Stephen Anderson (pictured), Middle East Markets and Strategy Leader at PwC,
Over the last four weeks, Middle East Chief Financial Officers (CFOs) have gradually pushed out their recovery expectations, now with 66 percent of CFOs, up from 44 percent, expecting the recovery timeline to return to business as usual to take three months or more, according to the new PwC COVID-19 study. Naturally, this will impact revenue and profits, with 70 percent of CFOs in the region now expecting to see a decrease of 10 percent or more.
The third Middle East edition of the biweekly COVID-19 CFO Pulse Survey also revealed further pessimism in the region with nearly one in five Middle East CFOs expecting to see a decrease in revenue or profits of over 50 percent.
The study, which shows how CFOs in the region are responding to COVID-19, highlights CFOs’ focus on workplace reboot, transformation, and cost cutting. The survey tracks the sentiment and priorities of finance leaders as they navigate the unprecedented disruption that COVID-19 has on their business.
The study added that the workforce in the region is still at risk, with 87 percent of Middle East CFOs considering cost containment versus 81 percent globally; and with 51 percent targeting workforce savings. With the growing acceptance that COVID-19 will have a more long term impact on businesses, CFOs around the world are still acutely aware of the need to manage cash flows carefully.
Implementing cost containment measures and deferring or cancelling planned investments remain the two most likely actions for CFOs, with these being even more likely for CFOs in the Middle East than the global average, a reflection of the heightened levels of pessimism around revenue and profit.
Even though the likelihood of deferring or cancelling workforce investments has seemingly reduced since the previous PwC survey (51% vs 70% two weeks ago), the Middle East is the region most likely to see a change in staffing.
However, as most companies look to reopen, 71 percent of Middle East CFOs are very confident in their ability to meet customers’ safety expectations and 70 percent believe they’d provide a safe working environment for their employees.
Customer and employee safety is of the utmost importance, with 76 percent of regional CFOs having confirmed that their companies are planning on implementing workplace safety measures such as wearing masks, testing and promoting physical distancing at work sites. The PwC study also revealed that 33 percent of Middle East CFOs are more likely to reduce their company’s real estate footprint due to the recent transitions in partial opening of offices and retail outlets.
While 76 percent of Middle East CFOs believe that work flexibility will make their organisations better in the long run, only a third are planning to make remote working a permanent option. In terms of innovation, digital transformation is set to accelerate, with 54 percent of regional CFOs remaining focused on accelerating automation and new ways of working as a priority.
About 47 percent of the respondents said that technology investments they are making will make their company better and 39 percent are looking to use automation to improve the speed and accuracy of decision making with regards to their supply chain strategy.
Stephen Anderson (pictured), Middle East Markets and Strategy Leader at PwC, said: “It’s reassuring to see that almost a half of the executives we surveyed in the region are very confident in their company’s ability to build skills for the future. This aligns with the increased likelihood of companies adopting workplace automation, new ways of working and preparing employees for a digital tomorrow.
