COVID-19 drives increased cost-reduction measures

Brussels, 12 May 2020 - According to PwC’s CFO Pulse survey, businesses are prioritizing their liquidity position, while assessing options for financing and/or deeper pullbacks as they look forward toward a recovery time frame. 60% believe the outbreak could have a significant impact on their business operations and as many as 80% will decrease their revenue or profit. Finance chiefs are therefore broadening cost-reduction measures as a growing majority fear a significant impact on their business from COVID-19.

PwC is tracking sentiment and priorities about the COVID-19 outbreak from finance leaders around the world. More than 150 finance executives from a variety of territories — including Bahrain, the Netherlands, the Philippines, Portugal, Qatar, Switzerland, Thailand and the United Arab Emirates — weighed in, of which 10 CFOs in Belgium. This survey, which follows similar efforts in the US and Mexico to track the business impact of COVID-19, is our first look across the globe.

Worries over the financial impacts of COVID-19, including on liquidity and capital resources, are cited by 80% of finance leaders. The potential for the outbreak to lead to a global economic downturn remains one of the top concerns (50%).

A majority of finance leaders surveyed report that they are taking steps in anticipation of COVID-19 effects: 70% of finance chiefs are considering measures to contain costs. In comparison, finance executives based in the US are more likely to consider additional measures, such as changing their M&A strategy.

PwC expects more companies to explore different scenarios regarding the duration of the outbreak and to assess the range of potential impacts on their financial performance. It is worth noting that 70% of the surveyed CFOs believe it’s currently too difficult to assess what changes, if any, will need to be made to disclosures.

Companies are dealing with immense uncertainty as the effects of COVID-19 on their businesses and the economy become more widespread. So how long do finance executives think it would take to recover if the outbreak were to end immediately? Belgian respondents are cautiously optimistic: 40% told us they expect that their business would be back to normal within less than a month if COVID-19 were to end immediately, somewhat lower compared to sentiments shared in the US and Mexico. Still, 20% of Belgian finance leaders say it would take three to six months to get back to normal. Companies that remain optimistic about resolution of the outbreak are focusing on near-term solutions to manage disruptions, rather than longer-term solutions with strategic implications.

François Jaucot, Partner at PwC Belgium: Managing cash pressures often falls directly on finance departments during a crisis. Cash flow scrutiny will be critical in the days and months ahead. These findings indicate that cash management priorities are exerting operational pressure across a broad range of companies — not just in businesses with short cash runways or those in industries, such as transport and hospitality, where demand has evaporated”.

Via this link, you can also access the survey results from other countries.