Report outlines positive factors
Most Asia-Pacific chief financial officers expect growth in revenues and profits at their corporations this year.
A full 71 per cent are forecasting revenue growth, while 62 per cent are anticipating that their net profits will exceed those of last year, according to the Bank of America Merrill Lynch “2013 CFO Outlook Asia” report, which surveyed 600 CFOs and senior finance executives in the region.
In its second edition, the report provides broad insight into the perceptions and strategies of key financial decision-makers across the region, including the outlook for their companies, their own roles and their expectations for financing and mergers and acquisitions (M&A).
Key conclusions are the following:
_ Southeast Asia presents significant earnings opportunities: 81 per cent of CFOs forecast growth in revenues and 72 per cent foresee growth in profits in the region.
_ Credit access remains strong and affordable: CFOs in the region intend to maintain or increase borrowing (73 per cent), and financing will be used for capital expenditure (23 per cent) and to raise working capital (17 per cent). Credit availability remained robust last year according to 90 per cent of respondents, and 47 per cent expect the cost of capital to remain consistent this year.
_ CFOs favour organic growth over M&A: The majority of CFOs (63 per cent) aren’t planning to participate in any M&A activity, and half of those who intend to will do so to achieve growth targets and will mostly look at opportunities in their home markets or in developing Southeast Asia.
_ The CFO skill set continues to evolve: Corporate strategic planning is an important (61 per cent) or growing (29 per cent) part of the job of CFOs in Asia-Pacific. About 84 per cent of respondents believe it is getting tougher to recruit treasury staff with the appropriate skills in the region.
Furthermore, CFOs polled will increasingly focus on improving operating efficiencies at their corporations and commit resources to enhancing working capital management to drive profits. On the flip side, respondents identified higher commodity prices as the greatest risk to earnings.
“Despite economic uncertainty and global market headwinds, there remains a sense of unbridled optimism towards business prospects in Asia-Pacific, according to the region’s leading CFOs,” said Steven Victorin, head of Asia-Pacific Corporate Banking and Global Corporate Banking subsidiaries.
“This year’s report again sheds relevant light on the perceptions and strategies of the evolving CFO function across the region. The results clearly reinforce this view.”
The conclusions are based on more than 600 interviews conducted with financial executives in Australia, mainland China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand.