U.S. Mid-Market CFOs More Positive on U.S. Economy and Business Performance in First-Quarter GE Capital Survey
Posted on April 13, 2012 at 12:19 PM EDT
U.S. chief financial officers (CFOs) of middle-market companies have grown more positive about the state of their industries and businesses as well as the state of the domestic economy over the last six months, according to the latest middle-market CFO survey by GE Capital.
In terms of potential threats to the U.S. economy in 2012, concern over European fiscal conditions spiked in the first quarter, matching worries over the U.S. budget deficit and ahead of concern about U.S. unemployment levels. The two biggest threats cited to business performance over the next 12 months were healthcare and raw materials costs.
The survey, which took place during the first quarter of 2012, included responses from 495 CFOs of companies with an average revenue of $143 million operating across seven major industries, including: metals, mining and metals fabrication; food, beverage & agriculture;general manufacturing; healthcare; retail; technology & business services; and transportation.
“Mid-market CFOs are more optimistic than six months ago, despite the European fiscal crisis and inconsistent job growth,” said Dan Henson, president and CEO of GE Capital, Americas. “A larger majority sees top-line growth and stable or better profits this year, and more will be hiring. These companies have access to affordable capital, which in 2012 is most likely to be targeted for investment to finance growth and to purchase equipment.”
“This outlook is generally consistent with what we are seeing in our own, mid-market financing businesses, as our total financing activity was up 15 percent in 2011 and our pipeline of new business is up 16 percent at the end of the first quarter. We’re also seen consistent improvement over the last three years in the companies in our loan portfolio, with average customer EBITDA (pretax cash flow) up 10 percent again this year.”
Current Views on Health of Economy and Industry
CFOs’ sentiment on the current health of the U.S. economy grew stronger after a significant dip during the third quarter of 2011. However, views on the strength of the global economy fell again, as concerns rose about Europe.
CFOs expressed more positive sentiment than in last year’s third quarter about their own industry. Food, beverage & agriculture CFOs were the most positive, and healthcare companies had the least favorable views.
2012 Growth and Profit Expectations
Looking forward, CFOs are more optimistic than six months ago about growth in the U.S. economy, in their own industry, and about the outlook for their own company.
Confidence Indicators: Cost Structure, Hiring and Capital Expenditures
Other Top Findings:
For additional survey data, including detailed industry-level findings, contact Ned Reynolds at 203-229-5717. For an executive summary including industry highlights, visit gecapital.com/cfosurvey.
GE Capital supports the middle market with more than just financing. In 2011, in partnership with the Fisher College of Business at The Ohio State University (OSU), GE Capital founded the National Center for the Middle Market (NCMM). The Center is the leading source of knowledge, leadership, and innovative research on the U.S. middle market economy. Through research, executive education, and student engagement, the NCMM is dedicated to promoting job creation and growth in the middle market as well as driving the dialogue on this vital economic segment. The NCMM has produced foundational research on the size and contributions of the U.S. middle market, and is funding and overseeing additional projects in this area. For more information, visit middlemarketcenter.org
Among the CFO surveys published in the U.S., the GE Capital Middle-Market CFO Survey is one of the few that examines businesses across distinct sectors, providing a more comprehensive picture of how financial executives view the world today and their outlook for the months ahead. CFOs surveyed were from an independent Dun and Bradstreet source of middle-market companies with revenue between $50 million and $1 billion, and average revenue of $158 million with the exception of the transportation industry respondents.
About GE Capital
GE Capital offers consumers and businesses around the globe an array of financial products and services. For more information, visit gecapital.com or follow company news via Twitter (@GECapital). GE (NYSE: GE) is an advanced technology, services and finance company taking on the world’s toughest challenges. For more information, visit ge.com.
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