Chief financial officers in Romania are more optimistic than in 2020, but continue to focus on cost reductions: Deloitte
Chief financial officers in Romania are more optimistic than six months ago regarding the evolution of their companies’ main financial indicators, according to the latest edition of Deloitte CFO Survey Romania, based on opinions expressed by over 100 CFOs. Although half of the respondents show optimism, cost reductions continue to be the next 12 months’ priority for 37% of them, down from 58%, at the beginning of the pandemic. The ranked second priority is organic growth of business (up from 13% to 18%), followed by digitalization (11%), as work from home and internal process automation have become crucial in most of the fields.
The costs expected to increase the most, according to the study, are those related to provisions for bad debts, followed by cost of debt and of equity. At the opposite end, real estate expenses are likely to decrease the most.
The reduction in demand remains the main concern for companies in 2021, although, as far as the domestic demand is concerned, the share of respondents who expect a decrease is down to 44%, from over 70%, at the beginning of the pandemic. On the other hand, the shortage of skilled professionals climbed back among the factors that are likely to pose a significant risk to business over the next 12 months, as mentioned by 43% of CFOs, compared to 11%, in the first months since the pandemic outbreak.
Asked when they expect their company to return to a pre-crisis level of revenues generation, 34% of respondents said they are already at or above pre-crisis level, 43% said that 2021 would be the year of the recovery, while 20% estimate this would occur in 2022 or later.
In order to ensure company recovery after COVID-19 pandemic, companies will focus on health and safety of the workplace (38%) and on digital transformation (38%), so that they can keep the organization running even with lockdown, isolation and social distancing rules in place, the study shows. One of the areas that least interests them is the exploration of new markets, as only 1% of companies consider this for the near future.
More than half of the companies (56%) expect to report higher revenues in 2021 compared to 2020 and thus to regain from last year’s lost ground. Despite this, 84% of respondents say they are not willing to take risks, as half of them feel a high degree of uncertainty, especially in fields such as tourism, hospitality and financial services.
As far as the overall economic evolution is concerned, approximately half of the participants to the study expect an increase in 2021 and a quarter of them even estimate an increase of over 2%. Nevertheless, 71% of respondents say unemployment will increase this year.