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CFO Barometer 2012 (CSC-TNS Sofres)

A world in transformation.

Laurent Leloup
Laurent Leloup
The fifth edition of the CFO Barometer was produced in cooperation with market research institute TNS Sofres, and is based on a sample of finance directors working for European companies with more than 1,000 employees. These directors were interviewed regarding the position, concerns, performance and outlook for finance departments.

Interview Method
The questionnaire was administered by the TNS Sofres market research institute, in accordance with the CATI method (Computer Assisted Telephone Interview), between December 2011 and January 2012.

Targ et and Sample
Private and semi-public companies:
- With a minimum of 1.000 employees
- Located in Belgium, France, Germany, Italy, Luxembourg, Portugal, Spain and the UK.
80 managers were interviewed (with no specific criteria in terms of industry or company size). These managers represent the following target positions:
- Finance directors / managers.
In the end, the sample was adjusted to ensure that it accurately represented all European companies in the target sectors having at least 1,000 employees.



The role of chief financial officers is changing in today’s challenging economic environment.

Just three years after the turmoil triggered by the U.S. sub-prime mortgage crisis, Europe’s chief financial officers once again face an uncertain outlook. Sluggish economic growth, the sovereign debt crisis and a still fragile banking system are just some of the obstacles ahead. This time, however, companies are in much better shape. Many have emerged from the last crisis leaner, more profitable and with more cash, leading Europe’s top CFOs to look for new ways to grow.

In a major shift from previous years, sixty percent of the European finance directors questioned in the 2012 CFO Barometer cited the strategic vision of their companies in an uncertain climate as their top concern. This suggests they are getting ready to invest in either internal expansion or external acquisitions.

“It’s no longer a question of numbers,” says Bruno Moors, CFO for Belgian insurance company Delta Lloyd Life, one of the companies surveyed. “CFOs need to look far ahead and think strategically.” His company is monitoring the macroeconomic and political developments worldwide. “On this basis, we identify the various opportunities and threats,” he says.

The role of successful CFOs is evolving from short-term crisis management to long-term planning. Finance directors must be capable of analysing data and advising management on the best ways to grow the business. The optimisation of budgeting processes features among the priorities for 70 percent of finance directors, which confirms the desire to improve the reliability of forecasts.“Today, finance departments are critical for business success,” says Jose Ignacio Gutiérrez Cano, CFO, IT manager and customer service director for Spanish toy manufacturer Famosa. ”They must go beyond their traditional role of ‘cash police’ and become strategic experts.”

Risk management remains a key component of the CFO skillset given the uncertain economic environment. Forty-nine percent of the European CFOs surveyed ranked their ability to balance growth with an acceptable level of risk as their main concern.

The impact of the sovereign debt crisis on financial markets increases uncertainty. The many challenges facing CFOs include figuring out what to do with their financial resources, where to achieve a reasonable return on investment given the current low level of returns and what to do with their cash until they are ready for acquisitions, says Stephan Leonhard, CFO of German healthcare company Asklepios Kliniken. During this period of economic crisis, cash management involves risks including counterparty risk, agrees Gilbert Canameras, head of financing and risk management at mining group Eramet. “It’s not enough for companies to have cash,” he says.


Europe’s finance directors have proved their ability to adapt to economic volatility over the past five years. During the period before the financial crisis of 2008, CFOs focused on short-term profits and shareholder returns. They looked to boost market share and profits and their roles centered on risk controls, profitability and supervision of the administrative side of the business.

Once the financial crisis hit world markets, CFOs switched to a defensive role. Their top priorities were cash management and cost cutting as their ability to manage creditworthiness became crucial for their companies’ survival. Businesses focused on the basics and the short- term needs of the company such as cash flow, order backlogs, business continuity and urgent deadlines.

As confidence started to return in 2010, finance directors sought to make production processes as efficient as possible. Their priority was to preserve the equilibrium of the balance sheet, to optimise cash flow and working capital requirements. They became the guardians of business continuity while focusing on forecasting and improving their ability to plan ahead.


Liquidity risk remains a top concern of CFOs, potentially dampening their appetite for growth-based strategies such as acquisitions. The return of the financial crisis in the second half of 2011 has forced companies to step up their efforts to generate additional cash flow and reduce their exposure to liquidity risk. The 2012 CFO Barometer reveals that the vast majority of the finance directors interviewed (71 percent) rank liquidity as their top risk above other concerns including IT security, uncertain financial markets and customer defaults.

Cash management, meanwhile, has become more important for 72 percent of CFOs, according to the 2012 survey. “What kills companies is a lack of liquidity, not poor returns,” warns Jose Ignacio Gutiérrez Cano at Famosa. His group has been focusing on optimizing its working capital with the result that recent growth has not required additional funding from banks, he adds.


It’s tough for businesses to raise funds for two main reasons; banks are tightening credit to European companies and it remains difficult to raise capital from investors at a time of volatile stock markets. In addition, the uncertain economic environment is pushing investors towards corporate bonds rather than equity.

“Europe is still in the midst of a very serious financial and economic crisis,” warns Jean-Marc Forneri, president of French corporate adviser Bucéphale Finance. He predicts the banks’ continued unwillingness to extend credit will push companies to seek other forms of financing such as private placements, bonds and convertible bonds. French engineering group Alstom, for example, has already made the switch away from bank loans, financing around 90 percent of its debt with bond issues, says Nicolas Tissot, CFO of the group. German clinic operator Asklepios Kliniken, with its large appetite for acquisitions, is preparing for continued fragility in the banking system by planning for additional fund raising in the bond markets, says CFO Stephan Leonhard.

It’s clear that companies need long-term financing to support their future growth. There are already signs that CFO are starting to look further ahead. Fifty-five percent of finance directors interviewed for the 2012 CFO Barometer attached greatest importance to the 12-month outlook and 46 percent focused on the three-year outlook. In addition, 60 percent of finance directors viewed a management control system more focused on forecasting as essential to their businesses.

Today, many companies have emerged from the crisis without major increases in their financing deficits thanks to strategies such as trimming inventory, controlling working capital needs and carefully managing investments. These strategies have now reached their limits. It is time to take a more proactive approach to growth.


The traditional role of the CFO is changing with the majority of respondents reporting a greater focus on financial controls and reporting, cash management and preparing financial statements.

CFOs, meanwhile, are playing a growing role in instilling a financial approach and mind set within operational divisions with 59 percent of those interviewed citing this as one of their main roles. One way the CFO can influence a company’s policies is by imposing profitability or cash generation targets. France’s second-biggest private television broadcaster M6, for example, last year created a new medium-term performance measurement for its top 25 executives aimed at boosting value creation.

The traditional communications role for the CFOs in the survey remained largely unchanged this year. But the CFO Barometer found that 79 percent of the CFOs interviewed believed that the main objectives of financial communication were to reinforce the visibility of a company’s strategy. Seventy-six percent, meanwhile, felt that consolidating management’s credibility was the main objective. In this time of uncertainty, sixty-four percent of respondents cited events and crisis management as a top priority.



Businesses must be able to assess and take risks. They must generate sustainable cash flow without disrupting the structure of their balance sheets. They need to remain autonomous from investors and creditors and be able to wait for the right time to invest.


It is essential that companies allocate financial value to risk and continuously monitor risk. Risk mapping is only the first qualitative stage in risk management. Ultimately, risk always results in a cost that cannot be fully written off. Quantitative risk measurement is needed, with a local monitoring system.

Until now, businesses have tried to limit risks and have minimised their cost. They must remodel their portfolio of activities and products, while adopting quantitative risk assessment methods. As a result, they will have to tolerate less profitable activities or part with insufficiently profitable activities. Companies have invested a great deal of time and energy in reducing, diversifying and covering risks, says Jean-Michel Bouhours, senior partner in charge of finance transformation consulting at CSC. “Now they must relearn how to take risks in order to grow,” he says. “The cultures of risk and innovation form the two pillars of growth.”


Improving knowledge of customers helps boost profitability. Until now, financial indicators have focused on product-driven measures such as sales and profitability. However, it is not enough to have a superior product. Companies must find ways to quantify the value of customers, the impact of loyalty and the benefits of cross- selling.

The trend is less towards volume-based strategies and more towards selective strategies focused on the more profitable customers in the long term. The most successful companies are concentrating investments on the most profitable populations, targeting each customer for their history, value and potential.

While guaranteeing the oversight of the company's financial performance, the finance department must take this new paradigm into account in its indicators and integrate it into its operational processes.

Read more about results and testimonials.
Download the PDF (48 pages) below.

Laurent Leloup

Mardi 17 Juillet 2012

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