41.7
If so, by how much?
Less than 1 percent 0.0%
1 percent 0.0
2 percent 14.3
3 percent 71.4
4 percent 14.3
5 percent or more 0.0
Does your company expect to raise prices in the next six months?
Yes 40.9%
No 59.1
If so, by how much?
Less than 1 percent 5.6%
1 percent 38.9
2 percent 11.1
3 percent 0.0
4 percent 5.6
5 percent or more 38.9
Has your company measured productivity gains in the past six months?
Yes 53.3%
No 46.7
If so, how much has productivity risen?
Less than 1 percent 16.7%
1 percent 8.3
2 percent 25.0
3 percent 16.7
4 percent 4.2
5 percent or more 29.2
The results of CFO Forum are based on quarterly surveys of a universe of 1,600 chief financinal officers. Because of rounding, responses may not total percent.
