Good morning.
By the end of 2023, CFOs said they were less optimistic about the economy and more cautious heading into 2024, but that they remained confident in their ability to capitalize on long-term growth opportunities—and technology will play a big role.
Deloitte’s CFO Signals survey for Q4 2023—the respondents were 124 finance chiefs with the majority at public firms that reported at least $1 billion in annual revenue—came out this morning. Among the findings: CFOs are expecting a tougher 12-month span in North America, Europe, China, and other parts of Asia compared with their Q3 outlooks, and pessimism over their own companies' prospects rose to 27% from 19%. CFOs lowered their year-over-year growth expectations for revenue, dividends, earnings, capital investment, and domestic hiring, but raised them for domestic wages, according to Deloitte.
“It’s continued uncertainty,” Steve Gallucci, Deloitte’s global and U.S. CFO program leader, told me. Interest rates, the macroeconomic economy, and geopolitics—whether that be in the Middle East, Ukraine, or China—are CFOs' top three concerns.
“Politics and geopolitics will be big business stories,” Fortune CEO Alan Murray wrote in the Jan. 2 edition of CEO Daily. “Wars are already raging in two important regions of the world, and contentious elections are scheduled this year covering more than 40% of the world’s population.”
Sixty-two percent of CFOs said now isn't a good time to take risks, according to the survey, although many did express hope for growth.
Their top three priorities for 2024 are financial performance (53%), organic and inorganic growth (43%), and cost management (36%). Thirty-seven percent of CFOs said M&A will be a substantial portion of their growth strategy, even though they see capital markets as a continued challenge. Regarding organic growth, half of finance chiefs surveyed said they expect to raise prices for a substantial portion of their products and services to offset inflation, while 67% said they would allocate or reallocate capital to new business investments.
That said, Gallucci told me, there still are some "bright spots" when it comes to investing in digital technology, which "is certainly going to be a big factor."
Deloitte found that 76% of CFOs expect digital transformation and technologies to play a greater role in 2024. Some 80% are expecting their companies to automate more operations, with roughly as many (81%) making plans to harness the talents of those freed-up workers for higher-value tasks.
“The more value-added types of activities could be with upskilling and rescaling," Gallucci explained, "but it also could be with bringing a different type of skill set into an organization."
Sheryl Estrada
sheryl.estrada@fortune.com
