Aftermath of COVID-19 expected to be felt for up to two years

PwC Belgium CFO Survey Series

  • 43% of CFOs expect a decrease in turnover of up to 10% due to COVID-19
  • Most CFOs generally optimistic about an immediate short-term recovery
  • Negative business impact will be felt over 1-2 years (62%)

Brussels, 30 June 2020 - 43% of CFOs of large companies in Belgium expect their revenues to fall up to 10% over the next six months and that the negative business impact will be felt over the next one to two years. Although the Belgian government has taken measures to mitigate this impact, only 43% of CFOs have made use of it. These are the main conclusions of PwC Belgium's CFO survey.

The current economic crisis due to the COVID-19 pandemic is rippling throughout businesses across the globe. To gauge its impact on companies in Belgium, PwC Belgium launched the CFO Survey Series, consisting of periodic surveys on the effects of the crisis on finance, operations, workforce, supply chains and much more.

Driving force for new growth

Most respondents (79%) expect Belgian economic growth to decline, with nearly half (43%) believing that the economy will contract greatly. COVID-19 will inevitably have an economic impact on every sector, but it will hit them with a different intensity. CFOs predict a 10% drop in revenue over the next six months, according to 43% of respondents. This is significantly lower than the recent forecast models of the National Bank of Belgium, which assumes a contraction of GDP of -16% for the second quarter of 2020. Of the CFOs surveyed, 40% estimate the impact of the COVID-19 outbreak on their overall financial performance to be high, while the rest are more confident, with only a moderate or low impact.

Didier Vandenhaute, Partner in Treasury Consulting at PwC Belgium, commented on the survey findings: “Certain sectors will be more prone to an L-shaped scenario, with a drastic impact on our economy and a prolonged recession on the horizon. The transportation sector, for example, might never look the same, with permanent shifts in personal and business travel habits. In the coming months, more and more companies from various hard-hit sectors will inevitably face bankruptcy. Nevertheless, many companies have listened to the market and are rethinking their entire business model, making COVID-19 an important propeller for new growth. In this sense, this crisis has been an eye opener that has accelerated corporate decision-making when it comes to building in financial resilience, measures that had been put on the back burner until COVID-19 hit.”

A long and challenging road

With the lockdown measures being eased, this will provide our economy with a much-needed boost. Nevertheless, most countries are facing a U-shaped baseline scenario - with a sharp shock and several quarters of very low economic activity before returning to previous GDP levels - instead of the original V-shaped forecast, resulting in a faster and more complete recovery. This was also apparent from the CFO survey. 62% of CFOs surveyed expect the negative business impact of the COVID-19 crisis to continue to be felt for a period of one to two years. Nevertheless, 83% of CFOs say that their company may be able to absorb a delay of more than a year before it would have to close down.

“Whatever the scenario, contraction in growth is inevitable. A much more important indicator for assessing the economic outlook is the unemployment rate. A recent study by Strategy& showed that even in the V-scenario, a high unemployment rate will have a more decisive negative effect on consumer demand and hence the overall economic outlook”, said Didier Vandenhaute.

Despite the long and difficult road ahead, most CFOs are generally remarkably optimistic that a recovery is in sight. Most respondents (81%) are 'very confident' that their company has the financial means to continue operating. If a second outbreak of the COVOD-19 virus were to occur, this number drops to 55%.

Belgian State aid mechanisms directed more towards SMEs

In the short term, most large companies - the basis of this survey sample - will have worked towards building in access to financial resources in their business model, protecting them from a next potential crisis wave. Among the CFOs we surveyed, just 43% say they’ve made use of government stimuli to support their business. In the future, most companies plan to implement additional measures to become more financially resilient, with the majority of respondents making reference to cost optimisation (opex and capex) as the first measure to implement.

“We should however be cautious that not all companies, especially SMEs will be that well-prepared. This demonstrates that ‘size does matter’, making smaller companies much more vulnerable to the COVID-19 financial impacts. Exemplary is the much talked-about state loan guarantee scheme of 50-billion euros, in which qualifying loans granted by banks are guaranteed by the Belgian State. While it holds the potential to ensure short-term liquidity, its rather complicated, short-term applicability and additional costs pose a considerable hurdle for the larger multinationals”, explained Didier Vandenhaute.



Erik Oosthuizen

0474 56 42 76


About the PwC CFO Survey Series

PwC Belgium is closely tracking sentiment and priorities for finance leaders, as businesses respond to unprecedented disruptions brought on by COVID-19. The first edition of this PwC Belgium CFO Series covers financial resilience. It reflects the views of 42 finance leaders of large companies in Belgium in a cross-section of industries during the week of 8 June 2020. They weigh in on the effects of the crisis on their organisations, their coping strategies and their plans and predictions for a post-COVID-19 world.



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