The Deloitte/SEB

CFO Survey

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Deloitte Finland 2014 1

Positively developed business optimism from

the past year and a half has dropped to the

levels of early 2013 in the fall 2014. Finland isn’t

experiencing this development alone as CFOs in

the UK have given similar indications.

CFOs are experiencing tolerable risks. This

might be due to the eased lending attitudes, ability

to cope with the geopolitical crisis, and the

defensive strategies CFOs are employing. Notably,

the lending attitudes of financial institutions are, by

some accounts, the most positive ever since the

post-financial crisis, although the larger companies

still enjoy better access to the institutions compared

to their smaller counterparts.

Despite the softer prospects, there is no need

to panic while companies are still making

targeted strategic investments in Finland and

abroad. We asked CFOs how they would prefer to

use their liquidity if their cash surplus remains the

same. 23% of CFOs believed that they could make

strategic investments in Finland.

Back to BasicsSummary

2

There is no end to the news related to job

reductions. Even though the majority of

companies (63%) predict that they can increase

their operational cash flow in the next 12 months,

this won’t translate into a greater willingness to

hire. There are still significantly more companies

that are cutting their workforce than those who are

hiring new employees. This indicates that the

barriers constraining the development of the

Finnish economy have not been overcome.

Macroeconomically the recession is over, but

weak demand and concerns over the

development of it are hindering growth

opportunities. The end-2013/early-2014 recession

ended earlier than expected when second quarter

growth came in at 0.2%. However, we do not

expect much in terms of positive news from the

Finnish economy during the rest of 2014. The

outlook is still weak and the economy is troubled by

structural problems and a high exposure to Russia

compared to other Western European countries.

The net percentage of CFOs who are

optimistic outweighs those who are

pessimistic by 6%: positively

developed business optimism from the

past year and a half has dropped to the

levels of early 2013.

CFOs are turning significantly more

cautious: 31% CFOs are prioritizing

growth strategies, which is six

percentage points less than six months

ago.

More of the CFOs in Finland have

been able to manage their financial

risks: 57% of CFOs argue that their

financial position is favorable.

Back to BasicsOptimism dropped to the level of 2013

3Deloitte Finland 2014

CFOs’ sentiment is rather positive in

regard to the development of the

operating cash flow : 63% of CFOs

expect their cash flow to increase.

Financing is available if appetite to

borrow increased: 71% of CFOs say

that lending attitudes are favorable.

M&A market has been active for the

past year: the sentiment is slightly less

optimistic than before, but 54% of CFOs

suggest activities will increase.

Back to Basics

Cash flow and M&A activities expected to

increase

4Deloitte Finland 2014

CFOs favor investments over debt

reduction or dividend to owners:

23% of the respondents assume they

would make some strategic investments

in Finland.

CFOs have their eyes fixed on

domestic: 48 % of the respondents

believe that they have the best

opportunities for growth in Nordic.

Back to Basics

Focus on safety

5Deloitte Finland 2014

The same worries as earlier continue

as greatest concerns among Finnish

CFOs: concern over demand, the

outlook for the Finnish economy, and

the cost of labor and raw materials.

More than half of CFOs say their

business won’t be affected by the

geopolitical crisis: however, 37% of

respondents will experience their

revenues falling due to the crisis.

Back to Basics

Concerns remain the same

6Deloitte Finland 2014

The number of employees in Finland

still falling in many companies: 43%

of respondent companies are going to

reduce the number of employees

working for them in Finland.

Back to Basics

Unemployment to increase in Finland

7Deloitte Finland 2014

Macroeconomic context

9

• CFO’s are turning more

cautions with business

optimism falling to the levels

of early 2013.

• SEB has revised forecasts

downwards from April –

GDP estimated to decline

by 0.6% in 2014.

• In October, S&P downgraded

the Finnish sovereign rating to

AA+ from AAA.

• Structural weakness of the

Russian economy, import

restrictions and EU’s trade

sanctions, are hurting Finnish

exports, and we see that

short-term risks are rising.

MAY 2014 2012 2013 2014F 2015F

GDP, % -1.0 -1.4 -0.3 0.8

Unemployment, % 7.7 8.2 8.8 8.6

Inflation, % 3.2 2.2 1.5 1.7

Government fiscal

balance, %-2.2 -2.3 -2.5 -2.2

AUGUST 2014 2013 2014F 2015F 2016F

GDP, % -1.4 -0.6 0.5 0.9

Unemployment, % 8.2 8.6 8.4 8.2

Inflation, % 2.2 1.2 1.0 1.0

Government fiscal

balance, %-2.3 -2.7 -2.2 -1.8

SEB Forecast, Finland: 2014 April vs 2014 August

Finnish GDP to decline in 2014

SEB’s forecasts have been revised downwards since

April this year

10

GDP growth estimates

Growth estimates for Finland below Nordic averages

GDP expected to fall in 2014, with only marginal

growth in the coming years

• Finnish GDP development is assessed

to lag behind the growth numbers for

the Nordics, the Euro area, the US and

emerging markets.

• The estimated weak outlook is due to

structural domestic weakness, and low

demand in Eastern and Western

Europe.

• Finland is also burdened by its

exposure to the negative effects from

geopolitical tensions and a slowdown

of the Russian economy.

• Eastern instability has shifted focus to

the domestic, Nordic and, to some

extent other EMEA markets, with an

increased interest in strategic

investments in Finland.

• Exports are weak, but imports are falling at

a faster pace. The net effect is a positive

contribution to growth. This trend is

expected to continue till the end of 2014.

• Exports represent < 40% of Finnish GDP.

Largest trading partners Sweden, Germany

and Russia (~10%).

• The decline in Russian exports so far this

year is slightly above 10%, on annual basis.

• Impact from falling exports to Russia are

difficult to estimate, but a 25% downturn in

total exports would lower GDP by > 1%.

• A weaker euro and improvements in

competitiveness, with slower pay increases,

will support exports that are estimated to

show modest growth during 2015-2016 (1.3

and 3.5% respectively). However, no

growth estimated for 2014.11

Finnish exports are weakerGoing forward falling euro and improved

competitiveness will provide support

Finnish exports

• The third-quarter edition survey of Chief Financial Officers and Groups Finance Directors in Finland

was conducted between September 16 and October 3, 2014. 63 CFOs participated; including a good

representation of privately held and publicly listed medium, large and multinational companies across

industries. 54 % of the respondents are from companies that have an annual turnover more than 500

mill €. 22% have an annual turnover more than 1.5 bill €.

• Twenty-three Deloitte Member Firms’ CFO surveys, covering 58 countries, are conducted on a

quarterly, biannual, or annual basis. They are “pulse surveys” intended to provide finance chiefs with

information regarding their peers’ thinking across a variety of topics. They are not, nor are they

intended to be, scientific in any way, including the number of respondents, selection of respondents, or

response rate, especially within individual industries.

Deloitte/SEB CFO Survey

Fall 2014

12

Contacts

Tuomo Salmi

Tel. +358 20 755 5381

tuomo.salmi@deloitte.fi

Mikko Mäkinen

Tel. +358 20 755 5682

mikko.makinen@deloitte.fi

Ville Lähde

Tel. +358 9 6162 8097

ville.lahde@seb.fi

Writers

Juha Lintula

Tel. +358 20 755 5575

juha.lintula@deloitte.fi

Ville Lähde

Tel. +358 9 6162 8097

ville.lahde@seb.fi

Marketing contacts

Maria Kaisanlahti

Tel. +358 20 755 5519

maria.kaisanlahti@deloitte.fi

Mari Nikitin

Tel. +358 20 755 5303

mari.nikitin@deloitte.fi

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