Companies optimistic on credit availability but still remain cautious
TORONTO, Nov. 22, 2013 /CNW/ - Canadian companies may be more optimistic
about access to credit, but they're keeping a tight hold on costs ahead
of investing for growth. In fact, 60% of companies expect cost
reduction and process efficiency to be the most important areas of
focus when it comes to business improvement over the next two years,
according to a new Canadian Financial Executives Research Foundation
(CFERF) study, sponsored by EY.
"Companies are still weary. During the recession in 2008 and 2009, they
experienced firsthand how quickly credit availability can be squeezed,"
said Michael Conway, President & Chief Executive Officer of Financial
Executives International Canada. "They remain watchful for signs that
credit flow could lessen in the near term, and they're being very
careful about how and when to invest in their own growth."
Despite positive indicators, the economic environment remains uncertain.
Optimizing for Growth: Working Capital & Credit Availability finds that, while Canadian financial executives are optimistic about
their economic prospects and access to capital for growth, 56% say they
failed to meet revenue growth targets over the past year and 55% are
focused solely on organic growth in the next 12 months.
"Even with today's ultra-low cost interest rates, Canadian companies are
relatively conservative when it comes to investing for growth," said
Tim MacDonald, Partner, EY Transaction Advisory Services. "They're
focusing more on cash generative projects, like cost reduction,
technology upgrades, and working capital optimization, to support
reinvestment in, primarily, organic growth."
The study results correspond with EY's most recent Canadian Capital Confidence Barometer, which found that efficiency and cost control, followed by risk
management, continue to be the boardroom focus of many Canadian
companies. It also showed that, although they have been focusing on
their core business by optimizing their capital structures, there are
signs that point to increased transaction activity.
"Cash flow must be carefully managed, even in so-called 'good' economic
periods," Conway said. "Finance can play a critical role when it comes
to driving the growth of the business, whether raising cash,
championing initiatives like working capital improvement, or looking
for inorganic growth opportunities."
About the survey
Optimizing for growth: working capital & credit availability comprises the results of an online survey of Canadian financial
executives which took place between September 17, 2013 and October 11,
2013. A total of 121 respondents completed the survey. Further insights
were gathered at executive roundtables in Toronto and Montreal which
took place simultaneously by video conference, on October 9, 2013.
Almost one-half (45%) of respondents were CFOs, and 18% held the title
of VP Finance. Respondents were drawn from a wide range of industry
groups and sectors. Of the respondents, 49% were from private companies
and 37% from public.
About the Canadian Financial Executives Research Foundation
CFERF is the non-profit research institute of FEI Canada. The
foundation's mandate is to advance the profession and practices of
financial management through research. CFERF undertakes objective
research projects relevant to the needs of Canada's senior financial
executives in working toward the advancement of corporate efficiency in
Canada. For more information, please visit feicanada.org.
About Financial Executives International Canada
FEI Canada is the all-industry professional membership association for
senior financial executives. With 11 chapters across Canada and 1,700
members, it provides professional development, thought leadership and
advocacy services to its members. The association membership, which
consists of chief financial officers, audit committee directors and
senior executives in the finance, controller, treasury and taxation
functions, represents a significant number of Canada's leading and most
influential corporations. For more information, please visit feicanada.org.
EY is a global leader in assurance, tax, transaction and advisory
services. The insights and quality services we deliver help build trust
and confidence in the capital markets and in economies the world over.
We develop outstanding leaders who team to deliver on our promises to
all of our stakeholders. In so doing, we play a critical role in
building a better working world for our people, for our clients and for
For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.
EY refers to the global organization and may refer to one or more of the
member firms of Ernst & Young Global Limited, each of which is a
separate legal entity. Ernst & Young Global Limited, a UK company
limited by guarantee, does not provide services to clients. For more
information about our organization, please visit ey.com.
SOURCE: EY (Ernst & Young)
For further information:
For FEI Canada/CFERF:
Research and Communications Manager
Canadian Financial Executives Research Foundation
416 366 3007 Ext. 5103
416 943 5497
604 648 3607
514 874 4308