CFOs put bigger focus on capital spending

6 January 2011
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6 January 2011 | Lindsay Clark

Increasing capital spending will become a greater priority in 2011 as firms lessen their emphasis on cutting costs compared with last year.

In a survey of chief finance officers by consultancy Deloitte, 22 per cent said increasing capital expenditure in 2011 was a priority, compared with 9 per cent in 2010. Overall, 44 per cent said they would increase capital spending.

Meanwhile, the focus on cost cutting will be reduced slightly this year, according to the survey of 126 CFOs carried out in December. It found that 29 per cent said reducing cost was a priority for 2011, while 32 per cent said it was a priority for 2010.

The research divided CFOs into those who see this year as good time for taking risks and those who do not. A third of risk takers see increasing capital spending in 2011 as a priority.

Deloitte chief economist Ian Stewart said: “For many corporates, 2010 was dominated by the need to cut costs against a backdrop of slow revenue growth. Cost control has now dropped from first to third priority for CFOs. Introducing new products or services or expanding into new markets is the top priority for corporates in 2011.”

Although the survey paints a more optimistic economic picture compared with last year, respondents still see risks. Commodity price volatility was the chief concern for one respondent, while “absorbing inflationary pressure through cost efficiencies” was the greatest challenge for another.

While CFOs say capital investment has increased as a priority, the latest SM100 survey of buyers found that cost cutting was still top of the agenda for 46 per cent of respondents.

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