Dun & Bradstreet Composite CFO Optimism Index Jan-2019

Dun & Bradstreet Composite CFO Optimism Index: Dun & Bradstreet Composite CFO Optimism Index declined by 17.4% on a y-o-y basis

Barring Q4 2018, optimism level amongst CFOs in the industrial sector is the lowest since Q2 2014

Mumbai, January 28, 2018: Dun & Bradstreet, the world’s leading provider of global business information, knowledge and insight conducted a pan India survey of Chief Financial Officers (CFOs) in which they were asked about their confidence in the overall financial and macro-economic conditions for Q1 2019 (Jan-Mar of the calendar year 2019), as compared to the same quarter of the previous year. The survey reveals how optimistic the CFOs are with respect to the overall financial health of their respective companies, the business risk environment and the macroeconomic scenario in the country.

The survey revealed interesting facts about CFOs’ perspective on the overall business climate in the country:

§  Decrease in optimism was steeper for macroeconomic scenario (21.5%) than financial performance of the company (14.4%)

§  Barring Q4 2018, optimism level amongst CFOs in the industrial sector is the lowest since Q2 2014

§  87% of CFOs expect the level of financial risk for corporate sector as a whole to remain unchanged or unfavourable during Q1 2019

§  Only 15% of CFOs in the industrial sector expect level of financial risks on company’s balance sheet to decrease - lowest in five-and-half years

§  Only 8% of CFOs expect cost of raising funds to decrease - lowest since Q2 2012

§  Percentage of CFOs who expect an increase in availability of funds in the market fell by 13 percentage points in Q1 2019 compared to the year-ago period

§  39% of CFOs in the services sector have indicated overall scenario for mergers & acquisitions to be favourable in Q1 2019 - lowest in nearly five years

§  66% of CFOs expect an increase in the operating margin of their companies - highest since Q2 2012

§  Only 6% of CFOs have stated organic expansion to be their priority in the next six months – lowest since Q2 2012 

§  59% of CFOs have stated effective recovery system to be their risk management tool in the next six months - highest in two years

§  Percentage of CFOs stating hedging (15%) and tightening credit appraisal mechanisms (12%) to be their risk management tool in the next six months is the lowest since Q2 2012

Commenting on the findings of the survey, Manish Sinha, Managing Director – India, Dun & Bradstreet said that “The Dun and Bradstreet CFO Optimism Index for Q1 2019 has declined as compared to same quarter of last year. In reading the Index, timing is important to see the story behind the numbers. The responses for this quarter’s survey were received during December 2018 and January 2019, shortly after recent state elections, possibly leading to questions amongst businesses: whether reform agenda would continue and whether the various ambitious projects would stay. Unpacking the Index, three components out of the twelve in the index contributed to half the decline in the optimism levels: cost of funds, availability of funds and level of financial risk in the corporate sector. The optimism level for these three parameters remains clouded by multiple factors: the prevailing liquidity shortfall, increased borrowing cost both domestically and globally, increased risk perception given the expected slowdown in global growth and the uncertainty related to the interim Budget. Going forward, CFO optimism levels are likely to remain subdued given the upcoming general election, the underlying risks to the global growth prospects, development related to Brexit, perceived slowdown in China and tightening of global liquidity”.

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