These are some of the key findings in the latest PwC CFO Pulse survey conducted last week. This survey, which is a fortnightly poll of 871 global financial leaders including Ireland, helps to identify the business and economic impact of COVID-19.
Irish CFOs are continuing to take a more hardline view compared to global counterparts on the potential impact of the pandemic on their businesses. 88% remain greatly concerned about the impact of the crisis on their businesses (Global: 70%). An overwhelming majority (98%) expect a decrease in revenues or profits this year as a result of COVID-19 (Global: 80%). Nearly half (44%) are concerned about the impact on their workforce, up from 26% two weeks ago.
Reconfiguration of work sites and remote working features of the ‘new norm’ – more so than global peers
In spite of concerns for their businesses, finance leaders are thinking about how they might bring their people back to the workplace and a ‘new norm’. For example, 76% of Irish CFOs say that their company will reconfigure work sites to promote physical distancing (Global: 55%) once they start to transition back to on-site work. 61% are planning to make remote working a permanent option for roles that allow (Global: 47%) while 41% are accelerating automation and new ways of working (Global: 46%). Over half (59%) will change workplace safety measures i.e. wearing face masks, offering testing to employees and 51% will review shift patterns.
The survey highlights that changes in supply chain strategies are on the cards with Irish finance leaders hungrier to implement more stringent risk protection measures. Over four out of ten (44%) Irish CFOs stated that they are developing additional alternate sourcing options (Global: 52%) while a similar proportion (41%) will seek to improve risk protection measures such as disaster insurance coverage, more flexible force majeure contract clauses (Global: 32%). Over half (54%) will look to understand the financial health of their suppliers (Global: 50%).
The survey reveals a jump in implementing cost reductions (up from 78% to 95%) and deferring or cancelling planned investments (up from 61% to 73%) compared to two weeks ago. This scaling back is also more severe in Ireland compared to global counterparts. Facilities and general capital expenditure are top on the list for deferment or cancellation (73%); Other key areas for deferment/cancellation include workforce (57%) and operations (37%). In addition, over a third (37%) are planning to scale back digital transformation, double that of global counterparts (18%).
Garrett Cronin, Consulting Partner, PwC Ireland, said: “The survey shows that most companies have moved beyond the short-term, reactive phase of the novel coronavirus pandemic. While they remain focused on what they need to do, what it takes to ensure the safety of their people and the survival of their businesses, they are also thinking about how to stabilise. They are taking tactical steps that will prepare them to operate in ‘the new normal.’ There is no doubt that technology will play an even more important role in how we work in the future and digital transformation is an important area that should not be scaled back if possible. We need more digital, not less.”
Just over a quarter (29%) of Irish CFOs now expect productivity losses due to lack of remote working capabilities. This view has more than halved compared to two weeks ago (61%) – likely due to the fact that employees and employers may be adjusting to remote working. Nearly half (46%) expect temporary furloughs in the month ahead, up from 39% two weeks ago. Over one in five (22%) now expect layoffs in the month ahead, down from 26% two weeks ago.
Almost half (47%) of Irish CFOs still expect to return to ‘business as usual’ within three months if the pandemic were to end now compared to 44% two weeks ago (Global: 49%). At the same time, more than a fifth (22%) expect this to take more than a year, up from 17% two weeks ago and is substantially higher than for their global peers (8%).
David McGee, Markets & Strategy Leader, PwC Ireland, said: “It is simply essential that companies continue to scenario plan for the ‘new norm’, however this will look. To protect our future, Government and business need to continue to work together now to map out how to safely reopen our economy, while balancing the essential health protections we will continue to need for the foreseeable future.”
To help identify the business and economic impact of COVID-19, PwC is conducting a global, fortnightly survey of finance leaders including Ireland. Of the 871 surveyed around the world during the week of 20 April 2020, respondents were from 24 countries or territories: Armenia, Azerbaijan, Brazil, Colombia, the Czech Republic, Denmark, France, Germany, Greece, Ireland, Japan, Kazakhstan, Mexico, Middle East*, Netherlands, Philippines, Portugal, Singapore, Sweden, Switzerland, Thailand, Turkey, the US and Vietnam. The next set of results will be released on 28 April 2020.
* Representatives from Bahrain, Oman, Qatar, KSA, Kuwait, UAE, Egypt, Jordan, Lebanon and Palestine
At PwC, our purpose is to build trust in society and solve important problems. We're a network of firms in 157 countries with over 276,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at pwc.com.
PwC refers to the PwC network or one or more of its member firms or both, each of which is a separate legal entity. Please see pwc.com/structure for further details.
© 2020 PwC. All rights reserved.