With vaccination plans now in full swing in most European countries, CFOs are now focused on relaunching their companies. Deloitte collected the views of around 1,600 CFOs in Europe and Italy in March, to understand, one year after the pandemic, what the impacts of Covid-19 are today on some key factors such as: the state of recovery, revenue expectations and employment plans.
Revenue trend
Weakening demand remains a major concern for European CFOs, and most companies have yet to return to pre-pandemic revenue levels. However, the picture that has emerged in this edition of the survey is improving compared to the autumn edition. In Italy, there are 32% of companies that already operate at a pre-COVID level or higher (in Europe it is 43%) and 19% expect to return to pre-crisis levels by the end of the year (24% in Europe), as many as 48% expect to return to those levels of income only in 2022 or even beyond (33% in Europe).
At the industry level, it is in tourism and travel that European CFOs are more negative about the recovery: at the European level only 17% expect a full recovery by the end of 2021 and 44% expect to return to the pre-crisis level of revenues no earlier than 2023. Also in transport and logistics, the majority (51%) of CFOs, again at the European level, expect to return to a pre-crisis level of revenues only by the end of next year or later.
However, the prospects in sectors such as Energy, Financial Services, Construction, Life Sciences, Consumer Goods e TMT where around half of European CFOs claim to be already at pre-crisis levels, or plan to fully recover by the end of 2021. Also 37% of European CFOs in the sector Retail declares to already operate at pre-Covid levels.
Performance of the workforce
Compared to autumn 2020, the European CFOs, in line with the positive and optimistic prospects, foresee an increase in the workforce in their companies in the next 12 months, going from 22% to 43% (+ 21 pp). Hiring expectations across industries are all rising, even if they are not evenly distributed, with CFOs in the travel, tourism and professional services sectors generally positive. Italy is aligned with this trend, 33% of CFOs expect to increase the workforce in their company in the next year, while 25% expect a decrease.
“In general, CFOs see less uncertainty than in the fall, despite the fact that it is still perceived as extremely high. Despite the external context, the intention is to return to investing in human capital as well, with a marked improvement in the prospects for employment. CFOs, both European and Italian, plan to increase their workforce over the next 12 months. It is the first positive balance for employment in two years and the outlook is positive for all sectors, even those most affected by the pandemic. Companies in the relaunch phase show a greater propensity to hire, precisely in view of possible strategic restructuring and the strengthening of some areas with a view to innovation or in which it is necessary to invest in light of the changes brought about by the pandemic, such as in the sustainability. ” explains Riccardo Raffo, CFO Program Leader of Deloitte.
Orientation towards recovery: investment intentions are increasing
The second wave of the pandemic that began last fall has hit the Eurozone harder and much longer than expected. The high number of infections and a slow start of vaccination campaigns have led to continued restrictions on economic activity in the first quarter and early second quarter of 2021. However, CFO sentiment is surprisingly optimistic, returning positive after two years in which it had remained firmly negative both in Europe and in Italy.
In fact, in March, half of CFOs across Europe reported feeling more optimistic about their company’s financial outlook than in previous months. Confidence has improved in all the countries examined, even if the CFOs in Italy remain more cautious, those who feel more optimistic are 32%, -21 pp compared to the European average.
In addition, 66% of European CFOs declared that they believe their company is in full recovery phase, fully operational towards the re-definition of the landscape in which it operates. In particular, companies in the professional services, life sciences and TMT sectors seem to be already projected towards a prosperous future.
Investment intentions are also rising across Europe, with 46% of CFOs planning to increase spending in the next 12 months (42% in Italy), versus 14% planning to decrease them (20% in Italy). In general, the path of the economy is in a positive moment and aimed at recovery, even if it is not yet possible to exclude some economic repercussions in the future.
“Although the COVID-19 pandemic has not yet been overcome and despite the many restrictions in place during the period covered by our research, this edition of the survey reveals a new sense of optimism. Many companies seem to have already moved on from the crisis and are now focusing on the post-pandemic reality. However, this is not true for everyone. Much of the ability of companies to emerge strengthened from the crisis depends on their ability to invest with care and foresight, both in human capital and in digitization. The propensity to invest is in fact significantly increasing. But the real key factor for companies right now is the ability to look to the unfolding future and formulate a bold, innovative and sustainable long-term strategic vision. And in this context, CFOs have an important role to play, providing the information and tools that can enable companies to make correct decisions. ” comments Riccardo Raffo, CFO Program Leader of Deloitte.