Overall, the outlook for own-company revenue growth over the next 12 months has improved notably among senior executives of US-based multinationals as they hold steady on costs and new hiring and begin to see some relief with new demand. Most panellists agree, however, that despite a more positive outlook, their businesses will not recover from the economic crisis until 2010. Forty-four percent believe that their business will not recover (defined in the survey as a stabilization and return to growth) until the second half of 2010 or later.
Key findings include:
Optimism returns
Looking at the next 12 months, 51 percent of senior executives surveyed are optimistic about prospects for the US economy, up 11 points from the prior quarter. Only 14 percent are pessimistic, and 35 percent remain uncertain. A year ago, only 8 percent were optimistic, and 66 percent were pessimistic. In parallel, 49 percent of panelists marketing abroad are optimistic about the world economy over the next 12 months, up 18 points. Only 11 percent are pessimistic, and the remaining 40 percent are uncertain.
Growth projections double
Although average revenue growth forecasts for calendar year 2009 remain negative, at minus 4.9 percent, projections for the next 12 months doubled on the plus side from 1.3 percent in the second quarter to 2.7 percent in the third quarter. Overall, 62 percent forecast positive revenue growth, with only 11 percent expecting double-digit growth but 51 percent expecting single-digit growth. Only 12 percent expect negative growth, 22 percent project zero growth, and 4 percent did not respond.
International forecasts strengthen
Looking at the next 12 months, the contribution of international sales to total sales among those selling abroad is projected at 29 percent, a rebound from the prior quarter’s survey low of 24 percent.
Low demand persists
Lack of demand remains the chief potential barrier to own-company growth over the next 12 months, cited by 69 percent. However, concern about legislative/regulatory pressures is now felt by a majority, up 9 points to 56 percent. The number concerned about new taxation policies also rose sharply, up 8 points to 49 percent.
Barriers to business, next 12 months:
| 69% |
| 56% |
| 49% |
| 38% |
| 30% |
| 29% |
| 25% |
| 24% |
| 12% |
| 11% |
| 9% |
Gross margins improve
In third quarter 2009, 38 percent reported an increase in gross margins while 22 percent reported a decrease – a net plus 16 percent, or 25 points up from the net minus 9 percent in the prior quarter. Costs and prices remained low. Costs were up for 16 percent and down for 40 percent – for a net 24 percent lower, similar to the prior quarter. Prices were up for 16 percent and down for 27 percent – for a net 11 percent lower, also similar to the prior quarter.
Capital spending picks up
Thirty-six percent are planning new major investments of capital over the next 12 months, up 5 points. Their average investment as a percentage of sales is higher, at 5.5 percent versus 5.2 percent in the prior quarter. Sixty-eight percent are planning to increase operational spending, up from 56 percent last quarter.
Plans for M&A activity also rose 5 points to 36 percent, with its focus on the purchase of another business.
Workforce projections improve
An improved hiring pattern is reflected as 32 percent plan new hiring over the next 12 months (up 9 points), and 18 percent plan layoffs (down 3 points). Yet the layoffs remained deeper than the new hires, resulting in a net minus 0.9 percent composite workforce expected loss over the next 12 months, similar to last quarter’s minus 0.6 percent.
About this survey:
The PricewaterhouseCoopers Management Barometer Survey is compiled with assistance from BSI Global Research, Inc. One hundred and thirty executives participated in this survey by telephone between July 27, 2009 and October 30, 2009.
Demographic profile:
| --Number of participants | 130 |
| --Average # employees | 9,351 |
| --Average revenues | $3.22B |
| --Enterprise revenues | $9.60B |
| --Market capitalization | $8.93B |
For more information about Barometer surveys, including recent economic trend data and topical issues, please visit our web site: www.barometersurveys.com.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 155,000 people in 153 countries across out network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
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