COVID-19 CFO Survey Underscores Lay-offs, Cost Clampdowns, And Longer Recovery Periods

Chief financial officers are increasingly more negative about the impact of COVID-19 to their companies, according to the third PwC COVID-19 Pulse Survey released this week.  

In the past two weeks, companies notably shifted from the immediate threat of the pandemic to a focus on how they will manage during the recovery period.

With the sharp decline in global economic activity, cash liquidity and access to capital are among top concerns according to 75% of the CFOs interviewed. The threat of a worldwide recession was another concern for 70% of respondents. The survey revealed CFO concerns on the impact of workforce reduction on productivity, supply chain disruptions and a decrease in consumer confidence.

A significant disparity exists among CFOs over how long the recovery period will be for their businesses. While 61% of CFOs believe they can be back to business as usual in less than three months, another 18% think that it will take six months or more to recover.

Companies are clamping down on costs across the board with 81% of the CFOs believing that their company revenues will be negatively impacted in 2020. More than 50% anticipate reductions in capital expenditures, workforce, operations and IT expenses.

Lay-offs are planned by 26% of the surveyed CFOs, while 44% expect to furlough employees.  

“Companies are thinking about how to cut their costs in the short term with non-essential projects being pushed out,” said Amity Milhiser, chief client officer at PwC.

When it comes to mergers and acquisitions, companies have a split outlook, with 49% taking a wait-and-see approach and 51% moving forward with plans. Those companies with cash may have an aggressive appetite for M&A, with 17% noting increased interest given current valuations.

While China may be coming back online, 39% of respondents said they plan on making changes to their supply chains in the recovery period. At the same time, 43% said they plan to make no changes and 18% were not sure. 

“Companies still do not understand the whole ripple effect on their supply chains,” said Tim Ryan, senior partner at PwC.  “As the recovery progresses, companies will look at their risks, and make important changes to improve the resiliency of their supply chain relationships.”

PwC interviewed 313 CFOs and finance leaders between April 6 and 8. Eighty-four percent of respondents were from public and private companies in four sectors: financial services (27%), technology, media and telecommunications (19%), industrial products (22%) and consumer markets (15%). 

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