As businesses respond to the unprecedented disruptions caused by COVID-19, we know sentiment and priorities are key to responding to the crisis. To that end, we are tracking the impressions among finance leaders about the COVID-19 outbreak. We surveyed 824 CFOs from 21 countries or territories during the week of 6 April, including 23 from Ireland.
This survey is our second look across the globe, expanded from eight countries and 150 CFOs in the previous version. We will continue to add territories and companies and offer a robust view of how the crisis is affecting businesses worldwide.
The contrast between the COVID-19 experience of countries across the world, and across Europe, is marked. In recent days, some countries began to see a slowdown in new cases of the novel coronavirus, whereas others neared or reached their peak. Countries such as Denmark, Spain and Italy have announced plans to lift restrictions in the coming weeks, while Ireland remains in lockdown until at least May 5.
At the same time, many governments have announced or adjusted relief packages. These include the US CARES Act and the EU Coronavirus Response Investment Initiative. Ireland's Government announced a package of supports for small and medium sized businesses.
Finance leaders are taking stock of these and other developments. From our survey results, it would appear that most CFOs in Ireland are watching the situation unfold with concern.
Almost all Irish finance leaders polled are greatly concerned about the effects of the COVID-19 crisis on their operations. This compares with three-quarters of global respondents.
Over half of Irish CFOs believe return to business as usual would take between three and 12 months. Almost a fifth believing full recovery would take longer than a year, compared to only 6% of those polled globally.
In both the Irish and global surveys, CFOs expressed great concern about the potential impact of COVID-19 on their business. However, compared to three quarters of global CFOs sharing that opinion, an almost unanimous 96% of Irish respondents fear the potential for significant impact to their operations from the current crisis. These expectations align with recent economic indicators. The IMF is now projecting that more than 170 countries will see per capita income decline in 2020, and the OECD has predicted that the coronavirus outbreak could slow global growth to 1.5% in 2020.
The pessimism in Ireland may come from being an export based economy seeing the European outbreak closing means of access to trade. It is interesting to note that the majority of respondents to the Irish survey come from the financial services and technology sectors, two areas of business that have seen changes to their operating models since the start of the COVID-19 crisis.
As leaders responsible for cash flow and capital structure, it is unsurprising that 70% of Irish CFOs are most concerned with the financial effects of the coronavirus on their company’s operations, future periods, liquidity and capital resources. They are also concerned about the possibility of a global recession, though less so than their international peers.
The impact of the coronavirus on the workforce and their ability to work and be productive, particularly at a time of lockdown, is front of mind for all Irish businesses. A quarter of CFOs expressed concern about the effect of COVID-19 on the workforce and their productivity.
Surprisingly, cybersecurity ranked very low, selected by 4% of respondents. Although a more pressing concern for CIOs, keeping data secure and ensuring privacy while employees work remotely should be a key issue for the C-suite during this crisis.
When it comes to potential financial actions to help mitigate the effects of COVID-19, there is a distinct commonality between the intentions of Irish and global respondents. Implementing cost containment measures tops the poll, with more than three-quarters of those polled saying it was their topmost consideration. Deferring or cancelling planned investments, and changing their financing plans follows close behind. That said, sentiment varies among countries. In Switzerland, CFOs are equally as likely to consider cost containment, investment deferral and change of company financing plans, and CFOs in Denmark are focusing almost exclusively on cost containment alone.
CFOs in all countries expect a range of consequences for the workforce. Irish respondents are over-indexing in terms of their expectation that they will suffer productivity losses because their organisations lack remote work capabilities.
They also expect to have changes in staffing because of low or slow demand, with 39% expecting temporary furloughs, and a quarter expecting to have to lay off staff as a result of downturns in operations.
35% of CFOs surveyed (40% globally) say they expect to experience a higher demand for employee protections in the next month. The CSO has already reported that the unemployment in March had reached 16.5%. In the US, close to 17m jobs were lost in just the last three weeks. In late March, the International Labour Organisation predicted global job losses resulting from COVID-19 could reach 25 million.
Nearly half (45%) of Global CFOs and 35% of Irish CFOs say their company plans to take advantage of government support programmes offered in response to COVID-19, which may seem on the low side. But it remains to be seen if this number will increase as more organisations move into the second wave of crisis response and begin to have a clearer view of their needs, and the corresponding strategic decisions. The second wave is typically when companies assess government stimulus programmes.
Of the CFOs who say their companies will take advantage of government support, the actions they will take are dependent on the programmes offered. The EU Coronavirus Response Investment Initiative designates €37bn (US$40.5bn) in funds to bolster healthcare systems, small and midsize enterprises, short-term employment schemes and community-based services, among other benefits.
Countries that express a lower level of concern about the potential impact of the coronavirus—Denmark and Germany, in particular—show less inclination to avail themselves of government support programmes. However, some German CFOs may bolster liquidity by choosing to delay tax payments, which will be permitted as part of the country’s €1.1tn (US$1.1tn) coronavirus crisis package.
Perhaps the greatest disparity between the Irish and global results of the pulse survey appear when it comes to the question of how long respondents feel their organisations would take to return to normal if the crisis ended today. Over half of Irish CFOs believe return to business as usual would take between three and 12 months, while 56% of global CFOs expect a return to business as usual within three months.
Almost a fifth believe full recovery would take longer than a year, compared to only 6% of those polled globally. Only 9% of Irish respondents believe it would take less than a month for their business to be back to their pre-COVID state of operations.
The response window for crisis is measured in months, while recovery is measured in years. Stabilisation may come soon for some companies in some countries, but full recovery will take time for all.
As the crisis progresses, finance leaders will need more information to finalise plans across their organisations. Many companies are likely still in the early stages of crisis management and have yet to make decisions that will shape their recovery. We’ll continue to track finance leaders’ perceptions and actions, to understand how their response is evolving throughout the COVID-19 pandemic.
To help identify the business and economic impact of COVID-19, PwC is conducting a global, biweekly survey of finance leaders. Of the 824 surveyed for the global report during the week of 6 April 2020, respondents were from 21 countries or territories: Armenia, Brazil, Colombia, the Czech Republic, Denmark, France, Germany, Greece, Ireland, Japan, Kazakhstan, Mexico, Middle East*, Netherlands, Philippines, Portugal, Singapore, Sweden, Switzerland, Thailand and the US. 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.